Unbiased CPQ Selection

At this moment, there are many CPQ platforms in the market, some cater to mid to large enterprises, while some cater to the small to midsize businesses. We can find CPQs built primarily for Configure to Quote products, Engineered to Quote products, pricing products, or services. We can also find CPQs embedded in CRM, stand-alone CPQs and CPQs that come with ERPs. With so many to choose from, it is not an easy task to find the right CPQ platforms for your business. For example, if a business is heavy on engineering calculation based configuration, and it picks up a CPQ which is primarily used for simpler configuration, the business will have very big challenges in getting it working for them.  In this article, I’ll take a very detailed approach in analyzing and selecting a CPQ platform, based on my decades of experience in this field. It can be used as a general guide, and enhance based on actual business needs, as my examples are more generalized in nature. 

Investing in CPQ platform is an important business decision, the right choice will take the business to the next level of digitization. I recommend a six step approach in identifying the final CPQ platform, they are:

  1. Business Requirements & Budget:

The first step is to identify the business need, at least high level, calculate potential benefits and potential budget for the whole effort. Capture the requirements in major categories; for each item, assign a weight depending on the impact of that requirement on the business benefit. You can define a numerical scale to assign weight to the requirements. The scale could be 1 (lowest impact) to 10 (highest impact) or 10 (lowest) to 100 (highest). Any scale is ok as long as you can use it to calculate final appraisal value (will show it later). For example, if Offline Capability is an important requirement for the business as the users are always out on the field, you can assign the highest (10) weight to it. On the other hand, the ability to generate a proposal in .Docx format is something the user believes is nice to have, you can assign the lowest (1) weight to it.

Here is a list of common requirement categories, try to get at least 3 defined per category. I’ve provided some examples as well.

Configuration: What are the important functions you want your CPQ to have in terms of configuration capabilities? For example, you may want a CPQ which can perform complex engineering configuration, or you may want a CPQ to sell subscription products.

Pricing: What are the requirements for the CPQ to perform accurate pricing calculations? Don’t forget to consider the need to align the cost and price with ERP and effort to keep it updated whenever needed. Some CPQs may come with a very detailed pricing structure to match with the same of ERP, some come with simpler versions instead. 

Quotation: How complex is your proposal? Do you need the ability to export the document in both PDF and .Docx? Do you need digital signature integration? For example, if you are in a business to create customized proposals to the paragraph level, not having the option to export the document in .Docx may not work; on the other hand, if your business creates simple 2-pager proposals with the items listed only, PDF is just fine. 

Usability: Who are the users? What are the requirements for user experience? For example, you may want a system which has well defined flow-based logic, or you may want a system for engineers who may prefer the ability to use tables. 

IT Requirements: IT Team may come up with some requirements on their own, from an architecture point of view (how it fits with the rest of the platforms they have already), integration capabilities, scalability, performance, reliability etc. For example, if the long term goal of the business is to implement end to end digital thread, CPQs with strong API capabilities are the right choices. If the business wants to roll-out the CPQ in different phases, scalability becomes very important then. As the CPQs are cloud-based, performance is always a crucial factor in choosing CPQ platforms. 

Financial Requirements: This set of requirements about the money the business is willing to invest in getting the CPQ. You should have an initial budget number, timeline and required Return on Investment/Benefit Dollars ready by now. To estimate the cost, consider external (CPQ license fee, hosting fee, contractor labor & travel etc.) and internal (resource cost when they are reassigned to this project, platform (e.g. ERP, CRM) change cost etc.). Try to calculate potential benefit/user and cost/user, these two numbers. In an ideal scenario, benefit/user should be several times higher than cost/user over a 5 years period. Also, follow standard financial procedures in terms of inflation, time value of money, market volatility etc., this will avoid nasty surprises after a few years in the process. On the other side, you may want to figure out the business’s preference in the size and experience of the CPQ companies; some companies prefer to buy the products from a CPQ company which has at least 10 years of successful operation, while some companies may give new entrepreneurs a chance.  

  1. Short List of CPQ Platforms:

Now that you have an initial list of requirements and budget, you can explore different CPQ platforms available. Goal at this stage is to identify not more than 5 platforms. I’d suggest you start with Gartner’s report on CPQ. Gartner is getting really good at evaluating CPQ platforms, focusing on key areas like their focus areas, performance, company stability etc. The report will also help you identify if your desired CPQ platform is a common one or a niche one. Niche CPQ platforms can get you very customized solutions, but they sometimes are limited to only a few product applications. Where, common CPQ platforms can cover a wider range of applications, but may not be able to provide the depth of one specific application. 

  1. Demo:

At the 3rd stage of the analysis, you can invite each CPQ Platform company to do a demonstration of the product. It is recommended that, before the company comes for the demo, they should understand the business process, and high-level requirements. I remember a company coming to demo, and spent one hour highlighting a function that they are proud of, but completely useless to our business case. In person demo is always recommended, because it makes it very easy to open up to the discussion and ask questions. However, please note that the companies spend significant effort in getting the demo ready, respecting their effort and providing them with the proper guidance will make the demo really fruitful and pleasant. Another suggestion is to have the questions for the vendor ready and reviewed beforehand. In several demos in the past, we had a few guys who asked questions just to make themselves known, derailing the whole process. A good internal preparation is key for the successful demo sessions with the vendor. The last point, put all the key requirements in the Excel table, assign those appropriate weights and have it ready. You will need this to evaluate the CPQ platforms during the demo sessions. Before the demo, distribute the table and explain to the participants (internal) what are the expectations during the demo and after the demo is over. At the end of the demo, collect the evaluation table responses from all the participants. 

  1. Initial Analysis of Vendors:

After the Demo, it is time to get your spreadsheet out and perform the analysis. Goal at this stage is to identify the first two choices, based on numerical and strategic analysis. Here’re the recommended steps:

  1. Collect response from all the participants of the demo
  2. Average the ratings per requirement per CPQ (side note, don’t forget review the ratings first, to eliminate any biased or incorrect values)
  3. Calculate ratings per CPQ vendor


Ability to export the document in .Docx format1087

This analysis is very important for multiple reasons:

  1. It shows which CPQ platform(s) can meet your overall requirements
  2. It shows strengths and weakness for each CPQ platform for your business case
  3. You will need it support your decision on picking one particular CPQ in future


With the final two defined, it is time to ask the CPQ companies to create a customized demo for you, this step is very important, and I’ll write down what to look for at this stage.

Pilot of CPQ generally means that the vendor company will try to replicate some portion of your configuration, pricing, and proposal in their CPQ to showcase their capabilities. Pilot is crucial in evaluating a CPQ platform, but it comes with a cost. Generally, CPQ companies will work with the clients to share the cost. However, asking them to build something free might work, but it won’t be fair as the contractor/vendor company has to invest in terms of resources and facilities. To get a successful pilot working, follow these steps:

  1. Identify the scope and goal of the pilot. It is not possible to very every function a CPQ offers through pilot, so the realistic outcome should be the goal of the pilot. The scope is also important, and the vendor/contractor can guide you there as well, for that’s what they have to build it up. 
  2. Set some guidelines and expectations for the pilot. For example, if you believe hands on experience will help you know the system more, don’t forget to ask for it before they start the build. Also, internally, it is important to identify the right persons to attend the pilot. 
  3. PRepare documentations, more detailed the documentations, better the quality. The CPQ will be built on these documentations; clear configuration, pricing and proposal information will help get the pilot built faster, and with better quality.
  4. Support the CPQ Vendor, if they have questions, if they need any help in understanding the product and process, if they need more time.

On the day of the pilot, it is recommended that all stakeholders attend in person. Setup expectations for them, what to look for in pilot, what questions to ask, how to evaluate the system, etc. Good logistics is very important, good network connection, availability of meeting rooms, lunch etc. After the pilot, thank the CPQ vendor, and collect all internal input.

Final Selection:

I’d suggest the whole process may take somewhere between 4 to 8 weeks, depending on the available resources and budget. Also, please be mindful that the CPQ companies spend significant time and resources to get the demo and pilot working, and they will appreciate it when the client has the budget approved and is really serious in getting the CPQ platform. After the pilot is completed, and you have the feedback from all the stakeholders, it should be pretty easy to identify the final CPQ platform. Note, internal change management plays a big role in this whole effort. If the users are not aligned and ready to move to a new and advanced digital platform, they may become the biggest roadblock in the success of a CPQ project. Last point, most of the CPQ platforms are cloud based (on-premise ones have big performance issues outside North America), don’t forget all legal documents to protect the data integrity.