Article & Blog Posts


Don’t replace your CRM or ERP. Enhance it!

  • by Kevin Geraghty
  • 26 May, 2017

Motivation for CPQ

In order to benefit from recent cloud based technologies, it is no longer necessary to replace existing CRM and ERP systems.

Forward looking companies are now adopting a different approach - embracing new, innovative applications in low risk ways. They are extending current system capabilities.

They are also gaining competitive advantage by deploying proven motivational techniques to bring about change in their organizations.

This paper looks at a growing front office software solution that delivers cost savings, removes sales constraints and increases revenue.

And it suggests ways to plot a path to effective implementation.

The drivers for change…...

IT projects, of whatever flavor, can be high risk.

Some projects include the discarding of incumbent systems, and the adoption of expensive replacements. Sometimes this can even involve removing systems that may still adequately perform to their original specification.

Two of the biggest ticket items within any business are its front-office (CRM) system, and back-office (ERP) system. They may have been in place for some years.

Many companies however are now recognizing gaps within and between these systems; and they are investigating how such gaps can best be plugged. Frequently the gaps are associated with the production and processing of quotes.

Applications using the three letter acronym ‘CPQ’ are now offering solutions. CPQ stands for ‘Configure Price Quote’ - and the term has been adopted to describe applications that specifically address the shortfalls between and within CRM/ERP.

Anyone still using spreadsheets for producing quotations will be familiar with the problems that can exist!

The good news is that with the arrival of CPQ solutions, it is no longer necessary to replace either a recently acquired CRM system, or a well worn ERP system.

The less good news is that CPQ is becoming a bit of a ‘catch-all’ for a range of quite different solutions. It is now not uncommon for terminologies such as ‘Quote to Order’, ‘Quote to Cash’ and ‘Lead to Order’ to appear alongside CPQ.

It is important to understand the differences between these terminologies - as an understanding can reveal the strength, experience and philosophy of a software solution and its provider.

Ultimately, gaining such an understanding can help to indicate the best fit of a solution for any given business.

  •   CPQ - Quote to Order.   These solutions bridge the gap between CRM and ERP - by providing for the production of quotations and their conversion to an order. Some systems cope only with simple quotes. Others handle complex quotes of large scale.
  •   CPQ - Quote to Cash.   These products bridge that same process void; and in addition extend backward into the traditional ERP area of control - in order to incorporate the production of invoices and the collection of cash.
  •   CPQ - Lead to Order.   These applications seek to bridge the same process gaps. But they reach forward from a company’s CRM system to embrace potential buyers, and to guide buyer journeys from the first touch point.

Determining which flavor of CPQ best suits a business will often flow from a review of objectives, and a determination of the key issues which are affecting the customer journey and experience.

Identifying the type of CPQ most suited to your organization is however only one element of a successful implementation. The other is delivering a successful project outcome.

Reduce project risk and bring faster reward…...

IT projects, of any flavor, are by their nature challenging. Largely because they involve change - and crucially because they involve change for people.

And they involve uncertainty. Even when a business is convinced it knows what it wants, there are always unforeseen requirements or factors which may only emerge during the life of a project.

These ‘Unknowns’ need managing. They can be categorized at the outset of a project as either ‘Known Unknowns’ or ‘Unknown Unknowns’.

The former will usually be accommodated quite easily; because in well managed projects they are built into a planning phase. However, ‘Unknown Unknowns’ are higher risk, and can in extreme circumstances even throw into doubt the original perceived wisdom - as a project progresses.

The reality is that these ‘Unknown Unknowns’ are very likely to remain so until an undetermined point in the project - when they will suddenly become clear.

The size of an organization is not a key factor here. All teams will be challenged to know everything there is to know at the outset - when designing an optimized process, that will be loved by its users.

But these challenges can be anticipated and addressed.

1. Engaging the right project team

Sharing project objectives and involving an appropriately wide audience at the outset, will provide the best opportunity to flush out known issues, and capture ideas.

But this also presents a challenge - the challenge of explaining requirements to a broad team in terms that they can understand, and in ways which encourage their relevant insight and input.

It has long been recognized however that high levels of involvement across an organization during the introduction of a new system, increases ownership - and results in better solutions, that are adopted faster.

So choosing the right team, from relevant organizational disciplines and Users is critical. Having selected that team, it is important to find ways to encourage positive contribution from all.

In a CPQ project -   Sales Operations   and   IT   can play a pivotal role. Although organizational titles will vary, it is these functions - if appropriately supported by Sales, Marketing and Product / Service specialists, that are well placed to deliver the desired outcome.

2. Providing a clear vision of the future

Individuals involved in any project, of an IT nature or otherwise, need to understand the direction of travel, and how it relates to them.

An exciting vision of where an organization wants to be or what it wants to achieve, can encourage individuals to contextualize how they fit in, and how they can contribute to the overall aim.

And taking time to really think about how business processes contribute to an organization’s success is important. So is setting out the future of the business in terms of specific objectives and tasks.

It is important for each person on a team to have the opportunity to assimilate the desired destination in their own terms, and appreciate how they can contribute. This is often achieved better with a vivid description of the future.

An example of a vision - within a CPQ project context - might be:

We need to make it easier for buyers to say   YES   and continue to come back for more. We want our customers to be so impressed with their experience that they feel   COMPELLED   to post fantastic reviews of the product or service they bought.

3. Motivating the team to contribute

There can be a temptation to motivate teams simply by setting revenue or profit targets, or other numbers based objectives. This is generally too simplistic. Of course, financial outcomes will be an important element of the ultimate goal.

We all hope that our employees, and certainly those that are asked to deliver as part of an IT project team, will be self motivated. However this does not ‘just happen’ - organizations need to work to achieve a good outcome.

Often within project teams, individuals are asked to contribute in ways that are outside their normal comfort zone. And it is likely that their involvement in a team will be in addition to their daily work. So if we want a good project outcome, we need to carry them with us.

Invite project team members to become involved in the delivery of a clear vision. When done in the right way, this will encourage individuals to focus on improving their individual processes, practices and service provision - thereby contributing to the delivery of the business goal.

Always provide opportunity for early project successes, ideally with wins that demonstrate the value of the contribution made - thereby helping to secure enthusiastic participation. Successful projects always involve visible achievements along the way.

Empowering people taps into their intrinsic motivation. It leads to greater enjoyment of a task, and to continued motivation over a sustained period.

In a CPQ project - start with a basic solution that contains just the core building blocks. Users will quickly understand the nature of their tasks, and suggest rules that will speed and ease their work. This gives the vision meaning to individuals. It demonstrates that the team has choice in how they can deliver. It opens the space for all to contribute their knowledge and experience. And it delivers early, tangible success.

4. Developing the critical steps to success

Once a Vision has been articulated, its impact on areas of current Business Process needs to be assessed. This is necessary in order to identify specific Requirements that will need to be addressed; and also to help identify those in the organization who could best be assigned to a delivery team.

For each of the Business Processes that will be affected, the delivery team should identify and record the main Requirements that are involved. And it should set down the Steps which will be required in order to align any new or revised processes - to meet the overall Vision.

Don’t get lost in the detail. Keep the Requirements list at a high level. Distill and refine it, until it contains only those Requirements that are fundamental to a successful outcome. This provides important flexibility for the ways in which an outcome can be delivered. It can also help reduce the impact of any ‘Unknown Unknowns’, as they emerge.

The team, having conducted this exercise, should address each Business Process in turn, and determine the high level Steps which will deliver the Requirements. This can now be done, safe in the knowledge that the project is being built on solid foundations, and with a broad understanding of the ultimate goal.

Avoid any temptation at this stage to work only on immediate points of pain. Rather, take time to consider and document each essential Step. This will reduce the risk of coming to hasty conclusions, and maybe selecting a solution that does not offer a robust long-term outcome.

As the Steps for each Business Process are addressed, it is wise to revisit and review, against the documented high level Requirement. This will ensure that a team remains focused on delivering the benefits that each Step is required to contribute to the desired outcome.

5. Selecting the right software partner

How can an organization choose a CPQ solution partner, when there are still project ‘Unknown Unknowns’? Well there is an argument that says - choose the right partner early on, and use their experience to help unlock those ‘Unknown Unknowns’.

Frequently in IT projects, logic based choices are made to deploy specific technology to overcome tightly defined problems. Such an approach is sound. However, this approach may not work well in projects where there is a strategic vision with significant ‘Unknown Unknowns’ at the outset.

Whilst commencing a project where there are ‘Unknown Unknowns’ can appear risky, sometimes there is little choice. And given a sound strategic vision, such an approach can bring great rewards. Some simple safeguards can mitigate risk.

Start with a low cost or free trial version of the potential technology solution. A solution that is quick and simple to deploy. Ensure that your provider’s solution initially meets the very basic level of your requirement but with capacity to grow and accommodate your strategic vision.

It is essential to progress in incremental steps, in the safe knowledge that your solution provider can continue the journey with you. Here is a checklist that can help your selection process.

A note of caution.   A traditional approach to seeking a software partner can be to look for those who are experienced within a vertical. But this may not help, if a team is looking to introduce competitive advantage. An outside perspective with solid experience of CPQ best practice can often be more helpful than industry experience. So look for providers that can demonstrate solutions across multiple and varied scenarios.

6. Embracing the ‘Unknown Unknowns’

Avoid unnecessary pressure. Appreciate that whilst the destination (Vision) is clear, the route may not as yet be fully described. Be confident however that it will evolve and emerge over time - if good practice is followed.

Seek to identify ‘Known Unknowns’ that might impact the business, and future decisions. Brainstorm these, and identify different scenarios - whilst appreciating that such assumptions, by their very nature can be wrong. And accept that there are ‘Unknown Unknowns’ that may change everything.

Here are a couple of ‘Unknown Unknowns’ relating directly to CPQ.....:

Automation:   It can be stated with confidence, that algorithmic rules and calculations will lead to further time saving automation. Progressive organizations now work on the basis that they will achieve greater automation of the sales and marketing process - far beyond current capabilities.

Artificial Intelligence (AI):   Machine Learning is in its infancy. Along with well publicized trials - there is hype and speculation. It is hard to ascertain how technology will advance to allow machines to heuristically solve problems. However, we do know that they already possess this capability, and thus we can reasonably predict with some degree of confidence that their ability will improve rapidly.

Google Translate is a great example how AI has worked out solutions to problems that did not exist when it started out. The software built its own language to enable it to translate world languages more efficiently.   Click here for more information

So in the field of ‘Unknown Unknowns’ it is quite conceivable that algorithmic solutions may be replaced by heuristic machine learned solutions. And this may even affect CPQ. But until that time we can only ensure our organizations are positioned to take advantage..

Enjoy the Journey…...

CPQ is a technology which will enhance existing CRM and ERP investment - with wins in both the short and longer term. Done right, it maintains and enhances current IT investments to deliver real competitive advantage.

Adopting the approach outlined in this document will minimize project risks and expedite successful implementations.

A CPQ journey, within a sound vision and with the right partner, can be truly transformational for a business.

An effective Lead to Order program can dramatically improve a company’s relations with its prospects and customers - by improving engagement and collaboration.

What Next?
If you, or your organization would like to discuss or explore any of the points above, please do get in touch with us by entering your name and email address in the form on this page or by calling +44 (0)1242 233 700.

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