CPQ Process Improvements at Work
by John Konczal, Global Industry Executive, Product Management - Communications and Media at Sterling Commerce -
June 27, 2011
CPQ Process Improvements at Work
By John Konczal, Global Industry Executive, Product Management - Communications and Media at Sterling Commerce
Companies in the communications, media and entertainment (CME) industries are looking for ways to manage their sales process to improve revenue and margins. A 2010 independent survey of the IT priorities in the telecommunications and media industries found that 79 percent of respondents plan to increase their focus on sales strategies and 63 percent indicate that better customer collaboration is of top importance as they prepare for spending growth (1). A configure, price, quote strategy (CPQ) is one way that CME industries can help generate more revenue, reduce costs and create a positive buying experience for customers and partners.
Implementing a solid CPQ strategy has been proven to help companies improve revenue and margins, as illustrated by several companies in the CME space who have transformed and optimized their CPQ process. For example:
• A multibillion-dollar worldwide telecom equipment provider implemented a world-class CPQ solution to enable a guided selling environment that eliminated most manual ordering steps in its process. The result was a 66 percent reduction in quote-processing times.
• A multinational software and IT services provider implemented a CPQ solution in its partner sales channel environment. The system created a self-service channel that enabled its partners to serve themselves, end-to-end, with ordering data storage services and other IT support plans. The result was a 500 percent increase in revenue generated through that channel.
• A U.S. telecommunications company implemented a new CPQ solution to guide customers on making real-time changes to their network services based on the latest data available. The solution enabled this provider to gain market share by being significantly more responsive to changing customer requirements.
The companies above have embraced CPQ solutions to transform their B2B opportunity-to-cash lifecycle, from ensuring process integration across all key processes to focusing greater attention on post-sales support, which enables customers to have greater flexibility in how they manage their installed or delivered products and services. There are five ways in which CPQ solutions can help CME companies improve their revenue and margins. They can:
Deliver a seamless ordering experience for users – Today, many companies are implementing sales force automation (SFA)/customer relationship management (CRM) and CPQ solutions on a web-hosted platform to help manage key opportunity-side processes. However, they do not supply capabilities such as solution configuration to handle selling and ordering complex products and services. Thus, the transactional sales functions, e.g. solution discovery and configuration, are managed by separate systems. Instead, CME companies should implement a solution that supports open integration and end-to-end integrated process modeling, which will ensure process integration across all key processes in the opportunity-to-cash lifecycle.
Enable guided recommendations and configuration –The best configuration solutions act as a bridge from a company’s back-office systems, rules, and data, to its front-end order-entry processes. This provides a common ordering process, logic communication and enforcement layer across all ordering channels, which improves responsiveness to customer requirements and reduces order errors and delays. Thus, the solution becomes an integral part of the opportunity-to-cash process to ensure prices are quoted and orders are placed accurately, making a highly complex configure-to-order scenario into something simple.
Apply the proper business rules to negotiated pricing based on the context of the order – Today’s sales processes must ensure that the proper validations are applied to avoid rogue pricing and discounting, which can cause margin drain. At the same time, the quote-approval process cannot be too constricting or onerous, which would inhibit sales effectiveness. Therefore, a third solution involves using advanced quote-management solutions that, depending on the specifics of the order (i.e., who is the customer, what is the value of the deal), will help eliminate rogue pricing while accelerating the quote-processing time.
Facilitate more effective management, communication, and enforcement of pricing policies across different channels – This yields a more operational environment for offer-management solutions, thus substantially eliminating inconsistencies that materially impact customer satisfaction and profitability.
Assist in the configuration of upgrades to as-installed products or as subscribed services in the field – This will enable an organization to take a client's product and/or service bundle as it was built, subscribed to, or delivered, and perform a configuration of an upgrade to that installed/sold product and/or service. By focusing greater attention on post-sales support, this type of solution allows customers to have greater flexibility in how they manage their installed or delivered products and services, which in turn can lead to greater customer satisfaction.
With over one third of telecommunications and media executives expecting their IT budgets to grow this year, CME companies are focusing on improving complex sales and order management processes. Automating these traditionally manual processes can yield significant benefits if companies choose a comprehensive solution that features multi-channel support and usability, among other important considerations. Usability is particularly important, as salespersons will resist learning to use the system if they perceive that the time spent learning to use it will outweigh its benefits.
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1. Edge Research. (2010). Telecommunication and Media Industry: Results from an Online Survey with IT Decision Makers in the Telecom/Media Vertical.Dublin,OH.
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