Manufacturer, increase your sales efficiency with CPQ

A modern and well-integrated CPQ solution helps manufacturers increase sales efficiency by streamlining both the quoting and product data management processes.

Is your manufacturing company struggling with inefficient revenue processes, such as slow quoting, siloed product data, difficult configuration management, inaccurate pricing or inconsistent processes in product lifecycle management?

If you answer ‘yes’ to the above, you are not alone. Research recently conducted by Salesforce showed that one of the top five current challenges for industrial companies was achieving sales efficiency. Resolving that challenge was seen as a crucial step for future sales and marketing success.

Configure–Price–Quote (CPQ) solutions have been developed to enhance sales efficiency, and there are tremendous savings your manufacturing company can achieve in terms of time, money and headache by having a smart and integrated CPQ solution. It is seldom an easy and straightforward task to implement this, but it will reward you in the end if you do it right. If you wonder how to approach a CPQ project or if you have already started to improve your sales tools, this article will give you some guidance on the way forward and help you to avoid common obstacles.

It’s not about implementing new software

A common mistake is to approach and drive these projects solely as IT projects without getting the involvement and commitment of all relevant stakeholders, such as sales, product management, order handling and production.

After a successful CPQ implementation, the new software is only a small part of the game in the end. The software itself doesn’t transform your business; it’s the people, the users, who make the processes more streamlined and efficient. It’s one thing to implement new technology for a business and another to fundamentally change the way a business thinks, plans, strategies and operates. That’s what true digital transformation brings.

In other words, be mentally prepared for a real transformation and get the right commitment early enough from everyone who will be even indirectly touched by the new application, including top-level management. Although you might think that some of them are too busy to contribute to the project, the invested time will certainly pay off later if the systems are set up to support their teams and make their lives easier.

Make your product data an enabler instead of an obstacle

One of the most important characteristics in the manufacturing industry is how important the role of the product is in everything you do, especially if the product is configurable and complex. The nature of your products is reflected in how you market them, how you sell them, and how you manage quotes, orders and contracts, assets and installed base — especially the master data, including all components and items, product structure and configuration rules.

It’s often fully possible to build ‘point solutions’ that enhance some of these sub-processes, but what’s much harder is to build an automated and integrated system landscape with an efficient solution for managing the product data structure supporting all these sub-processes and their stakeholders in the right way.

If you are about to implement a new CPQ application, one of the first questions is often “Where is the product data coming from?” And while that might sometimes be a simple question, the trickier one is, “Where are the product configuration rules and compatibility logic coming from?”

For a well-working CPQ solution, you need both the product data with the right items, structure and hierarchy, as well as the rules and logic about how they can be configured. While it often makes sense to get the product data from a PDM (product data management), PLM (product lifecycle management) or ERP (​​enterprise resource planning) system through integration, the configuration rules are often more multidimensional and trickier to streamline through the different systems. Every CPQ platform has its own configuration rule engine and different format for the rules to be managed, so there’s no single solution which will work for all cases.

The most important thing to remember, however, is to carefully plan and design a setup which is optimal for your products, system landscape and business processes from the beginning. If you haven’t selected a CPQ platform yet, this is a crucial aspect to evaluate before you make that decision. With modern CPQ software combined with the right integration platform, it’s possible to re-use the product structure defined in one system through integrations and thereby avoid duplicate changes in multiple systems every time your product is changed.

When the technologies and platforms are selected, and their limitations and capabilities are clear, you can start to design a framework for how and where to manage the different types of product data, where it is consumed or enriched, and how your organisation will maintain the whole setup in the future. Don’t try to integrate every single system with each other — that will probably not work or even make sense — but evaluate the business case behind every integration carefully while keeping future scalability in mind.

Plan the handshake with other systems

When we develop sales tools for our manufacturing company customers, we always involve the right expertise outside of the CRM system or customer engagement platform. For example, if the product structure and lifecycle processes in the backend are not set up correctly, it will quickly be reflected in the customer engagement layer in the form of incorrect quotations, slow responses to quote requests, mistakes in order handling and therefore in assembling and delivering the right product, and so on. It is crucial to approach these programs in the right way and not try to take shortcuts by only focusing on solving one individual problem in the end-to-end process and system landscape.

When looking at the other side of the CPQ and its output, we quickly enter the world of ERP and need to plan the handshake between it and the CRM/CPQ. After the deal is closed, you probably want the downstream processes in order handling and production planning to follow smoothly with a minimum of manual work. Here you also need to look again at what capabilities the different platforms have, what the ultimate role and responsibility of each system should be, and then start to draft how the sold product gets consumed by the ERP.

While you don’t want to renew or fundamentally change all your systems at the same time, you should also be open-minded when it comes to adjusting other systems to build a complete and linked system which is scalable for your business in the long run.

Other systems where your product plays a big role might include an eCommerce solution, a Product Information Management system, a partner or customer portal, and so forth. It’s not realistic to push through big changes in all of these systems and processes at the same time, but it will benefit you to be well aware of what your future vision looks like, maintain at least a high-level design of the final solution and then proceed in smaller steps with an iterative approach while not disturbing daily business too much.

Have patience

As you might have guessed at this point, there are many things that are crucial to do right in these kinds of programs. That also means that your targeted transformation will take time. A common misunderstanding is that a new CPQ tool could be set up in just 2–3 months using only out-of-the-box features and that this would lift the business to the expected level.

This might be possible for some manufacturing companies if we’re talking about simple products, a very well-defined and documented product catalogue, a system landscape with properly set up CRM, PLM and ERP tools and clear requirements. However, a more realistic duration is around 4–6 months for planning, designing and implementing an MVP solution, but this will vary a lot.

What is fully possible, though — and even recommended — is to start small and go live early with a pilot implementation or even just a proof-of-concept. It can be a truly limited application with only a few products and their most important options, no integrations in the beginning, and used by only a small team. This is often the most efficient way to get a good idea of what the end result should look like, and at this point, it’s still fully possible to drastically change the direction of development. With this approach, it’s crucial to remember that the first release is only the start of the whole CPQ journey and business transformation and might not yet bring huge advantages to the company.

So don’t over-sell the new solution internally: you want to do proper expectation management and avoid causing disappointments in the first release. Instead, communicate clearly how you will develop, roll out and expand the application and what the final solution could look like. By keeping your stakeholders actively involved and showing that you listen to them, they will understand that it takes time to build something amazing and also answer the “What’s in it for me?” questions.

Next steps

Everything said here might sound overwhelming, but don’t worry: you are not alone! Take a look at our following content on this topic: 5 company functions that all benefit from CPQ, How to get started on CPQ and How to select the right CPQ platform.

You are welcome to contact us with any questions. Fluido has vast experience in guiding our manufacturing customers from the very first steps of these transformations to successful global rollouts. We have our own CPQ practice with years of experience in tackling exactly the challenges mentioned here, and we are happy to help manufacturing companies in different stages of the CPQ journey.


Start your CPQ journey successfully

Selecting the right platform is one of the most crucial steps in your CPQ journey. Perhaps surprisingly, there are enormous differences between the different CPQ platforms. By watching this short video, you’ll learn how to approach the CPQ selection process from different perspectives.

Alexander Franck

CPQ Practice Lead

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