Month: March 2020


History of CPQ

CPQ, or software to Configure, Price and Quote a product, has been around for a while. I remember my first CPQ was built on VB platform, and used mostly to perform guided selling for very large projects (multi-million dollar). Later, when I started rolling out BigMachines back in 2009 (now, Oracle CPQ) to replace our home-grown software, we started the cloud-based CPQ journey. Over time, I got to work with many of such platforms, small niche players to mega enterprise software. Anyway, here is a brief history of CPQ.

Early CPQ Solutions

“CPQ technology was born in the 1980s in the form of the “configurator,” a rules/logic-based system used to ensure customer specifications didn’t conflict with enterprise resource planning. Eventually, the use of the application shifted toward CRMs and became more of a front-office and sales application.

When ecommerce started to gain momentum, configurators became a part of interactive selling, and when a solution for the quote-to-cash problem was needed, a more modernized CPQ application started to come into its own.”


“Come the early ’90s, sales force automation (SFA) was really starting to catch on. More and more companies were beginning to automate many of the arduous tasks that were once dependent on humans. At this point, configurators were being brought to the front office.

By the late ’90s, technology, in general, was advancing by leaps and bounds and eCommerce began gaining momentum. Configurators had grown to be a part of interactive selling.

When the early 2000s rolled around, many small to mid-sized sales organizations found themselves needing a solution for the quote-to-cash problem. At the time it was still fairly laborious and they needed a way to streamline and automate the process even more.”

The CPQ concept officially caught on and gained traction in 2010 when Gartner Research created a report where they stated that “CPQ systems typically include pricing engines, proposal generators, quoting systems and rules or constraint engines, and are complemented by approval and authorization workflows.”

Since then, CPQ continues to gain more and more attention – and there are no signs of it slowing down. Sales organizations understand the need to scale their sales processes and are using CPQ solutions to deliver a personalized sales experience while still controlling time and cost. ”



CPQ Roll-out: A Change Management Approach

CPQ Roll-out: A Change Management Approach

CPQ, or Configure Price and Quote platform is a sales enablement tool, with the goal to help the companies create commercial offer of highly configured and complex products. In most cases, such platforms or tools incorporate complex product logic, pricing calculations, cost information and business rules in a centralized and automatic platform. The results of deploying such tools include improved productivity, better revenue, pricing accuracy and better sales effectiveness. CPQ also helps the sales and commercial team by guiding them with right questions and recommendations, which speeds up the commercial process itself.

After the roll-out of a CPQ program in the company, the first priority of the business leader or the program leader is to improve adoption. Adoption can be defined in many ways, mostly it refers to the % of the users using the platform; though, some would argue over entitlement, some would fuss over lower numbers. In the end, adoption, to its core meaning, answers the question: “Have my users started to use the CPQ platform yet?” After a few months of going live, the program leader or business leader also needs to prove that the CPQ program is actually adding value to the business. Sometimes, the journey towards acceptable (or, ‘good’) adoption or realization of business benefit (revenue, productivity, cycle time etc.) is a smooth one; more often than we hope for, the first journey does face with some roadblocks though the benefits of CPQ program are always accepted by all parties.

What can we do make the journey a bit smoother for all of us? That’s the question we always ask ourselves before go into the next CPQ project. There are always a lot of preparations needed, and we can discuss those at another time. When we look at the CPQ program from our user point of view, we are actually asking them to change something in their working days. For commercial team, it means they have to learn and use a new system, without their deadline for the work changing. For channel partners or external teams, it might mean going through a new route to get the quote. For our business stakeholders, it is also a change in roles & responsibilities, accountability and commercial deliverables. Consider such changes, let suggest an approach which might help us out a bit for sure. Let’s treat a CPQ program roll-out as an organizational change as well. It doesn’t impact other plans and deadlines of the project, but it better prepares our users so that they can accept the CPQ with open hands.

When leading a major change project, it is important for leaders to recognize that the change process goes through stages, each stage is important, and each may require a significant amount of time. Let’s use John Kotter’s framework for change to navigate the CPQ roll-out driven change process.

  1. Light a fire for change. The customers of CPQ program have to ‘believe’ that it is time for something better than their old program or Excel/Word method of creating configurations and pricing, they have to ‘feel’ the need and urgency for the change. At the very early stage of CPQ program kick-off, one action we always, and must, take is to get broader buy-in from the users. This can be accomplished via voice of customer activities, frequent communications and doing a small-scale pilot. One note of suggestion here, while trying to convince the users to the idea of new-generation CPQ platform, ‘Appreciative Inquiry’ (where the analysis is done from a positive point of view) is more effective than gap finding approach.
  2. Get the right people on board. In this complex organization world, and the numerous teams and functions a complex CPQ platform will touch, it is clear that no single person can implement a change of this scale. For successful change, we need to identify the right people for the CPQ roll-out project team. They include the champions with enough power to make sure the needed changes happen and help the CPQ project team to overcome the roadblocks, as well as people who can contribute to the success of the project and the acceptance to the users.
  3. Paint a compelling picture. Future users of CPQ platform need a clear vision and strategy to inspire them to believe that a better CPQ platform is possible and they can realize benefits by supporting it. The energy and the enthusiasm of the users can work as the positive support which will sure to contribute to the future adoption effort post go-live.
  4. Communicate, communicate, communicate. Changes, especially the ones which will alter the day to day work of the users, throw everyone into doubt and uncertainty, and people have difficulty in listening well to the logic when they feel anxious. Frequent communication does not only alleviate the anxiety of the potential users waiting for the new CPQ platform to go live, but it also helps the program leader to shape the new behaviors needed from the users to harvest the potentials of a new CPQ platform.
  5. Get rid of obstacles and empower people to act. Successful change leaders enable the people with time, knowledge, resources and discretion to take steps to make the change happen. For any given CPQ projects, there will always be some obstacles. One goal of good CPQ project planning is to anticipate such roadblocks, unfortunately such sometimes come with good experience as well as knowing the business itself, take actions to remove them as early as possible. Good thing is that empowering the project team who represent the end users to dictate the changes they desire, helps out in wiping out most of the roadblocks as well.
  6. Achieve and celebrate quick wins. Unless the users of CPQ platform see positive results of their efforts, energy and motivation can wane over time. To keep the momentum going, the CPQ project should never be a long-drawn project with years to see anything useful. Rather, I recommend that the whole project be broken into smaller phases, which will enable the users see the benefit, albeit not to the full capacity yet, and keep the change process moving forward. The release of each phase will provide the highly visible and successful short-term accomplishment boosting the credibility of the CPQ project.
  7. Keep it moving. Even though initial phases or pilots of CPQ project may yield some quick wins, the full benefit of any CPQ project is dependent upon its completion to the fullest. It’s important for the champions and project leaders to build on the credibility of initial go-live successes, and keep the CPQ project moving forward.
  8. Find ways to make the changes stick. Another common pitfall of CPQ project is the failure to take necessary steps to keep the project sustained after going live. It is imperative that the project leaders look for ways to institutionalize the new approach of using CPQ platforms for day to day activities, striving to integrate the new values and patterns into work habits. The credibility of a CPQ platform is highly dependent on the accurate and up-to-date data, the process needs to be in place to make sure these are taken care of.

While each CPQ project is unique, and sometimes these stages of change process may overlap with each other, it is important for successful CPQ project to ensure the key steps are followed properly.


CPQ – A Key to Successful Implementation

CPQ Functions

When we start a new CPQ project, the excitement is always high in our mind. CPQ brings in changes to how we work, it helps us move into new digital era, productivity gain, shorter cycle time, increased revenue, digital thread, it’s the ‘trend’ of using cloud app instead of old Excel files to get the quote out the door! I have seen CPQ vendors focus a lot on getting the project started, making sure the project gets completed and then moves on to the new project. For the business and stakeholders, the life begins after going live…they monitor if the investment in CPQ is successful and if it is delivering the promised benefits or not! Some projects manage to continue for many years after going live, providing a steady stream of revenue to the CPQ vendors and the implementation consultants; while some projects get abandoned within one or two years of going live, business leaders reluctantly writing the cost down as an unforeseen loss. Analyzing such projects in detail, we can conclude that the success of a CPQ roll-out depends not only on its ability to provide continuous benefit to the business, but also on its ability to scale and sustain

In this paper, let us focus on a concept that sometimes even the most experienced CPQ folks forget to consider properly. It is called ‘Support & Sustainment’ or ‘S&S’ in short in our world. In almost all the project plans and cost estimation I have seen from our CPQ vendors, they always add certain cost and resource need to keep the system supported after going live. What we can do to make it a truly scalable and sustainable CPQ program then? The answer is a buzzword called ‘CPQ Eco-system’. When the CPQ Project includes all necessary cost, resources and process changes needed to make the Eco-system work, it ensures that the business leaders know what they are paying for and what they are getting out of it, it ensures IT Leaders staff their team properly while Finance leader becomes aware of a continuous cost & benefit element.

What are the main elements of a successful CPQ Eco-system, could be dependent upon the size of the program, criticality of the program and the business’s ability to fund it properly. In general, I believe these should be included, either as a whole or in part, in any CPQ post go live program:

Business Owners: Business owners, or Functional owners, are the owner of the platform in terms of its functionality, benefit and content. They are the guys who decide what to add to the system, how to design them and how to train the users. They are also responsible for ensuring the CPQ program provides continuous benefit to the business, thus ensuring it is still an ‘asset’ in finance term and not an overhead expense. Business Team generally includes Product Owner or Functional Owner, subject matter experts, Champions and Stakeholders. Without a strong Business Owner team, with clear Content Owners identified, CPQ program has less chance of success.

Solutions Architect: Even though some smaller companies may ignore this role, but this guy alone could turn a failed system into a working solution or vice versa. The SA’s role is to keep up with ever changing CPQ capabilities and help business design in a scalable & maintenance easy systems, that will help the CPQ platform to add more content, without slowing the system down. Investing in Solutions Architect role will always pay off.

Scrum Master or Project Manager: As the world turns, only the business which can change with the market has better chance of staying competitive. This actually has ensured that we never run out of changes in CPQ, including new products (NPIs), new updates and new pricing. A good scrum master/PM manages the developer team well, ensures the development is completed on time and without issues.He works as the bridge between the developers and the business folks, he or she is the coolest guy in the bunch while strong as steel while it needs to be. A good PM/SM comes with experience in this field, CPQ is unique in many ways, such project managers know how to make it work.

Developers: Yes, not much to say, we need developers. After working with hundreds of them, I have come to believe that the developers sitting near the business team, are 2-3 times more productive than the ones who are on the other side of the ocean. Of course, a business needs find a balance between two options!

Quality Team: This is a common area that gets overlooked by many organization in terms of CPQ. The reality is that, if someone wants “0” or “near-0” bugs in production, Quality Team is the answer!

Migration Team: Another team commonly overlooked by many projects, individual folk(s) assigned to migration ensures the system integrity, keeping the production free from too many fingers (including greasy fingers which make code errors!) during migrating changes from lower CPQ sites to the production. Following this procedure ensures that the product is always free of any unfinished work, unwanted bugs or hiccups.

Operations Team: Last, but not the least, Operations Team is our interface with our users. They tackle day to day issues, including enabling users, fixing minor production issues, supporting users with simple guidance etc. Again, not all developers can be successful in Operational Role, a good experience and strong sense of ‘responsibility’ and ‘customer service’ are needed here. As they are our first point of contact for users, they become a key factor in adoption and benefit realization. 

Getting all parts of a CPQ eco-system doesn’t automatically guarantee CPQ success. Just like a true eco-system, roles & responsibilities need to be clearly defined, hand-off between teams need to be clear and transparent, overlapping roles need to be eliminated. Experience plays a big role in here. Most of all, CPQ eco-system needs to be a role model for team work in matrix organization, it is never an one man show in CPQ world!

(Special thanks to Kiran Yerneni and Pramod Sonawane for the review comment and content—-it’s always a team work!)


Commercial Platforms in Cloud Advantages

Have you seen ‘Floppy Disk’?

Folks who have been around in IT for more than a decade, may still remember the old day ‘floppy disks’. During my early years in university, I developed a passion for programming. After a month or so of hardcore coding, one evening, I typed a wrong command ‘Format C:\’ instead of ‘Format D:\’ in a PC with floppy disks! Even though I took the floppy disk out immediately, but the damage was done and I lost all of my months’ worth of codes.

Copy 500MB of images to where?

While being part of international Commercial Excellence team, I was sent to Jakarta to prepare responses to a complex RFP (Proposal/Bid), with 10 or so of my colleagues. During the preparation, we had to get hundreds of pages of diagrams ready for a Telecom client. Now, those diagrams were big and sitting in a server in China and we were sitting in Jakarta; we ended up in spending 48+ hours of continuous copy and paste from one server in China to another PC in Jakarta! If we had cloud then, we could have saved our common library in cloud and get those from there. We’re actually doing it now, by building up our Commercial Library in a Cloud-based Proposal Platform called, ‘TinderBox’.

The Cloud Advantage

I have been reading this interesting article from GE, ‘The Cloud Advantage’, and then I could relate a common question from our clients regarding Commercial Platforms and CPQ (Configure, Price, Quote). Almost in all cases, our clients will ask ‘Is it available offline?’, and we will always answer that our proposed platform will be cloud-based. In addition to availability, reliability and security, what other advantages do we see from moving to the Cloud?

Click here to download the complete document from GE.

[Ping me if you need a copy]

“With the advent of the Industrial Internet come the challenges of scale and speed. Scale is required to consolidate and manage massive volumes and varieties of dynamic and time-series machine data. Speed is needed to leverage this data with analytics in real-time. The imperative for industrial IOT is a secured environment with capacity to grow at the speed of machine data and the technical infrastructure to apply sophisticated analytics that drive insights for more profitable business decisions for industrial companies.

According to Gartner, the uptake in the use of cloud services is accelerating rapidly. Gartner forecasts that total annual spending on public cloud services will nearly double within four years — from $152 billion at year end 2014 to over $282 billion in 2018.According to the International Data Corporation (IDC) Worldwide Quarterly Cloud IT Infrastructure Tracker, for the five-year forecast period, IDC expects that cloud IT infrastructure spending will grow at a compound annual growth rate (CAGR) of 15.1% and will reach $53.1 billion by 2019 accounting for 46% of the total spending on enterprise IT infrastructure. At the same time, spending on non-cloud IT infrastructure will decline at -1.7% CAGR.”

Let me quickly explain how the advantages mentioned in that document (copied here) relate to our Commercial Platforms/CPQ.

1.     Speed to Implementation and Innovation: Cloud architecture delivers the ability to rapidly develop and deploy Commercial Platforms/CPQ platforms.  It achieves this speed by providing standardized approach and self-service options.

2.     Security: Security for Cloud-based CPQ/Commercial platforms can be really robust as those Cloud providers make investment in security software, capabilities, facilities and expertise.

3.     Lower costs: Without going to Cloud, in-house Commercial/CPQ platforms would have needed huge investment in enterprise infrastructure to enable the users fast and reliable access to the platforms. Speed & performance become a bigger problem over time, as the investment in servers tends to go up with the increase in capacity demand.

4.     Ability to scale: It is much easier to scale the Cloud-based Commercial/CPQ platforms to meet growing business demand, without being restricted by hardware capabilities of the computer servers. For one implementation of CPQ, we ran 3 parallel projects on the same CPQ platform, without slowing each other down.

5.     Global access: With the global user base, for Commercial/CPQ Platforms, global access has become a critical success factors. With good Cloud providers, we can provide faster access to non-North American users, especially in other continents.


Important Financial Terms Simplified for Commercial/CPQ Platforms

Financial Terms

In today’s market, for each commercial/CPQ projects we work on, we need to show business benefit of such projects. We all know that such calculation of business benefit needs to be clear and transparent, with minimum uncertain assumptions and measurable. Especially for CPQ projects & other commercial projects, it has been a challenging tasks for sure, when the most of the benefits are qualitative in nature, only some are quantifiable. I have seen benefit claims of 10mm/year for a CPQ project, but they did have to lower it to 1mm/year when challenged on the ability of being measurable and quantifiable for the next 3-5 years.

 Now, in most cases, our clients can ‘define’ such benefit, and manage to prove, with reasonable certainty, that we will realize such benefits and we can show such in our pro forma cash flow for next few years, as well as in the balance sheet. However, that alone might not be enough to sway the CFO or the finance leader. Questions will be raised on the timeline of payback, compared value of today or the cost of investment/loan to invest in this project.

Let’s look at the 3 financial terms that we should all use while we evaluate such benefit stories:

  1. Payback period: tells us how many years we have to wait to recover the investment, assuming the benefits are measurable and can be claimed in pro forma statements (balance sheet, cash flow form)
  2. Net present value (NPV): tells us the present worth of future benefits, extremely helpful in determining which project to invest in
  3. Internal rate of return (IRR): tells us the rate of return on investment compared with the rate of borrowing capital (Weighted Average Cost of Capital or WACC)

Payback period: The payback period method simple computes the time required to recoup the initial investment. For example, for a given CPQ/Commercial project, we’d need to invest 1mm over next 3 years, and the project should provide us with 800k/year measurable and verifiable benefit. How many years would it take to get our money back? We get the answer by dividing 1mm by 800k, which is 2 years. In other words, after we go live with this project, benefit $ from the first two years will only contribute to recovering the investment; business will realize incremental benefit after cost is collected, which is after 2 years.

 Net present value (NPV): The net present value (NPV) of an investment discounts all the cash inflows over the life of investment to determine whether they equal or exceed the required investment. If the present value of the inflows less the initial capital outflow is positive, value is added to the firm. Let’s use a scenario for this one, assume that we have to choose one of the two CPQ/Commercial Platforms, Platform A and Platform B.

For Platform A, it’ll cost us 500k initially, then it will give us yearly benefit of 400k for the next 3 years. If the current market discount rate is 10%, we can break up the scenario like this:


CPQ: Integral Part of Commercial Digital Thread

CPQ or Configure, Price and Quote tools are mostly cloud-based platforms to enable the business automate their commercial activities like responding to customer inquiries and RFPs. The success of such CPQ platforms depends a lot on the Functional Leaders who can ensure these platforms meet business need and deliver business requirements as well as on the business sponsors for long-term sustainment. The most common benefits of rolling out & sustaining a CPQ platform include:

  1. Productivity savings (Shorter cycle time, commercial throughput increase etc., less keystrokes/quote)
  2. Improved winning ratio (more purchase orders, more closed deals)
  3. Quality of our proposals/documents (configuration accuracy, pricing integrity, marketing materials etc.)
  4. More revenue (may not be directly, but definite impact on revenue)

Now, with all the benefits of a CPQ, big question comes up is that where does CPQ fit in the world of Commercial Digital Thread?

CPQ belongs to the Supply Chain Network of digital thread. CPQ is an integral part of digital thread, for:

  1. CPQ enables the digital data transfer between CRM (Or Customer network) & CPQ, CPQ & ERP and CPQ & Analytics engines; eliminating duplication of data entry, improving accuracy of data and taking advantage of existing digitized platforms
  2. CPQ streamlines the configuration & pricing across the globe, and can tap into Industrial Internet to make the digital thread even more robust
  3. CPQ standardizes proposal (customer facing document) & contract management (may need different platform integration) across the globe, while keeping the sales forecasting always up to date

However, the success of CPQ platform’s ability to deliver fully digital commercial systems depends on several factors:

  1. Getting the right CPQ platform to meet specific business need (key for CPQ success itself)
  2. Integrating the CPQ with all other digital platforms (key for digital thread success)
  3. Design the digital thread with CPQ in it (key for enterprises’ digital journey)

As we move more and more towards industrial internet, value of data transfer digitally is crucial for our success and CPQ can help us out for sure!


CPQ Success Factors-Infographics

CPQ Platforms: Configure, Price & Quotation platforms designed to help Sales & Commercial Teams with quotations and proposal generation.

When so many CPQ implementations are facing adoption challenges, we have achieved big success in not only deploying CPQ, but also proving to the business that CPQ actually delivers the benefits. Here are the factors which helped us with achieving success in CPQ projects.


CPQ and Big Data

While working on my MBA for Business Analytics Leadership, I’ve come across a lot of analytics and big data stuff, platforms (Knime, Tableau….), business analysis etc. CPQ, when used properly, can also help with the business analytics and here’s how.