The selection process for choosing a CPQ solution vendor is not unlike most software selection processes. However, there are several unique factors that should be remembered when selecting a CPQ provider.
First, there is a tendency to think of CPQ as a point solution; a tool handed off to Sales for their use and to their singular benefit. Restricting CPQ in this fashion is a sure way to limit the benefits associated with CPQ and possibly even guarantee its failure within your enterprise.
CPQ is not simply a standalone tool for your sales team. In most cases, the solution will extend into, or touch, many functional areas and systems within your organization. These will include financial systems and processes, order management systems, supply chain management systems, inventory tracking, production scheduling, distribution and after-sales support.
The good news is that most of these processes will benefit from a CPQ solution as well as contribute to its success.
Finding a CPQ solution partner
The process of selecting a CPQ provider will need to start with a deliberate and thorough evaluation of many alternatives and ultimately multiple CPQ companies. The selection process should reflect the fact that CPQ is indeed a major system crossing over many functional borders within your company.
Your selection process should include the following major elements.
- A selection team – Your team should be made up of stakeholders and represent all functional areas affected by the system. These would include internal CPQ experts, functional beneficiaries, end-users and potential support elements (IT).
- Executive sponsorship – Cross-functional systems frequently encounter resistance from those who are potentially affected by the new system or those who feel threatened by it. An executive champion can help cut through this resistance and keep the process moving.
- Common vision of success – The selection team will need to identify and set forth specific goals and expectations and obtain buy-in from all stakeholders. Without agreeing on what success looks like in advance, you will not likely achieve a successful outcome.
- Functional requirements – The team will need to identify the functional requirements for any system evaluated. These are specific features to be included in the system selected.
- Vendor requirements – Finding a CPQ solution partner means you will need to look beyond the product offered and also consider the CPQ company itself. Is it a big company or a small company? Does it resell or own the product being offered?
- Cultural/environmental requirements – How well does your company mesh with the company you are engaging with? Do you get along with the vendor reps? Do they seem interested in your success?
Special Considerations Unique to CPQ
The elements identified above are common to most product/vendor selection processes, but there are other elements to consider that are more specific to CPQ. These are critical, and the decisions made with regard to these elements will have a large impact on the ultimate success of the selection process.
Most of these elements are not so much a matter of good versus bad as they are specific features you will want to consider in relation to your stated vision and needs. These will include:
- Vendor specializing in CPQ or one that offers CPQ as a part of a larger system – A number of the major business automation solution providers see CPQ as a part of a larger puzzle. It is offered as one of many functional modules designed to integrate with a much larger system such as ERP or sales automation and e-commerce. Other vendors build their CPQ offerings as a self-contained system that includes interface hooks to allow the system to integrate with and work within your unique environment. Both can work for you, but you should be aware of which type you are buying and how it will impact your implementation and rollout within your organization.
- SaaS/cloud offering or a licensed, on-premises software package – This can affect how flexible CPQ will be as a solution that’s unique to your needs. It also impacts the investment you will need to make in terms of implementation and ongoing support. Again, this is not a right or wrong choice, it is a choice to make based on your needs.
- Vendor market specialization – Some market verticals are more demanding than others in terms of special functionality or emphasis. Electronics and high tech are frequently challenged by low margins driven by brutal competitive realities that are unique to that sector. A&D requires agile CPQ that can handle the government acquisition process and revenue recognition associated with huge projects delivered over multiple years. Make sure your vendor is experienced in your vertical.
- Scalability and functional breadth – Complex product configuration and complex pricing requires robust capabilities in terms of configuration variety and variability. If you are simply offering multiple colors and three product sizes, you may require less-sophisticated product configuration. Your growth plans, current and future, need to support multiple currencies and country-specific pricing, and product versions should also be considered. Are you using CPQ for a single product, or will it be deployed across multiple business units that support many different complex products?
- Training, rollout and implementation – This is critical to any successful software deployment. How much external assistance will you need to bring CPQ online? Beware of turnkey promises; there are vast differences between installation and implementation. You may need to embark on a concerted effort to “sell Sales” on embracing CPQ. If your sales team is used to elaborate sales processes, it may be beneficial to document these processes in detailed sales workflows and see how effectively the candidate CPQ solution can accommodate your needs in this area. Finally, how will the system be maintained and supported over the long term? Is IT on board with keeping your CPQ solution current within the operational environment in your company, or should you seek some external solution?
Don’t Forget the Obvious
There are many vendors and many products available to address your complicated product configuration needs. The vendor evaluation is just as important as the product itself. Ask for customer references, and follow through with interviews of customers that use the product you are considering. Look at your vendor in terms of longevity and stability. Are they financially sound? Are they likely to be subject to M&A actions?
Look at the market reach for each vendor you are considering. Are they located where you are located or are planning to locate? This applies to geographic and market vertical orientation as well.
Finally, pick people with whom you are able to work. Do you like their sales and support people? Do you trust them, or do they make you a little wary? Software implementations are not typically without some pain. Some will even involve crisis management and require great effort in a tension-filled environment.
Be sure your vendor is a real partner; a resource you can depend on when things are not perfect. CPQ offers so many benefits and advantages. Make a smart choice, and you will have a system that will drive growth, increase profitability, ensure happier customers and promote a more efficient sales operation.