The State of CPQ Today – Helping Companies Meet Their Customers’ Needs [Part 2]

Last week, in part 1 of our 2-part blog series, “The State of CPQ Today – Single Cloud-Based Solutions That Reduce Operational Costs,” we asked our very own subject matter experts, Bert de Vries, Sales Director, and Peter Willemse, VP of Product Management, to look at the current state of CPQ, how it got here, and where it is heading.

In case you missed part 1, here is a quick recap of the first 5 questions we asked:

  1. For everyone new to CPQ out there, what is CPQ? Why do businesses use it, and who uses it?
  2. What did the first CPQ solutions in the market look like?
  3. You both have been involved in the CPQ space for a combined 20+ years. What has been the biggest difference you have seen in “yesterday’s” CPQ compared to “today’s” CPQ?
  4. Gartner estimated in 2018 that CPQ revenue was $1.2 billion, with almost all of the growth-related to cloud-based offerings. Compare this to 2015, when they estimated only 25% was cloud-based revenue. Why has cloud-based CPQ taken over the market?
  5. Gartner also projected the CPQ market to increase 15% annually through 2020. With your work in this industry, do you believe this projection from 2018 has held true? Or did world events like the pandemic impact CPQ growth?

What’s Next in The State of CPQ Today?

In part 2 of this Q&A discussion, we continued the conversation with Bert and Peter and asked the following 5 questions:

1. Is there a “generic” business profile that describes how base companies can benefit from a CPQ solution?

The base for a CPQ solution lies in the “C” with configuration. A base company that can benefit from such a solution starts with having a certain complexity – whether it comes from the product or service they sell, the process they use to configure and sell it, or both – which cannot be handled easily by CRM, ERP, or Microsoft Excel.

Secondly, CPQ is indispensable if such a company wants to scale up and grow their business channels internationally, while shortening their sales cycles and lowering the failure cost of their (non) digital channel from inquiry, to delivery, to the customer.

2. What common challenges are businesses solving today with their CPQ solutions?

Businesses today want their organization supported by a solution that helps drive focus to their customers’ needs. CPQ enables a company to organize itself from the outside-in instead of from the inside-out, where engineering decides what customer-specific products can do as a result of a sales process as opposed to the start of a sales process.

There are two main business challenges that are solved with CPQ. First is the speed of the sales process – creating a customer-specific solution based on customer-specific requirements helps eliminate time spent on creating incorrect configurations, and gives the vendor a competitive advantage.

Second is increasing their margin by significantly reducing errors and associated cost of sales and production orders to a minimum percentage level. This is done by creating a complete end-to-end digital process flow.

3. Do you see CPQ as a product that changes the market, or does it support and adapt to the changes happening in the market?

A CPQ solution adopts the changing needs of our customers. The specific complexities of their way of selling are what we need to help facilitate their sales process. We have multiple channels to gather input, such as customer input calls, interactions with the product teams our solution integrates with, and of course our implementation and sales teams in the field.

4. What innovative ideas are current businesses you work with bringing to the table that CPQ is helping to make a reality?

Lots of companies are looking into more predictive elements of their sales solutions. Based on data gathered, they want to be more proactive in what they recommend to their prospects or customers. Also, when customers are purchasing customized products or services, they want to make sure they can see how their offering looks. An example of that would be when I’m configuring a new car online. When I’m making my selections, such as the body color or rims, I want to see the car change in real-time on my screen. Therefore, visualization becomes increasingly important to customers to offer a high-quality real-time image, or even an augmented reality visualization through their mobile phones. These are two challenges CPQ solutions can solve.

5. What does the next version of CPQ software look like?

The next version of CPQ we are working on contains a lot of exciting new and improved features. The framework is even more scalable and maintainable and includes integration features, user interface, and user experience improvements. We are also focusing on functions like predictive selling – hooking into the AI services of Microsoft is being prototyped as we speak. More and more, we will utilize data gathered to assist the users in offering the best products and services to their customers, while making the life of their colleagues fulfilling these orders as easy as possible.

We would like to thank both Bert and Peter for taking the time out of their busy schedules to lend us their expertise in understanding the current state of the CPQ market today and where it is heading in the future. Experlogix is very fortunate to have such valuable assets as part of their team.

Looking for additional resources on how cloud-based CPQ software can help your company configure and deliver complex products and services faster, and generate real ROI? Check out our latest ebooks:

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