CPQ Tool Selection

These are some questions that you should ask yourself before you choose a CPQ (Configure, Price, Quote) tool

  1. What is your Route to Market? Are there any companies imposed restrictions?
  2. Do you have the right Stakeholders involved in the decision-making process?
  3. Are your goals and value drivers defined in accordance with your expected business outcomes?
  4. Have you defined your evaluation criteria?
  5. Have you evaluated your prospective vendor in a rigid criterion tailor-made from your requirements?

It is important to evaluate tool selection with a rational and scientific approach. This is true for technology investment for that matter. Skipping any of the steps might result in very costly mistakes and do-overs. If you need to customize the solution after implementation, you’ll need to increase your project budget. Applications with scalability issues may need expensive workarounds still resulting in an inefficient implementation. A lot of us tend to neglect the real stakeholders while adopting a CPQ tool, the sales reps. Clunky inefficient user experience will undoubtedly reduce user adoption, resulting in a crippled ROI.

At Standav, we make sure that our clients understand what they need. This is important for us when a client identifies exactly what they require; translating that to an effective solution is easy. In this article, we will be evaluating in detail the right questions to ask while looking for the right CPQ tool.

1. What is your Route to Market?

The very first thing you should do is to identify your route to market. Traditionally most companies sell through one of these three channels; Sales teams, Channel partners or E-commerce. This exercise will help you identify your most basic requirements from a pricing perspective. You will now have a basic understanding of your pricing logic and capabilities required.

Determine the objectives of your Executive Management Team, available budget, technical requirements, and restrictions. Study the impact on the existing team and establish a desired outcome for the implementation. The last and most important question before you evaluate vendors is to understand the Data and Process Flow between your CRM and ERPS solution.

2. Do you have the right Stakeholders involved in the decision-making process?

Configure, Price, Quote has rippled across many departments. For this very reason, the decision about which tool to be adopted and what features are required should be made by a cross-functional team of business and IT stakeholders. Key stakeholders to include in this group are those whose departments play a critical role in CPQ programs, including sales, sales ops, finance, product management, pricing teams, operations, and marketing. In addition to this, you have to ensure that the team is aligned in the vision of what the organization needs.

3. Are your goals and value drivers defined in accordance with your expected business outcomes?

The primary reason for CPQ vendor selections failure is premature decision making. Organizations are too quick to jump straight to the vendors instead of first taking the time to understand what they really need out of the solution. The key to a good selection, however, is to understand your goals and value drivers before considering vendors.

  1. To understand your requirements, you should ask:
  2. What pain points exist in your organization’s process today?
  3. Where do you want to take your CPQ strategy?
  4. Do you have a configuration problem, a pricing problem or both?
  5. What do your average quotes that cover ~80% of your requirements look like?
  6. What do your complex quotes look like?
  7. How does CPQ fit into your overall Quote to Cash (QTC)landscape?

A value tree helps you traverse the gap between your requirements and capabilities. I use a table that looks much like this:

The table above is just an example of how to arrive at the required capabilities from target business outcomes. Expanding on this you evaluate your approach to the market.

For example, do you want to increase deal sizes? or would it be far more beneficial if you improve on your margins? What are the functionalities or use cases that matter to you most? Finally, as you make these considerations, remember that this undertaking is not just about tool enablement or system transformation — it will also involve process transformation.

4. Have you defined your evaluation criteria?

Next, you need to determine the critical points you will bank on in your evaluation of vendors and their technologies. I recommend focusing on the following:

Configuration capacity – CPQ tools need to be adaptable depending on the complexity of your quoting requirements. Does the tool meet your needs for the most complex of these cases? How easy is it to generate your most popular quote? Is there any scope for automation?

Pricing capacity– Companies often overlook pricing capabilities in CPQ vendor assessments, doing so is a mistake. A faster, more accurate pricing with systematic approvals and governance is one of the core benefits of using CPQ. How important is pricing to you? Do you care about pricing analytics/instant pricing?

User collaboration – CPQ bridges Sales with Sales Ops, marries the front office to the back. Does the tool fit into your existing technology ecosystem to enable easy hand-offs and collaboration among users?

User experience – UX is the factor that determines user adoption. Ignoring this metric is ignoring the primary stakeholders in implementation. Does the tool meet your UI requirements? How many steps are there in a very standard process? How much do you need to be able to change the UI? Is mobility a factor?

Scalability and Technology – On-premise software has serious scalability issues. In some cases, looking for a solution that is 100% native to a specific platform can be very limiting in the CPQ space. Can the CPQ solution scale to meet your business needs? How much does the platform on which the solution is built (e.g. Force.com) matter to you?

Industry alignment – Certain CPQ solutions are tailored for specific industries. Does the vendor have functionality catered to your industry? Does he have prior experience delivering solutions around your industry?

5. Have you evaluated your prospective vendor in a rigid criterion tailor-made from your requirements?

Never settle for a vendor telling you of their capabilities. As you compare vendor capabilities to your goals, drivers and evaluation criteria, force the vendors to show you how their solutions work and to demonstrate their abilities to meet your requirements

Ask the vendors to explain how their solution can enable your business outcomes and where have they enabled similar outcomes before. Be sure to ask for a customer reference and to share clear use cases for them to demonstrate and discuss.

During the demo, go off-script. Ask the vendors to modify the configuration, add products, create a new approval or add a new configuration rule in real-time. This off-the-cuff change is a great indicator of how flexible the CPQ tool can be, which is incredibly important.

Finally, your high-level use cases could defined along the dimensions of -RTM, Deal Type, Geography and Offer Type

Catch us at Apttus Accelerate to learn about it

I would like to give credit to Salesforce, Accenture, Apttus and NovusCPQ for the content here.