Commercial, Sales & Engineering Strategies needs CPQ

Configure, Price, Quote and Propose (CPQ-P):

Cloud-based CPQ applications are streamlining omnichannel selling experience across direct sales, channels as well as online devices. Its strategies in the current market continue to evolve and bring consistency, accuracy, speed and improved sales cycles. CPQ software kicks this off from the very first step of the deal management like product pricing to precision-sensitive engineering and services-based product configurations. CPQ offers greater insights into your customer’s need and enable them to act quickly, which is essential for winning deals in a competitive and complex selling space.

Over last few years we all understood that the complex engineering industries and project-based install-bases needs millions of parts and offerings and services and with every overhaul a simple deal open up several up-selling opportunities. A stand-alone quoting platform that embeds AI, ML effectively and other key ingredients improves the win rate in a highly competitive market.

By aggregating massive amount of Sales, Commercial, Plant & industrial engineering data that associated with Artificial Intelligence or Machine Learning or Predictive analytics takes Customer’s preference into account shall make your CPQ a center of your selling strategies in overall Digital Thread.

CPQ and the CRM naturally fits into the eco-system and complement each other quite well. Most of the market leading vendors use standard webservices driven, scalable managed package to interface with each other. This ensure that the key data like Accounts, Legal Entity, bid submission date, RFQs and price & product books are seamlessly transitioned over to CPQ from the legacy CRM tools. This not just jump starts the commercial quote building process ahead of the curve but also initiates the collaboration between Sales and Commercial & Engineering teams or specific to your Org’s function.  I have extensively worked in an Engineering and Energy Industry so my examples will be more relevant to the industries of similar domain.

CPQ helps in supporting your Org’s strategies to drive the Commercial growth, reduce margin erosion, improves proposal cycle time in-turn variance to want (VTW cycle) and increases the revenue.

Listed below are the components of CPQ that shall help your org in supporting the strategies, KPIs and goals:

·       Efficient Internal Processes

·       Guided Selling

·       Product configuration

·       Pricing Accuracies

·       Standardized Contents

·       Increased Quoting Efficiency

Efficient Internal Processes:

Sales team or even third-party channel partners and distributors create an opportunity in their CRM system. They are navigated to CPQ tool where they start exploring the products, models and digitally start building the quotes per the RFQ needs. Data-enriched configurator digitally tags the Item masters, parts (SKUs) and prices with pre-defined compatibility rules and organization’s selling policies. These parts and prices are in-turn harmonized with back-end ERPs which boosts supports in Order creation at some stage.

Strategy Supported: Commercial Growth. By 2022 CPQ market is expected to hit $2.5B.

 Guided Selling:

Guided selling framework helps users with various up-selling and cross-selling opportunities. By enforcing the compatibility & relationship rules between the variants and options even a newbie sales person can easily create a very complex quote with latest parts and price information. Rules integrated with the guided selling framework helps commercial team in error-proofing the key contents.

Strategy supported: Increased Revenue due to cross-selling/Up-selling capabilities.

 Products configuration:

Configurator is rich in its database. Parts, price and other commercial master data are the key elements of every CPQ platform. Digitally set up product family tree in CPQ simplifies the org’s complex engineering product portfolio structure and hierarchy. Rule-based engine in CPQ which is tied up with the parts & price master ensures that the options and variants can be quoted as per the customer needs with much ease.

Strategy Supported: Accuracies and Consistent quoting.

Pricing Accuracies:

Data-enriched configurator and the rules are digitally tagged with the Item masters, Parts and SKU. Each of these parts have the price details stored in pricing masters which are harmonized with Organizations’ ERP systems as a single source of truth. With this tight integration prices are auto-populated based on the configured products/models. Sales and Commercial teams can even refer to past sales made, previous quotes. This ensures the contribution margin (CM) is as per the org-level policies and margin proliferation is controlled. Users can quickly review the Guideline pricing, CM% and take a decision on discounting which in-turn triggers the deviations and digital workflow approvals.

Strategy Supported: Reduced margin erosion and profit leakages.

 Standardized Contents:

Sales, commercial Ops, App engineers even Channel partners are creating the quotes without having to worry about the pricing inaccuracies as well as other critical information like customer legal entity, Quality standards certificates, Org policies and T&Cs because of the standard contents and accuracies enabled by using the artificial intelligence and relevant templates as part of the proposal automation engine. Built-in integration for proposal automation picks up the critical opportunity, quote, scope of work data and helps in generating the professional looking, well-formatted output document. Users can submit the same as part of the Bid. The other in-built capabilities like version control, saving as favorite gives right control on such contractual & legal documents

Strategy Supported: Consistent and Accurate contents. Improved VTW and proposal Cycle time.

Increased Quoting Efficiency:

System is up-scaled and digitally built-in with the complex engineering algorithms so that Commercial App Engineers and Channel partners can even configure the precision-sensitive engineered products in energy industries like valves in custody transfer, Flares, Flowmeters, Gas & Moisture analyzer by sizing them right after reviewing customer’s varied plant, site conditions to comply with regulatory authorities and even help in generating the complex ‘Engineering to Order’ quotes.

Strategy Supported: Improved Cycle time, Productivity

Are we ready yet?

Cloud Computing ....Most of us are familiar with the Service Oriented Architecture and corporate making a big buzz about these services and their consumption. Recently the jargons like Cloud Computing, SaaS, IaaS, PaaS are making rounds …. so what exactly is cloud computing - is it another name for grid computing, utility computing or virtualization?

The research study shows that cloud computing in India currently stands at US$ 100Million. According to a Gartner survey, Indian companies expect to adopt new cloud services in 2011 much faster than originally anticipated, with two-thirds of CIOs expecting the majority of IT to be running in the cloud within the next four years. In earlier news, IDC reported that the Indian cloud computing market would grow at a CAGR of 40 percent by 2014, and to become a $3 billion dollar market by 2015.

We're still relatively early in the cloud computing hype cycle but I strongly believe that in the future, most if not all server-side software applications will be deployed in a cloud-computing-like manner. That is not to say that all applications will be run in one of exactly five global clouds. On the contrary, every enterprise will have one or more 'clouds' into which they deploy applications.How is the Cloud Computing posed in India?The term cloud computing, at least based on it's image apprears to be derived from the availablity of these services, from anywhere on the internet (just like the cloud) or possibly the wireless network environment, in general term. We don’t care much what’s in the cloud or what goes in there, all we care about the reliability in sending the data to and receiving data from the destination server. With this basic principle now the cloud computing is associated with a high-level abstraction. Instead of having data pipes, routers and servers, there are just services. The underlying hardware and software or networking will of course be there but there is now higher-level service capabilities available and used for building the applications. Behind this services there is a data and the infrastructure/resources. User of the service doesn’t necessarily care about how they are implemented, what technologies are used or how are they managed. As long as users have an access to them and have a level of reliability necessary to meet the application requirements, they won't need to know anything about the recipe.

A study for EMC, conducted by Zinnov Management Consulting, finds that private cloud in India will deliver up to 50% saving to Indian enterprises creating in the process 100,000 additional jobs by 2015

SaaS (Software as a Service) has witnessed the most rapid pace and likely to reach US$ 650Million by 2015, while PaaS (Platform as a service) and IaaS (Infra as a Service) could touch to US$ 450Million by them. As a testament to this development, several research analysts have published predictions on the cloud growth in India:

There are several multinational and Indian companies entering the cloud space and trying to drive business's relevance of its solutions for the Indian customers. Cloud computing has allowed the smaller ISVs access to global customers, thereby, significantly reducing their cost of sales. On the other hand, this has also increased the flexibility for end customers and increased the choice of products and services.

Additionally, the global providers of PaaS, Indian companies have also sprung up offering cloud based platform-as-a-service. India being the world's fastest growing mobile market with over 20million subscribers added every month and the money the companies have invested for 3G services showcases the belief the large telecom providers have on data services in the Indian market.
Also for Indian small business, since there is always a pinch of budget, want to improve and digitize the process but cannot do that with the internal IT resources but are looking for the rapid growth in few years. For this entire if we put together, then 'Cloud Computing' may be the right solution.

1. Public Clouds 2. Private clouds 3. Hybrid clouds

Needless to say that, each type needs a different level of security.

1. Public Clouds:
Public cloud is the one in which the services and infrastructure are provided at off-site over the Internet. These clouds offer the greatest level of efficiency in shared resources, however they are more vulnerable than private cloud. Public cloud is good choice when - 
a. Your standardized workload for application is used by lots of people, for e.g. email.
b. You need to test and develop application  code.
c. You believe that you have well implemented governance and security strategy.
d. Your data volume growth is exponential
e. You need incremental capacity
f. You are doing collaboration projects
*c: Many IT executives are concerned about public cloud security and reliability. Take extra time to ensure that you have security and governance issues well planned.

2. Private Cloud:
A private cloud is one in which the services and infrastructure are maintained on a private network. These clouds offer the greatest level of security and control, but they require the company to still purchase and maintain all the software and infrastructure, which reduces the cost savings. A private cloud is the obvious choice when -
a. Your business is your data and your applications, Therefore control and security are paramount.
b. Your business is part of an industry that must conform to strict security and data privacy issues
c. Your company is large enough to run next generation cloud data center efficiently and effectively on it's own.
The public clouds companies are offering private versions of their public clouds. Some companies that only offered private cloud technologies are now offering public version of those same capabilities.

3. Hybrid Clouds:
A hybrid cloud includes a variety of public and private options with multiple providers. By spreading things out over a hybrid cloud, you keep each aspect at your business in the most efficient environment possible. The downside is that you have to keep track of multiple different security platforms and ensure that all spaces of your business can communicate with each other. Here are a couple of situations where a hybrid environment is best.
a. Your company wants to use a SaaS application but is concerned about security. Your SaaS vendor can create a private cloud just for your company inside their firewall. They provide you with a virtual private network (VPN) for additional security.
b. Your company offers services that are tailored for different vertical markets. You can user a public cloud to interact with the clients but keep their data secured within a private cloud.

Benefits that Cloud computing provides -Cloud computing comes in 3 variants depending on the type of the data that you are working :

• Reduced Cost: Cloud technology is paid incrementally, saving organizations money.
• Increased Storage: Organizations can store more data than on private computer systems.
• Highly Automated :No longer do IT personnel need to worry about keeping software up to date.
• Flexibility: Cloud computing offers much more flexibility than past computing methods.
• More Mobility
  Employees can access information wherever they are, rather than having to remain at their desks.
• Allows IT to Shift Focus: No longer having to worry about constant server updates and other computing issues, government organizations will be free to concentrate on innovation.

Inhibitors:

Despite its innate value, cloud computing has a few inhibitors that seems to impact the speed at which the implementation takes place in India. From the infrastructure stand point five major parameters that can enable or inhibit enterprise customers from moving to cloud.

·         Performance: Application performance needs to be same or better than before

·         Reliability: Mission critical applications have a very high level of reliability

·         Security: This is the biggest inhibitor of adoption at this stage, where organizations are not yet comfortable of moving their data to public environments outside their firewalls or even visibility and control of the cloud infrastructure (for users) - The cloud environment needs to provide extensive monitoring, logging and reporting support to troubleshoot the environment.

·         SLA - Cloud computing although claiming more robust, but have to provide service guarantees at operational level and security level.

·         Org level decision on  Application/solutions: At org level lack of knowledge or clarity on what application makes more sense to move to cloud.

·         Cost: Although at application level the cloud is very economical, the transformation to be 'In cloud' can be expensive and time consuming if not scoped and managed very well.