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Showing posts with label cpq vendors. Show all posts
Showing posts with label cpq vendors. Show all posts

Constraints, rules or relations - what's the difference?

Posted On Tuesday, October 8, 2019



In CPQ, there's a lot of talk about the way you describe how the products can be configured. Some vendors talk about constraints, some about rules, some try to get around it by calling it constraint rules (I'm looking at you Apptus!).

All in all though, who cares about what they are called? The more important question is how easy they are to set up and maintain.

Tacton calls it constraints. If you look up the word constraint, it's a limitation or restriction - which is actually a good way to think about it. Without constraints all combinations of all items in the product can be combined in any way the customer wants. With a constraint, you limit the way you can combine the product.

So if you have 100 rims and 100 tyres, and you want to describe the valid combinations of these - how do you do?

In Tacton, you try to figure out the natural law, of why they work together. So, why does a tyre work with a rim? Well, they obviously have to fit. So the width of the rim needs to match the width of the tyre. In Tacton language:

rim.width=tyre.width

And that's it. It's a natural law. It's true today, and it's true tomorrow. Most likely it's true in 10 years (if we haven't come to flying cars by then...). I want to point out, that usually, there's a number of constraints working together, so there's going to be constraints about diameters, materials, tyre patterns etc. But let's stick to one constraint for now.

So now you may be thinking, is there any other way? This seems to be the smartest way?

Yes, this is the smartest way - but there are many more ways you can do this. You can write relations, e.g.

tyre A works with rim A, B and D
tyre B works with rim C
tyre C works with rim D and E

This works. And sometimes this is the only way to describe the product (typically where things have to be tested to ensure it works). But this way stinks in general, because is the first relation true tomorrow? Maybe, maybe not. Who knows? So it becomes a very cumbersome way to describe things. Also, this is an easy way to get to 10,000 rules or more.

So, in summary. Ignore what the product description method is called. But do make sure it's easy to set up and maintain over time!

Tacton Peer insight by Gartner

Posted On Monday, September 30, 2019

Do you want to know what customers think about Tacton?

Gartner has a page were 18 Tacton CPQ-customers rate Tacton CPQ and there are many valuable insights shared.

Check it out at

https://www.gartner.com/reviews/market/configure-price-quote-application-suites/vendor/tacton


CPQ meaning

Posted On Wednesday, August 28, 2019

CPQ meaning


Definition

The meaning of CPQ is Configure Price Quote. The acronym is used to describe a system to support sales by guiding selling, governance of pricing and automation of document creation.

Configure Price Quote (CPQ) is the combination of techniques, strategies and technologies that companies use to manage and customize products throughout the customer lifecycle, with the goal of improving customer service and assisting in customer retention and driving sales growth.

CPQ systems compile product and pricing data across different channels, across the company, which usually include the product management, sales, marketing and R&D.

A CPQ systems can also give customer-facing staff detailed information on buying preferences thru a guided sales process.

CPQ has historically been used by larger enterprises, but the market is now moving toward small and medium sized businesses mostly due to cloud technology lowering the overall cost.

Components of CPQ


At the most basic level, CPQ consolidates product information, pricing and documents into a single “CPQ database” so business users can more easily access correct information. Business logic explains dependencies and ensure product correctness, pricing alignment and unified quote documents.

Over time, many additional functions have been added to CPQ systems to make them more useful. Some of these functions include automating various workflows, various calculations, advanced pricing structures and pricing models. Analytic capability gives managers the ability to track customer preferences and product inefficiencies based on information logged within the system.

Sales automation: CPQ tools with sales automation capabilities can automate customer interaction offering a 24/7-service for advance product enquiries. For example, as sales prospects come into the system, it might automatically send the prospects marketing materials, budgetary pricing indications typically via email, with the goal of turning a sales lead into a full-fledged customer.

Workflow automation: CPQ systems help businesses optimize processes by streamlining mundane workloads, enabling employees to focus on creative and more high-level tasks.

Lead management: Sales leads can be tracked through CPQ, enabling sales teams to input, track and analyse data for leads in one place. This is often combined with online presence of the configurator.

CPQ Analytics: Companies are keen to capture customer sentiment, such as the likelihood that they will recommend products and want to measure the overall customer satisfaction to develop marketing and service strategies. Companies can integrate CPQ data with other customer data from sales or marketing departments to provide a consistent view of the customer. Analytics in CPQ help create better customer satisfaction rates by analysing user data and helping create targeted marketing campaigns.

Geolocation technology: Some CPQ systems include technology that can create geographic sales campaigns based on customers' physical locations. This is important to make the product offering more adapted to the country or region. Geolocation technology can also be used as a networking or contact management tool in order to find sales prospects based on a location.


Types of CPQ technology


Some major players within CPQ systems are Apptus, Salesforce and Oracle. Other providers are popular among small to mid-market businesses, but these three tend to be the choice for large corporations with simple configuration problems. Some CPQ providers offer more advanced solutions for specific business segments such as Tacton that offers advanced CPQ with primary focus on the manufacturing industry.



The types of CPQ technology offered are as follows:

On-premise CPQ: With this system, the information about the company needs to be managed, controlled, backed up, and maintained using the CPQ software. With this approach, the company acquires licenses in advance rather than purchasing annual subscriptions from a cloud CPQ provider. The software resides on the company's servers and the user pays for upgrades. In addition, a longer installation process is usually required to fully integrate a company's data. Companies with complex CPQ requirements can benefit from a local deployment.

Cloud-based CPQ: Cloud-based CPQ, also known as SaaS (Software as a Service) or on-demand CPQ, stores data in an external remote network that employees can access anywhere, anytime. Sometimes an internet connection is established with a third party who oversees the installation and maintenance. The cloud's fast and relatively simple provisioning capabilities address companies with limited technological expertise or limited resources.

Companies might consider cloud CPQ as a more cost-effective option. Vendors such as Tacton charge by the user on a subscription basis and offer the option of monthly or yearly payments.

Data security is a major concern for companies using cloud-based systems because the company does not physically control the storage and maintenance of their data. If the cloud provider gives up the business or is taken over by another company, a company's data can be compromised or lost. Compatibility problems can also occur when data is first migrated from an in-house system to the cloud.

Finally, the cost can be an issue because paying subscription fees for software can be more expensive over time than with on-premise models. On the other hand, with a hosted SaaS solution improved functionality is constantly added to the CPQ platform.

CPQ examples in practice


Direct sales: Traditionally, data intake practices for CPQ systems have been the responsibility of sales and marketing departments. Sales and marketing teams procure leads and update the system with information throughout the customer lifecycle, and with the help of CPQ they gather data and revise customer history records through calls, meetings and technical support interactions. The CPQ system provides accurate pricing, correct product selection and impressive quotes.

Digital twin CPQ: CPQ can interact directly with customers thru a 24/7 business portal. CPQ gives the customer the possibility to investigate and understand the product offering prior to contacting a sales representative. This gives the company the possibility to find new lead thru automated channels and it give the customer a digital sales companion to guide thru the early phases of the sales journey.

Mobile CPQ: CPQ applications for smartphones and tablets are a must for salespeople and marketing professionals who want to access customer information and perform tasks when they are away from their office. Mobile CPQ apps use features that are only available on mobile devices, such as mobile devices. For example, GPS and voice recognition capabilities enable sales and marketing professionals to access customer information from anywhere.

Business-to-Consumer (B2C) Practices: A CPQ system in a B2C environment helps monitor sales as they go through the sales funnel and enables a business to solve any issues that may arise during the process. CPQ systems in the B2C market help improve the transparency of leads and thus increase the efficiency of the entire sales process.

CPQ challenges


For all the advancements in CPQ technology, without the proper management, a CPQ system can become little more than a glorified database in with product information is stored.

Companies may struggle to achieve a single view of the product portfolio. Challenges also arise when systems contain inconsistent data or outdated information. These problems can lead to a decline in customer experience due to lack of trust in the CPQ tool.

CPQ systems work best when companies are able to keep the product information up to date without involvement of consultancy services.

Multi-channel sales CPQ with ease

Posted On Wednesday, August 21, 2019



Multi-channel sales are made simple with CPQ. Managing multiple sales channels within the same tool can be troublesome but, this is a worry of the past. This might be a bumpy road, but in this article will sort out what you need to consider in order to support your multi-channel sales challenges.


What is multi-channel sales?



Multi-channel selling is the process of selling your products on more than one sales channel. Multi-channel management includes a mix of your own sales representatives, partners, OEM-suppliers and maybe directly on your website.

Selling on multiple sales channels increases your exposure to potential customers and will increases your sales opportunities. Multi-channel sales are also a way to minimize risk, especially for niche buyers and markets.

In the age of digitalization there is an increasing demand for online presence. In the time of of self-service sales, it’s important to minimize the product complexity and the potential errors due to misunderstanding. This is one of the main drivers for guided selling and high-level product guidance in the CPQ software.

Multiple sales channels give the opportunity to differentiate prices to match your service level commitment. The delivery terms and after-market commitment can also differ between channels.
The three main challenges in multi-challenge sales are the following;

Product offering per sales channel
Pricing and discounts per sales channel
Term and conditions per sales channel

Let’s dive deeper into each one of these topics and how a multi-channel CPQ can support these requirements.

Product offering and guiding your customer

The CPQ solution must be able to easily handle variations in the product portfolio. To start, not all products are sold to all markets. In the same way, it must be possible to control what options and features that are available for different sales channels. Obviously, all CPQ systems can manage this – the key questions is the effort to keep this kind of information up to date.

The second thing is the possibility to communicate and speak the language of the end customer. Different sales channels have different knowledge about your product. Where users in one channel care more about the overall performance of your product is in big contrast to a sales channel with very much focus on details. Here you want to keep the same “core product logic”, but be able to adjust what kind of questions to ask depending on sales channel.

A modern CPQ solution will provide effective tools to tailor general product logic to a specific sales channel.

Pricing and value


Price lists and discounts will most likely be different when you do multi-channel sales. Depending on the perceived value of the product and services provided thru a sales channel it’s very likely that prices are adjusted accordingly.

With multi-channel sales it’s possible to sell both highly standardized products and highly customized products at very different price points. A customer asking for higher level of customization will likely have a more expensive products as their next-best alternative.

A customer looking at a very standardized product might not expect to get the extensive know-how your company can offer and will therefore not value the product at the premium price point normally used. Selling a limited product portfolio thru a dedicated sales channel can be an opportunity to reach these customers that in other cases would have chosen a different vendor.
A modern CPQ solution will provide multiple price lists associated with specific markets or customer types in a multi-dimensional fashion.


Terms, conditions and appearance


Selling thru multiple sales channels will require different content and branding of the generated quotes and proposals. With multiple sales channels it’s possible to deliver exactly the same product but with different terms and conditions to match expectations within a certain sales channel or industry vertical.

A CPQ solutions can produce much more than just line-item prices; it can automatically create a full-blown proposal including customized 2D- and 3D-drawings. This is especially important in sales involving complex products or applications and can create a unique conformity in the quoting process.

The content is likely specific both to country and sales channel. For a global company it’s also important to support quoting in more than one language.  When it comes to multi-channel sales it’s equally important to align sales pitch as getting the language correct.

Bottom line


With modern CPQ software you can address all of the issues of multi-channel sales mentioned above with ease. With a CPQ solution it’s possible to deliver market and channel specific proposals, priced correctly and, of course, only with products available in alignment with your overall product strategy.

If you need advice on multi-channel sales CPQ, please get in touch.

Top 5 things you should read or listen to before starting your CPQ project

Posted On Saturday, July 20, 2019


Ok, so you're planning to implement CPQ at your business. You figured you should maybe do some reading to learn some tips and tricks. Where should you start?

We've collected the 5 most important things you should read or listen to about CPQ before starting your project.

1. Gartner's Magic Quadrant

Gartner publishes a research paper once a year in the form of a Magic Quadrant. The latest version was released in November 2018. The document can usually be downloaded for free from some of the vendor's web sites (Apptus).

2. Knowledge-Based Configuration: From Research to Business Cases by Alexander Felfernig, Lothar Hotz, Claire Bagley, Juha Tiihonen

This is an academic-styled book about configuration. We don't recommend you to read the whole thing, as it will gain you limited value for actually implementing CPQ. We do recommend chapter 2 for a brief history of configuration, chapter 6 for understanding of different technologies for CPQ and chapter 16-19 for valuable insights into implementations at different companies.

3. Product Customization by Lars Hvam
This is a really good book for preparing your company for a CPQ implementation, how to document your CPQ data before the implementation.

4. The CPQ Podcast

Novus CPQ is an independent CPQ analyst firm. Their podcast is focused on CPQ tools and processes, and will provide you with useful insights. They conduct interviews with many CPQ leaders and analysts.

5. Top 10 reasons why CPQ projects fail

Don't miss this blog post describing the top 10 pitfalls when implementing CPQ. Learn from mistakes made in other CPQ project, and avoid doing them in your project.

Top 10 reasons why CPQ projects fail

Posted On Saturday, July 13, 2019

The CPQ does not have backing from senior management

The CPQ process is spread all over the enterprise and touches many groups including sales, IT, engineering, marketing and order management. The planning and development of a CPQ solution must involve all of these organizations and must address the requirements of each group.

CPQ is a knowledge-based tool, and it's never better than the actual knowledge and data in the tool. Usually the product expert or senior sales rep who is too busy working with deals, is the person most needed for this type of project.

Backing from senior management is essential, to allow for prioritization of the implementation of the CPQ over the day-to-day business tasks for all these organizations, including the busy experts.

Scope creep

Scope creep is an uncontrolled growth in a project’s scope after the project has begun. This is very common in CPQ projects as you learn about and define processes that quite often were never documented before. 

This is why it's important to define project objectives early in the project, and refer to them as much as possible when deciding on changes to the project. It's also important to have a defined change control process, with a steering group that has backing from senior management. 

There's no easy solution to scope creep, but being aware of the problem is essential. 

Aiming at 100% of sales done with CPQ

If you ask an engineer working for an elevator company how many floors the elevators can have the most, he might answer 100. However, maybe 95% of the sales have fewer than 10 floors, and all elevators above 20 floors require some engineer-to-order? So, does it really make sense to allow for 100 floors in the configurator?

We recommend aiming at 80-95% of the configurations done automatically by the CPQ software, and allowing for some manual work for the rest. The reason is that there is typically an 80-20 rule in regards to implementation, where the last 20% of the configuration complexity will take 80% of the implementation time of the tool.

It is much better to focus on 80% of the sales initially in the project, and to make sure there is a ready process for the other 20% of the sales. If the project is a success, why not aim higher in the next phase of the project?

Bad data quality

A good sales configurator will use your product data existing in current systems. But how good is the quality of that data today? Do you have an organization in which all knowledge is stored in people’s heads and documentation is missing? As stated above, the output from the configurator will never be better than the input, which means you need to make an inventory of your product data and documentation.

You might need to structure and systemize your product data before selecting or implementing sales configuration software. If you don’t, the implementation will probably take much longer than expected, and changes of the tool will be done multiple times back and forth before being able to release.

Too few or too many integrations

Implementing integrations take time, whatever the IT-guy will tell you. Even a standard integration may require some adaptation because the software you are already using and want to integrate to is probably customized. Adding integrations to all your surrounding tools will add up to a hefty budget, and with some delays added, your project might get stopped before it is released.

Hence it is important to prioritize integrations, and to allow for manual integration in the early phases of the project. Do your prices reside in ERP? Are they only changed every 6 months? Can you export them to Excel initially, to get the project going? If you can get a manual integration to work, try to push the implementation work to the future.

However, from a similar perspective pushing integrations to the future which require a large amount of manual work is also a bad idea. The manual work will cost money and may cause update errors.
When selecting a vendor, make sure they have standard integrations to the essential systems you need to integrate to. Focus only on crucial integrations in the early phases to allow for a quick return on investment. Add the additional integrations in later phases, and do separate ROI calculations for the specific integrations.

The configurator cannot solve the configuration problem

Configuration is a complex subject. To put things into perspective; the number of atoms in the universe is estimated to be 10^80. A configurable product with 100 choices, and 10 alternatives for each choice has 10^100 combinations.

It is important to select a configurator that is able to solve complex configuration problems, an incorrect selection of sales configurator may lead to being force to simplify the configuration problem too much and hence giving incorrect configurations or prices to the sales person.

Too much focus on tangible products

A typical product does not only consist of hardware, but also other intangible products. It’s not uncommon for companies to have higher margins on services, spares and extended warranties. These products should not be forgotten when implementing the configurator – because without these the configurator is not complete. And if the configurator is not complete, the deals will either be missing these high margin products, or the sales will simply not use the CPQ due to the missing products.

The CPQ isn’t easy to use

If the solution is difficult to use or just slow – it will fail because no one will use it.

Your solution should simplify a complex process, not replace one complex process with another. There are often tradeoffs in functionality when simplicity is the primary goal. Make sure your CPQ is achieving a good balance between these two elements.

The CPQ doesn’t focus on the key users

CPQ projects tend to be initiated by all other departments at companies except sales, because sales are too busy working on quotes for customers. Hence the key tasks of the tool often misunderstood and not implemented properly.

The most important task of a CPQ is to help the sales person create a correct, competitive and valid quote quickly – and what that means exactly is different for different companies.
Makes sure key people from the sales department are involved in the selection and development process to insure that their requirements are covered.

No focus on data maintenance

In most configurable products, the master data changes continuously. New options are added and old ones disappear, new suppliers emerge, prices change, etc. Often, these changes are made on a daily or weekly basis. Typically, these changes are managed in ERP or PLM systems by people not involved in the CPQ maintenance.

It's vital that master data maintenance requires minimal amount of changes in the CPQ software. It is also equally important that an organization is set up to be responsible for the maintenance of the software, because with even a minimal amount of maintenance it still needs to be tested and validated.

Configure Price Quote Software

Posted On Friday, July 5, 2019


CPQ is normally a cloud-based software that helps sales teams to automate their quotation routines and manage interactions with clients.

Configuration

The C in CPQ stands for configuration. This means keeping track of all the logic that goes into a complex product. Certain options are required, others can not be combined.
The number of permutations is normally enormous. Even simple products often have millions of possible ways of combining a product. This means that the maintenance-effort required to keep the product logic up to date is one of the most important factors when evaluating the configuration engine.

Pricing

The P in CPQ stands for pricing. The next set of logic to master is the rules and constraints regarding prices and discounts. Certain items come cheaper as a bundle, some item are alliable for bigger discount while other can not be discounted at all.
This means that workflow and organizational hierarchies are needed to do pricing effectively. Keeping track of prices and the possibility to escalate the sales opportunities to management is all part of pricing.
Support for different pricing models, pricelists and purchasing agreements are essential in pricing.

Quotation

The Q in CPQ stands for quotation. Texts, specifications and images all come together in an advanced template that dynamically adjusts the quotation for each customer.
The ease of use and flexibility of the document generation is a very important factor when evaluating how the quotation can meet your business needs.

For a global company it’s often a requirement that both configuration and quotation must natively support multiple languages.

Vendors

According to analysts the leading vendors in CPQ are Apttus, Oracle, Salesforce and SAP. Niche players in manufacturing are PROS, FPX and Tacton. 

Configurator challenge

Posted On Friday, March 8, 2019


The configurator is one of the more difficult parts to evaluate in a CPQ-solution. The most straight forward way is probably to set up part of your real product rules in the CPQ system. However, this exercise is time consuming if you are evaluating multiple vendors. You are also likely to get questions from the vendors which in turn consume even more time.
It is not uncommon to try to solve this by instead giving the vendors a general problem and ask them to solve it. The travelling salesman problem is one typical example, however these problems tend to be completely unrealistic and have almost no relation to real configuration problems.
Below is an example of a configuration task that can show you how the configurator works. The main complexity with this challenge are all the ‘or’ statements which are very common product rules problems, but that are difficult to solve with a simple configurator.
Please contact us to get the expected results for the scenario.
Configuration task 1: 
Variables:
  • A: integer between 1 and 5
  • B: integer between 1 and 5
  • C: integer between 1 and 5
  • D: integer between 1 and 5
  • E: integer between 1 and 3
  • F: integer between 1 and 9999
  • G: integer between 1 and 9999
  • H: integer between 1 and 20
Rules:
  • Rule 1: A=2 requires D=4
  • Rule 2: B=1 requires (A=1 and E=1) or (A=2 and E=1)
  • Rule 3: C=1 requires (A=3 and B=2) or (A=4 and B=2)
  • Rule 4: C=2 requires (A=3 and B=2) or (A=4 and B=2)
  • Rule 5: C=3 requires (A=2 and B=1) or (A=3 and B=2)
  • Rule 6: C=4 requires B!=4
  • Rule 7: C=5 requires D=3 or D=4 or D=5
  • Rule 8: A=2 requires G=1 or G=2
  • Rule 9: D=3 requires F=3 or G=4
  • Rule 10: A >= F
  • Rule 11: E >= F + G
  • Rule 12: H = A * B

Publicly available CPQ examples

Posted On Saturday, February 2, 2019


Configurators built using CPQ software :

Aritco (Animech Technologies)
Bennington Marine (Verenia)
B├╝rkert (Tacton)
Demag (Camos)
Ebara (Intelliquip)
Festo (Camos)
Grundfos (Configit)
John Deere (FPX in the old version, Configit in the new version)
Maxon motor (Camos)
Mercedes-Benz Trucks (CAS Software / SAP)
Piab (Tacton)
Scania (Tacton)
Tuff Shed (KBmax)

Demos by vendors:

8-queens problem (Configit)
Bike/Lawn Mower/Etc (e-Con Solutions)
Cabinet Configurator (Configure1st)
Hi-tech, SaaS and IT/Managed Services (CallidusCloud CPQ)
Scissor lift/Cupboard/Etc (DriveWorks)
Sudoku (Tacton)

Notable configurators built in-house:

DAF Trucks
International Trucks
MAN Trucks
Montech AG
Renault Trucks
Schindler
Siemens AG
Volkswagen


Other configurators may be found in the configurator database, however most of them are very simple B2C (Business to Consumer) products.

Common abbreviations explained

Posted On Wednesday, December 19, 2018


Below is a list of frequently used abbreviations used in relation to CPQ:

  • ATO – Assemble To Order;  is a production approach where once a confirmed order for products is received, the products are assembled.

  • BOM – Bill Of Material; describes the different components/articles that together create a product. A BOM for a bicycle, for example, consists of all the parts that make up the bicycle: the frame, the saddle, wheels, and so on.

  • BTO – Built To Order; sometimes referred to as make to order (MTO), is a production approach where once a confirmed order for products is received, products are built.

  • CAD – Computer Aided Design; is the use of computer systems to assist in the creation, modification, analysis, or optimization of a design.

  • CPQ – Configure, Price and Quote; the complete software suite for configuring, pricing and quoting your custom product.

  • CRM – Customer Relation Management; the software suite for managing a company’s interactions with customers, clients, and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support. 

  • E-BOM – Engineering Bill Of Material; the list of engineering components/articles in a product (see BOM). Typically used as an complement to S-BOM and M-BOM.

  • ERP – Enterprise Resource Planning; the software suite to manage information across an entire organization, including finance, manufacturing and sometime sales and service.

  • ETO – Engineer To Order; a product in which after an order is received, parts of or the design is done uniquely for the specific customer.

  • M-BOM - Manufacturing BOM; the list of components/articles required to manufacture a product (see BOM). Typically used as an complement to S-BOM and E-BOM.

  • MTO - Made To Order; see BTO (Built To Order)

  • PDM – Product Data Management; typically an IT-system containing information about the product like CAD-drawings etc.

  • PLM – Product Lifecycle Management; in essence the next generation of PDM (even though vendors of PLM like to differentiate)

  • Sales-BOM – As Sold BOM; which is the list of component that are sold to a customer. These components are broken down to a E-BOM.

  • SKU - Stock Keeping Unit; a distinct type of item for sale, often the items included in a S-BOM. Typically used as another term for article or component. 
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