Eight Things to Evaluate in a CPQ Vendor

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Selecting the Right CPQ Vendor: What to Evaluate and How to Choose

Think in terms of defining the best CPQ software vendor as being the one who is big enough to care for you and small enough to care about you.

Configure-price-quote (CPQ) software vendors come in all shapes and sizes. How do you select the right CPQ provider for your enterprise?

You will spend considerable time looking at features and benefits associated with the best CPQ system for your enterprise. You should also spend some time looking at the software vendors themselves and the folks who represent them.

Someone once told me that the most important factor in picking out any vendor or supplier is likability. How much do you, the buyer, like the people who represent the seller?

It may be somewhat counterintuitive, but actually, that is far better selection criteria than just picking out a name brand or going with a current supplier who has an offering that more or less aligns with your requirements.

You typically find likeability in relationships that feature trust, similarity in worldview and open, effective communication. These three factors are the basic underlying elements that make up six more tangible evaluation criteria.

Let’s take a look at eight specific factors you can actually include on your CPQ software vendor selection checklist.

Eight CPQ Vendor Evaluation Factors

1. CPQ Market Footprint

Like most software vendors, CPQ software builders see their markets in terms of geography, vertical space and operating environment. Each of these is critical to how they design their solutions and how they align with their existing users and prospects.

If, for example, your enterprise offers products in China and Norway, you should look for a vendor that also sells into those markets. This will provide assurance that they understand the localization requirements for those specific markets.

The vertical element is, perhaps, more important. Government sales and selling into certain vertical markets, such as medical or automotive, all have unique requirements. Vendors that understand these requirements will undoubtedly understand what your challenges may be in that regard.

The operating environment is a potential showstopper. If your operation is strictly tied to a single operating system, you may be limited in terms of which venproducts will run successfully within your environment. The same is true for an on-premise versus cloud-based orientation. Both offer advantages and both tend to be somewhat mutually exclusive in terms of product capability.

2. Size of the CPQ Vendor

Yes, CPQ vendor size matters. You want to pick a CPQ vendor that takes your success seriously. You also want to pick a vendor that can back its product and grow successfully.

Think in terms of defining the best CPQ software vendor as being the one who is big enough to care for you and small enough to care about you.

3. Software Company History

Does the company have one, or is this a new venture? New ventures are not necessarily bad, but you should consider your own ability to take on some risk when working with a start-up software company. Long-term history is one very good indicator of company success, especially in the software business.

The developmental path of technology is less of a continuous smooth line and more of a series of smooth lines that link technological revolutions. Mainframe to mini to desktop to mobile and so forth. Surviving those periodic paroxysms is a great indicator of an innovative and durable culture and vision.

4. Vendor Strength

Strength can be defined in many ways. Financial strength is obviously important, but there are other elements with which to measure the strength of a software provider.

The public-versus-private question is always worth exploring. Privately held companies offer advantages that are frequently overlooked with the most obvious being the absence of the need to satisfy quarterly and annual stockholder revenue expectations.

Private ownership can mean an extended future vision that may be lacking in the publicly held company. This may be reflected in the ratio of profit to R&D spending.

Product stability is another strength metric that is important to buyers. In the software world, products are maintained via updates that keep them current with environmental changes, security requirements and other external factors. Strong companies turn out these sorts of updates on a regular basis.

CPQ systems and automated proposal-generation systems need to interface effectively with numerous back-office systems. Maintenance of that kind of complex connectivity across multiple platforms requires experience and expertise.

Functional improvements are also delivered, sometimes as part of a maintenance release and sometimes as an add-on option for purchase. Regardless, both should be forthcoming on a regular basis.

5. User References

No one wants to be the first user of a tactically important or strategic product. At least if this is a choice, it should be made with open eyes and be a realistically assessed risk.

For most companies, this comes down to talking with actual users of the software. User companies that have some degree of commonality with your own are preferred.

References in the early-stage buying cycle may take the form of user stories. Later on, you will want to speak one-on-one with a real customer. Keep in mind that references that happen to relate an account of some issue or failure should not necessarily disqualify your vendor.

The important question is how did the provider respond to the issue? Knowing how the provider responds to a critical issue is probably more instructive than hearing repetitious stories about how perfect everything is.

6. Software Vendor’s View of the Future

Finally, you should ask the software provider to share with you its plans about the direction of the company and the CPQ software product you are considering. It’s helpful to see the vendor’s expectations for the next five to 10 years.

If the vendor’s anticipated path significantly deviates from a direction that aligns with your company’s, be careful about depending on the provider for an extended relationship.

These types of changes may take the form of M&A activity for a start-up or decommitting from a technological or market orientation that’s important to your company.

7. CPQ Provider’s Revenue Outlook

Equally important are the software vendor’s goals in terms of revenue. Is revenue and organic growth important to the vendor? If not, why?

How does the vendor’s future vision align with your own company’s vision of the future?

The features of the CPQ software selected are essential to making a smart choice; however, the vendor is very much a critical part of that choice, as well.

8. Vendor Likeability

Finally, don’t forget about vendor likeability. It is important. The relationship between vendors and customers usually includes some difficulties and, perhaps, even some crisis.

In those times, it is especially important that you feel comfortable with being direct, open and honest with your CPQ software vendor. You should also have enough confidence in your CPQ vendor to expect the same in its communications.

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