CPQ is going through a mini upheaval, and for a great reason. Historically, technology vendors and customers placed the CPQ value proposition on the “C” in CPQ. This was almost a necessity, since the configuration part of CPQ required companies that had complex assemble-to-order or engineer-to-order processes require the reduction of mis-configured or engineered orders. These companies used CPQ to reduce sales cycle time by configuring complex product solutions in a fraction of the time it would take them with spreadsheets or some other manual process, better align unique configurations to customer needs and eliminate any backend fulfillment and supply chain rework expense by quoting only configurations that can be built and delivered.

I've seen it all before, and it's now wrong to solely focus on configuration technology as most vendors do. I have seen some of the most complex problems imaginable involving 1000s of options, millions of configuration possibilities, engineered products such as airplanes, jet engines, etc. The reality is as much value of as these companies with product complexity received collectively, they represent less than 10% of companies who can get value with CPQ. In full disclosure I often overweighted the ability to solve for configuration complexity when I would evaluate sales configuration vendors as an analyst. This led to best of breed vendors being rated higher, while vendors who solved for less complexity were often undervalued. Best of breed vendors had to focus on complexity because that was where the largest deals were in the market; therefore that was the easiest way to justify their value proposition and support their business model. 

The reasons why the P and Q have taken a more prominent value role is because companies face one or more of the the following challenges: 

• A manual quoting process that is slow and error prone;
• Productivity loss because salespeople waste time cutting and pasting information between their quoting app and their SFA app;
• Lost business opportunity because it takes too long to get promotions, price changes, and new discounts to the selling organization; and
• Decreased win rates because salespeople take to much time getting discount approvals.

I've often wondered if you removed the C and called it PQ just how many more companies would be able to focus on improving their quoting process. Here are some examples of companies who have received value for CPQ but don't have the most complex configured products:

An HVAC company created a partner community that brings product information, partner certification, self-service quoting, and lead registration to a single platform. A major part of the community being anywhere, anytime product and pricing information. As a result they eliminated an estimated total of 10,000 emails and voicemails, decreased cycle time by 1000%—with quote approval time reduced from two days to two hours, and cut quote pricing verification time from hours to minute. 

A higher Ed learning company generated an 80% reduction in time to create quote (2 hrs to < 20 min ), eliminated back-and-forth required by looking up data in multiple systems. At least 5 steps required selecting data from source systems. Generated a 97% reduction in time to approve and close contracts (3 hrs to < 5 min). The reduction was due to: automated contract generation for small contracts, automated approval workflow for complex contracts, implemented digital signature capabilities, and standardized term dates based on pro-rating capabilities.

Here are some specific advice for those considering CPQ:

1. Don't dismiss CPQ just because you don't have an overly complex product configuration problem. There is as much if not more value in automating pricing and quoting;
2. Implement CPQ in the broader context of your SFA strategy. Quoting is an integral part of the sales process and SFA apps manage the sales process. It is important that quotes get managed and tracked in the overall sales process.
3. Don't limit your pricing and discount rules based on traditional backend order management apps that often have very limited pricing capabilities. I have seen over and over again companies avoid implementing new pricing or discounting practices that would grow the business because what they thought would be constraints in their back end systems.
4. Focus on ease of use when considering pricing and discount administration environments. Keep in mind the ability to model complex configuration problems does not mean an environment is optimized for managing pricing and discounting rules.

With technology, sometimes change happens in tectonic shifts. But more often, it's that people solved for the most complex problems while forgetting about the the one thing they need. Outcomes and values. These shifts are more gradual, moving so slowly that no one realizes that the change has already happened. We are in that mode now. CPQ, once a grand standalone technology that could solve the most complex problems, has moved on. It's now the integration of CPQ directly into the sales process, putting the actions right in the hands of the decision makers that is driving CPQ to a new realm. It's about time.