This blog highlights research that IDC Manufacturing Insights has completed on manufacturers' increasing use of configure, price, quote (CPQ) applications to enhance the customer experience and empower sales channels to sell complex products and services.
As manufacturers are increasingly expected to provide engaging experiences to their customers throughout the sales and service cycles, one area that is receiving attention is in the configure-to-quote business process. Historically, with complex products that need to be configured, this process has been a challenge for manufacturers as they try to manage catalogs of up-to-date parts, product models, pricing, and services, and then reconcile these with customer accounts and the potential discounts associated to those customers. To add to the complexity, many different groups within an organization need to "touch" the configure-to-quote process, including sales, product management, engineering, and sometimes even production and finance. In response to this complexity, manufacturers have been implementing configure, price, quote applications.
At IDC Manufacturing Insights, we define CPQ as an enterprise software application that brings together many of the activities needed to help customers (whether consumers or businesses) configure, accurately price, and receive quotes for complex engineer-to-order (ETO), make-to-order (MTO), and assemble-to-order (ATO) products and the associated services that support the products once they are in the customer's environment. CPQ applications have existed for several decades, but with new cloud-based platforms and 3rd platform technologies, they're a valuable tool to help manufacturers more closely align product availability and production capacity with sales efforts, a necessity in the era of compressed delivery cycles and a move toward mass customization.
With the rise of connected products, CPQ applications must be able to facilitate the provisioning of services that are enabled by sensors and IoT connectivity, including remote monitoring and predictive maintenance. Our recent IDC MarketScape for CPQ in Manufacturing reveals that many CPQ vendors are able support the complex configuration, pricing, and quoting of connected products and their services, and some are even capable of supporting "outcome-based" pricing.
The new study, IDC MarketScape: Worldwide Manufacturing Configure, Price, Quote Applications 2017 Vendor Assessment (IDC ), examines the capabilities and business strategy of 12 key vendors with robust suites of CPQ applications used by manufacturing companies to support the sale of complex products and services, including: Apttus, CallidusCloud, Cincom, Configit, Experlogix, IBM, Infor, Oracle, PROS, Salesforce, SAP, and Tacton. While all 12 vendors bring notable capability to the space, their approach varies across the subcategories of capabilities and strategies. IDC Manufacturing Insights believes this is important to note for manufacturers that are evaluating CPQ applications, and we provide further details in the report.
Among the recommendations included in the report are for manufacturers to look at customer engagement, sales enablement, and production capacity holistically. We advise that you understand how tools like CPQ can be used to enhance the customer experience (CX) and set realistic expectations for product availability based on production capacity.
Are you currently using a CPQ application to facilitate sales orders through your channel or directly with your customers? What do you see as the primary benefit of using CPQ? We'd love to hear from you.