Configure Price and Quote projects (CPQ) implementations always come hand in hand with a set of challenges, of which we should be aware of since day one. My favorite one is that the same company may have different salespeople selling the same product in different ways, with different prices and rules, as each one has its own “spreadsheet”. But there are more cases such as this one. In this article, I would like to take some time looking into other challenges I’ve faced during my CPQ experiences. Many of these challenges are rather common, but still, somehow unexpected.
1. Many people have a say in the sales process
A common mistake is conceiving CPQ as a tool only meant to be used by Salespeople. It is not. There is no doubt that they will probably be the ones using it the most in their daily activities while preparing quotes to get them to customers quickly. But there are also other stakeholders. Don’t believe it? Meet some examples I have came across throughout the years:
- Solution Engineers: If your business is a bit more than “selling boxes” and you work in B2B with corporate / enterprise segments, it is highly likely that you sell bespoke products that sometimes require expertise to decide the right solution for your customer.
- Commercial Team: Most salespeople will worry more about their commission and less about other aspects, such as the company’s strategic goals. The commercial team will probably come with other requirements, including those related to specific KPIs and behaviors related to each of the products being sold.
- Finance Team: The finance team will be worried about financial KPIs. Together with the Commercial Team, they’ll contribute to one of the hardest challenges I have faced in CPQ projects: having a solid quote/ deal profit and loss (P&L) built into the system.
- Order / Delivery Teams / Customer Support Teams: Don’t forget that whatever is being sold always needs to be built and delivered to your customers, so you’ll need proper support. All these stakeholders will have to contribute to what you’ll build in CPQ or you’ll end up selling something that won’t be delivered nor paid for.
- Legal teams: You’re likely building proposal and contract documents from your CPQ system. They will push very strong requirements for the team.
In summary, don’t forget that other stakeholders have valid requirements that impact what and how we build into a successful CPQ system. Therefore, make sure these stakeholders are engaged in the early stages of your project (this is before the project starts), as they may have a significant impact on key decisions.
2. Too many approvers
One of the key benefits of a CPQ system is to automate as many processes’ steps as possible. You can do this by defining in the system the business rules that can best deliver quality and trusted outputs, avoiding manual tasks that would be performed by many different teams. So, the key step that comes to my mind when thinking about this topic is approvals.
Now, all businesses require some sort of higher-level approval for some deals. Yet, for sure, in most industries, most of the deals that you come through are standard and repeatable, having a lot of “automation potential”. I have seen CPQ implementations with 7 (yes, seven, it is not a typo) approval levels for deals that were not that big. So, here’s something for you to consider: If you are not willing to allow automation to approve, let’s say, 80% of your deals, and let the remaining 20% with at least two approval levels, will you truly benefit from a CPQ system?
On a side note, we also need to consider that, unfortunately, some people use and abuse of the “being the approver in the system” argument to prove their position in the company. But that is probably a bigger discussion topic than the article you are reading now. In any case, the system may be of enormous value for your company and there is plenty you can do from a system’s trust perspective. Thus, just find ways to gain your customer’s trust in the system (e.g. use staggered approaches with an increase in deal complexity)!
3. Profit & Loss (P&L)
I briefly mentioned this before, but let me reinforce it: Commercial and Finance teams love KPIs. One of the toughest challenges I have ever faced was to build a full quote/deal P&L into a CPQ system. And I don’t mean to have a P&L with 10 lines, I mean having a P&L with hundreds of lines that include every tiny detail of what impacts the deal. To give an idea of the kind of things we had to consider:
- Too many cost elements were included in the system. Which meant that any KPI related to pricing would have to consider all those variables, and not only one (e.g. the overall cost).
- Calculating all sorts of KPIs: Gross Margin, Net Margin, ACV (Annual Contract Value), TCV (Total Contract Value), AOV (Annual Order Value), EBITDA, etc.
- Having to calculate those KPIs in real-time, as you change something in your deal, you would expect everything to recalculate IMMEDIATELY.
- Having traffic lights everywhere, in the P&L, in the configurators, etc., that clearly provide the message to the user about deal profitability.
- Breaking down the P&L by year, quarter, month, and see how each KPI behaves.
- Managing how one-time fees are distributed across the KPIs and time span.
- …
Some companies may not have requirements as complex as the exampled above, but it is something we need to keep in mind because this kind of capability can easily break the system. Besides, you should also expect difficult discussions about which CPQ tools to use. Finally, also be prepared for hard negotiations on how far you can go and what compromises need to be taken by all parties.
4. Concurrent Access
This is not a CPQ specific topic but is something to watch out for. Modern systems have ways to handle concurrent access scenarios where you have more than one person trying to work on the same record/set of records. In the cases I came across, the scenario was basically the same: having two people configuring different products in the same quote at the same time. So, the problem here isn’t having to work on the same record, but on related records that contributed to the same deal. If this doesn’t sound like a problem to you, consider the thoughts on the P&L section just above this one. If you want a traffic light on each configurator that considers the overall deal KPIs, having someone working in parallel on the same deal changes the overall deal value. So, when you’re using your local product configuration you may think it is affecting the deal in a certain way, but with everyone’s changes combined, your deal is being affected in a totally different way.
That said, I don’t think we should prevent people from working in parallel unless the system can’t cope with this kind of behavior. Consider this simple example from the Telco world: you can have your salespeople configuring mobile services at the same time you have a solution engineer building your solution from a fixed services perspective. Although your fixed services will probably take longer to configure, it may happen that both the sales and the solution engineer decide to work at the same time. Why would we prevent them from doing their job?
In any case, the key message is to be aware of these kinds of requirements by your customer, as meeting them can be hard or impossible, and sometimes strong compromises need to be taken.
5. Too much information
There is a strong drive from some of the teams to push into CPQ all sorts of information that may come handy at some point in time in some other process, even if they are not directly CPQ. A common example is when engineering teams try to include as part of the product specs all the possible technical details so that they can then push those details into the ordering team and so do not have to worry about additional data enrichment later on the process.
Although I do agree with the idea of having the right information flowing between systems without user intervention, thus avoiding human error, bringing all of it into CPQ may have an impact on how the CPQ system behaves.
Thus, my advice is for you to consider including as part of the CPQ process only the details that can have a commercial impact or that will have to be reflected in your customer-facing documents. Keep all other aspects outside the CPQ, potentially having a centralized product catalog that CPQ, Ordering, and Billing systems can consume. Then, add a data enrichment layer to help the ordering team to provision closed-won deals.
6. Customer-facing documents
The logical step after having configured and approved a quote is to present it to your customer. In some businesses, a simple email with a few line items will do the trick, but others will demand high fidelity documents that can be a hard requirement to meet.
The key challenges I’ve faced were:
- Wrong formatting, from having the wrong margins, wrong font to wrong headings.
- Low image quality in documents, not compatible with the original image.
- Poor system performance, not being able to render long documents.
- Difficulty in handling dynamic content based on business rules.
Make sure that you set expectations early in the CPQ process about what can be done with regards to customer-facing documents. Customers are used to high fidelity word documents, that systems are not always able to mimic.
7. Edge Cases
If you could push 80% of the company deals through CPQ, you’re probably benefiting a lot from the decision of implementing CPQ in your business. For others, success in a CPQ project is to have 100% of the business going through the system, regardless of how bespoke certain deals are and how uncertain the rules to get to a proposal are.
Let’s be clear on what I mean with Edge Cases. I’m not talking about complex products. It doesn’t matter how complex your product and related rules are, if you are constantly proposing them to your customers, if the product is well defined, if you know what the rules are, then you should definitely bring it to CPQ. I’m talking about that one-time deal, that only happened once, or never happened but someone on the 5th floor thinks it may happen at some point, that variation that someone dreamed about after some drinks at a company event. Would you spend some thousands in building something that may never be used and that can impact other areas that are working just right in the system?
If you feel you’re about to build something that will never be used, take a step back, challenge your stakeholders (maybe even yourself). Your stakeholders will thank you at some point, maybe after a few more drinks.
Conclusion
CPQ projects are challenging in different ways. Regardless of your role in the project team and whether you are a customer or a vendor, implementing CPQ will for sure present you significant challenges, such as the ones I’ve listed here. It’s unlikely that you can fix them all in advance, but you can find ways to be prepared for their occurrence. So, here’s my last piece of advice:
- Make sure the right stakeholders are involved and that you can get a view from everyone impacted from the start. Even If your focus is a tiny bit of the world, make sure you look around and understand touching points with other areas. Sometimes these touching points can have an overwhelming impact on your project’s success.
- Don’t oversell CPQ. Don’t make others think that the tool will solve all companies use cases easily. Be the first to put things in perspective in order to find balanced solutions. Target that 80 %, but evaluate carefully over-complex requirements.
- Don’t use CPQ to solve non-CPQ problems. You will risk breaking the CPQ functions and defeat the purpose of having a tool like this.
- Test CPQ thoroughly, as you need to make sure the right numbers come out of the system, but then, trust CPQ to do the math and decide whether the deal can go forward. You will gain time, be more efficient, proposals will get to customers quicker, and sometimes that is a key factor from a buyer’s decision perspective.
I hope this article has been of most use for you to nail your CPQ implementation! Feel free to drop me a comment or ask me anything in our comment box! 🙂
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