With uncertainty ahead and analysts stumped predicting post COVID-19 future growth, one thing is for sure, businesses who are adapting to be future fit will be the resilient ones and emerge stronger in what will no doubt be a more competitive market. Gartner has a great resource ‘2020 Gartner CIO Agenda: Resilience During Disruption’, based on feedback from 1,070 CIO’s across 64 countries their guidance is not to use ‘wait and see’ or ‘defensive cost-cutting’ strategies to see through adversity and emerge in good shape. In summary, Gartner calls out three core areas
1) Alignment: Great leadership providing vision, continuous strategy, aligning and empowering the workforce with robust relations and exploiting technology in a disciplined way
2) Anticipation: Searching out and acting on emerging trends, using IT as a differentiator and enabler to execute strategy with balanced risk-taking.
3) Adaptability: Building the appetite for a change to established ways of working. Fostering a culture to welcome open feedback and questioning of the norm encouraging creative ways to overcome challenges.
With COVID-19 and today's pace of innovation service providers need to pay careful attention to what they do, how they do it and why. Clients will themselves be evolving and looking closely at their return on investment for services provided in a rapidly evolving world. This will pressure service providers to think carefully as to the value, quality and differentiation of their services. Successful businesses are the ones who care to understand and predict what their clients need by adding new offerings regularly while constantly honing their business operations to optimise costs, talent and quality of service.
As Charles Darwin said “It is not the strongest of the species that survives, not the most intelligent that survives. It is the one that is the most adaptable to change.” Very apt in today’s world of change.
This article provides useful insight into why a quality Configure Price Quote (CPQ) solution can better enable sales and wider business performance. It is targeted for service providers but may also be useful to those expecting more from their current CPQ solution or wanting to evolve from one-time product resale, maybe even with limited value add, to offering higher value solution-selling with recurring services.
Rarely are there opportunities to make step improvements with a rapid return on investment. At Vendira we know that Configure Price Quote (CPQ) solutions present just that opportunity. This article will help set the scene as to why and what you could expect and how. If this strikes your interest do get in touch as we love to discuss this subject irrelevant of any future engagement.
Before we dive in lets set the scene; most service providers widely recognise the need for investment in core business systems to better enable business operation such as Customer Relationship Management (CRM), IT Service Management (ITSM) and Enterprise Resource Management (ERP) systems (where ERP systems are mainly focused on financial, invoicing, professional services, procurement and Human Resource Management).
From our observations, the above-mentioned systems are widely adopted and expected ‘no brainers’, even though they are exploited to varying degrees. Can you imagine not having one of these core systems in an established business? It would certainly cause hot debate in leadership meetings!
The reason for this is three-fold:
Each of the above-mentioned areas has clear ownership and leadership team representation
The interaction between these systems is complex, with varied activities that cross many departments, it’s common for no central business ownership and leadership representation.
These systems are common knowledge and expected. Knowledge of solutions that address point 2 above, is far from common knowledge
It is interesting to note that
Point 2 led to the rise of Configure Price Quote (CPQ) systems, only recently coined circa 2007. CPQ is now steadily establishing itself as a core business system and becoming widely recognised across many industries.
CPQ is the key to unlocking the full benefit from CRM and ERP systems, one example being automating the feeds for sales pipeline opportunity reporting. Without CPQ this is a manual activity that is generally badly performed by sales-people who should maximise their time on winning business. The result is frustration, poor data, ill-informed decisions and lost time from key resources.
For those that are new to Configure Price Quote (CPQ), here is a brief explanation as to what CPQ solutions are.
CPQ solutions structure and centralise products and service catalogues and help businesses systemise and automate the configuration, pricing and production of client quotes or even proposal outputs. Key to service providers some CPQ solutions will help with Client solution life-cycle management, in terms of better enabling service entitlement and managing additions, upgrades, downgrades, decommissions, replacements and refreshes.
The makeup of CPQ solutions vary by vendor, some with strength and focuses in particular sectors and others providing a more generic capability to the masses. Service providers with diverse offerings and those that provide solutions rather than parts should look for good capability in the following areas
Systems Integration and Governance
The ability to integrate with and further benefit from your CRM and ERP systems, while further automating governance and presentation of data. Including
Ability to present deal commercials in comprehensive online dashboards coupled with system driven workflow approval flows with predefined thresholds and business rules.
Ability to feed into and from IT Service Management and Service Delivery systems for current or future automated service provisioning
Secure SaaS-based solutions with Single Sign On (SSO) work anywhere access and automated online approval workflows
Product and Service Catalogue
Centralisation and standardisation of your product and service offerings, with standard methods of dealing with non standard requests, including
Ability to create products and services as well as load or integrate with third-party supplier and partner catalogues such as TechData or channel aggregators such as ‘stock in the channel’.
Ability to model and manage the cost of service, maintaining commercial integrity, deal health and provide comprehensive standard pricing strategies.
Ability to simplify the complex and package for guided selling into templates, fixed bundles or dynamically configured products in a way that truly informs and enables people to sell fast, sell well and sell successfully.
Configuration
The ability for internal sales users and maybe even partners or customers to quickly and effectively configure quotes to requirement at all stages of a sale from indicative to final.
Configuration engines and easy to use GUI’s that simplify and guide the selling of both complex and simple offerings, eliminating the need for managing complex spreadsheets or disparate systems.
Ability to produce more than just a parts list, but to configure solutions in the context of the client’s business and commercial requirements.
Pricing
System enabled pricing unburdening and facilitating sales team to win more deals, including
The enabling of sales users to perform informed intelligent pricing via many methods and at many levels throughout a quote supported by automated and intelligent pricing capabilities and comprehensive financial dashboards.
Ability to enforce pricing rules, enable volume-based strategies and even automated intelligent pricing to help maximise the chance of success.
Quoting
The system enabled production of high-quality client-facing quote and proposal outputs. From standard template to customer-specific or tailored documents via an easy to use document engine and libraries with the ability to electronically share for online collaboration, review and approvals.
Gartner estimated the CPQ industry will continue to grow at 20% through 2020. During today's COVID-19 pandemic G2.com observed a significant surge of interest in the area’s relating to Configure Price Quoting. This is no doubt driven by the challenges non-CPQ enabled businesses are dealing with as a result of increased pressures and need for improved effective working and collaboration as a result of a remote workforce.
Noting an interesting observation in that the majority of searches are for 'pricing software'. Looks like CPQ still has a way to go in becoming common knowledge.
So why is CPQ the rocket engine of sales enablement for service provider success?
Firstly, to keep us grounded I think it is important to recognise CPQ is not a magic bullet, no system is. Just like a rocket engine such systems need the right ‘Fuel’ aka catalogue of products, services and content, ‘Controls’ aka governance and workflows, ‘Integration’ aka enterprise architecture and ‘Mission’ aka purpose and outcomes.
For example, feed a rocket engine sub-optimal fuel and you’ll be sure to see the end result. On the subject of ‘content’, it’s interesting to note that making the step to CPQ is a great reckon-er for exposing and addressing underlying issues with product and service packaging. Such issues are typically lost in amongst a haze of many other issues and distractions. Exposing, accepting, prioritising and addressing these are all a benefit of CPQ and part of driving to improved business performance.
Ok let’s crack on, below are some of the business benefits to be aware of
Unleashing your people
Providing a working environment for people to thrive is one of the upmost things business leaders need to do in being successful and future-fit, especially with today’s fast-changing online remote working world. Service providers without a quality CPQ solution are unknowingly overburdening and hamstringing their people with outdated ineffective ways of working. Effectively sending a negative message, leaving them to deal with high levels of manually intensive time-consuming low-value activity combined with chasing around for key knowledge and dealing with multiple complex error-prone data sources. This inevitably leads to
Increased costs, friction and frustration
Negative client feedback with higher than expected attrition
Costly staff retention issues, leading to skills shortages, productivity and development issues
Poor time to value for new hires, taking 7 months+ to learn the ropes be effective
Bad deals, lost opportunity and clients sourcing elsewhere
Over-reliance on the few resulting in significant constraints and risk
Sub-optimal and slow to respond client engagements
Poor reporting and decision making
Inconsistency and lack of standards impacting downstream service delivery and client solution life-cycle management.
A quality CPQ solution will make a step improvement in all these areas. It will unburden and enable via automation, workflow-enabled online approvals, standardisation, comprehensive dashboards and sales guidance, all in all, removing low-value manual intensive error-prone activity while providing the right information at the time of need. Ultimately reducing time to value, overcoming constraints, empowering the many, increasing productivity while improving quality and freeing up time for higher-value activity.
If this sounds too good to be true, spend some open honest feedback time with your sales, account and pre-sales teams, maybe even ask what service delivery think of sales outputs and the challenges they face in delivering against them.
Increased revenue and reduced attrition
CPQ systems are renowned for improving the speed and quality of quoting and as a result better enabling sales and account teams to serve clients while reducing the risk of clients sourcing elsewhere. Dig deep enough and you will find many generic stats in favour of CPQ enabled businesses, typically benefiting from double-digit percentage improvements.
Improved profits and reduced leakage
Additional benefits to CPQ included improved profits, reduced cost, revenue and opportunity leakage via improved
Deal health with an increased chance of cross and up-sell
Standardisation of offerings and outputs leading in improved productivity in downstream service delivery
The ability for lesser-skilled resources to sell more complex offerings without mistake
Cost and pricing management
Handling of tailored non-standard client requirements
Invoicing with clearer feeds, process and governance
Solution life-cycle management and client engagement, leading to non-competitive lower cost renewals and reduced attrition
Packaging for sale reducing errors, iterations, and rework
Aberdeen group research (‘Five fundamentals for Best-in-Class CPQ Deployments’)observed an average 3.9% year on year reduction in sales rep attrition, quite a cost-saving, they also observed CPQ enabled sales organisations are 2.2 times as effective as all others (67% vs 31%) at reducing the number of resources required to develop and deliver quotes and proposals.
Improved client satisfaction
A great lag measure for CPQ solutions is improved client satisfaction, CPQ provides the opportunity to make a step-change in the quality and speed of response.
Increased time from key sales and pre-sales focusing on higher-value client engagement
Improved standardisation and handover into service delivery
Improved clarity for all with regard to service entitlement and solution commercials
However, like our rocket engine analogy it’s no good having a great engine without the right ‘fuel’ (content), ‘Controls’ (governance and workflows), ‘Integration’ (enterprise architecture) and ‘Mission’ (purpose and outcomes).
Unlike a rocket engine, the optimal solution for four areas don’t need to be in place at the same time, Vendira would recommend an iterative approach on all areas coupled with careful consideration given to prioritising which areas to more focus. Implementing a quality CPQ solution will certainly help flesh out and enable such improvements.
We hope you found this an insightful read, if you are not getting the benefit from your CPQ solution or are a service provider thinking about taking advantage of CPQ get in touch we may be able to point you in the right direction or even help you make that step improvement and be future fit.
About us, Vendira are not just another CRM consultancy with some CPQ resource, we are product through CPQ specialists for service providers caring about your success. We help optimise your products, services, outputs, process and as well as successful CPQ adoption to help you better perform and maximise the benefit of your CPQ investment.