How Does CPQ Affect Back Office Systems?

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Directly connected to many back-office systems, CPQ (Configure-Price-Quote) supplies and accesses data in real time to execute its pricing and confirmation functions and to enable numerous processes associated with order processing and order management.

CPQ systems suffer from a degree of misunderstanding. There is a perception that CPQ stands alone, disconnected and self-contained, either within the sales organization or even on the sales rep’s laptop. In reality, CPQ is critically linked to your order processing and management software systems. CPQ is more than a list of product SKUs and associated prices; it’s an intelligent system driven by real-time data.

CPQ is an organization-wide system.

CPQ is Data-Driven

CPQ requires current and accurate data to fulfill its tasks within the sales order process. This is key to the Sales Enablement mission.

Sales reps work with prospects to address pain issues that may be mitigated by the products being sold. This is typically accomplished by walking through a usage questionnaire, which drives the selection of specific parts, options and configurations that will best serve the needs of the customer.

As configuration and order processing is engaged, CPQ also keeps track of the costs associated with the product as it is configured. This requires access to the official pricing system and the tables related to SKU, description and price. These may be incorporated within any number of systems. Finance typically maintains SKU tables and list prices that feed other systems to facilitate the management of orders, calculation of discounts and eventually profitability.

While the enterprise may maintain multiple price lists, there is typically one version of the truth with applicable discounts or elevators to address assorted customer classes or localized pricing differentials. CPQ must be provided with the most accurate pricing available. Proposals are generated from within the CPQ system, so the pricing must be bulletproof.

Additionally, product management and/or engineering builds specific product configurations to address specific needs. This information is built into the rules engine driving CPQ. Reps and prospects are prevented from conjuring up their own configurations based on out-of-scope needs.

Prospect and customer information is also key to CPQ and effective order processing software functions. CRM feeds this information into CPQ to facilitate the correct identification of existing customers, contracts governing the customer relationship and similar information.

CPQ Drives Data for Other Systems

Just as critical as the data supplied to CPQ from various back-office systems is the data that CPQ in turn supplies to those systems and others.

Order processing is typically initiated through the order management software. Customer data, products ordered, pricing and shipping requirements are all required to correctly and accurately handle the order. This data originates in CPQ. Passing it automatically into the order processing software reduces keyboarding errors and other mistakes. A perfected configuration turns into a perfect order.

Once in the Order Management System, or even earlier, directly from CPQ, information can move into the production systems to provide advance inventory requirements in terms of parts, products or supplies required to fulfill the customer order. The production job can be scheduled, logistical planning completed and acknowledgments produced for everyone involved in the order.

Finance will use the same data, along with the shipping data to initiate billing and recognize the revenue associated with the sale. Additionally, revenue and sales data will drive commission accounting and maintenance of the monthly books for performance reporting purposes.

CPQ Relies Upon Back-Office Data

So, CPQ does depend on back-office systems for the data that drives its functionality. But, at the same time, CPQ can supply data to the back office that facilitates earlier production planning, more accurate inventory and better revenue forecasting.