Configure, Price and Quote

Sales employees are familiar with the problem from their everyday work: creating complex offers, especially in the B2B sector, is a time-consuming and error-prone process.

Let's take the example of ordering laptops together with accessories for a company. For what purpose are the computers needed? Which equipment is a must, which is a "nice to have"? Should software be included and which for which function and which workstation? Are services such as warranty extensions or support desired?

The simple rule: The more variants and/or the more complex a product is, the greater the challenge for sales - after all, comprehensive price and configuration options must be taken into account.

It quickly becomes clear that such an offer is hardly feasible by hand. All too often, however, people still work with confusing Excel-based price lists, data has to be copied into the offer - costly errors in the offer and the subsequent order are almost the order of the day.

In addition, offers, however complex they may be, must reach the customer as quickly as possible. However, it's not just a question of price, but also of effectiveness - the more accurate and precise an offer is, the more likely customers are to opt for it, and the higher the closing rate. In short, competitors punish those who arrive too late or make mistakes.

Guided Selling

The solution is CPQ applications. The abbreviation stands for "Configure, Price and Quote" and thus aptly describes the purpose of these systems: They enable sales staff to quickly and securely create quotations for products and services that are available in many variants.

Key functions of CPQ systems include: Workflow-based quote generation; product selection and configuration; product pricing, including consideration of customer-specific discounts; deposit of customer-specific agreements; options for up-selling and cross-selling quotes; quote creation and negotiation; and collaboration functions, such as for internal approval of quotes.

CPQ solutions thus address urgent challenges in sales - no wonder that the market research company Gartner predicts a rosy future for the segment.

In their "Magic Quadrant" on CPQ, the analysts assumed last October that the market will grow by around 15 percent annually with a volume of 1.2 billion in 2018. The focus is expected to be on the manufacturing industry, the service sector, and the communications and media sector.

The top reasons for implementing a CPQ system, according to Gartner, are to: create quotes faster (73 percent of respondents); improve sales force productivity (63 percent); and replace an existing outdated system/process (58 percent).

With SAP CPQ, SAP also offers a corresponding solution. This is a standalone application that is naturally designed for integration with the cloud-based customer experience and e-commerce platform C/4 Hana and the ERP system S/4 Hana. In fact, however, SAP CPQ can also be used in non-SAP-based environments.

Lead to Cash

CPQ solutions are key to significantly streamlining the lead-to-cash process - from initial customer contact to order completion and fulfillment.

In the case of SAP, the entire process can be handled via a single platform based on transparently integrated applications: Thus, customer contacts and leads are managed and maintained in C/4.

The CRM suite consists of the Marketing Cloud, the Commerce Cloud for personalized shopping experiences across all touchpoints, the Sales Cloud for customer care across the entire customer journey, as well as the SAP Service Cloud and the SAP Customer Data Cloud. SAP CPQ is part of the Sales Cloud product family, but is still a standalone product.

The customer data required for the quotation is transferred to SAP CPQ. Here, all steps of the quotation creation process are handled, from product selection and configuration, integration of up- and cross-selling products, pricing and internal approval.

AI-powered sales efficiency

One of the strengths of SAP CPQ is the AI-based selection of products - supported by a comprehensive catalog, the efficient search, guided product recommendations and product comparisons, the definition of the appropriate configuration is easy. In addition, information on configurations previously ordered by the customer and the price history ensure the accuracy of the offer.

The process is further simplified by accessing existing configurations. Thus, products can be nested or organized hierarchically within the framework of so-called product nesting.

An example may be the configuration of a server cabinet, the subset of which is the configuration of each blade server within the cabinet. Bundles of products and services can also be predefined and conveniently integrated into a wide variety of offerings.

Internal approval is particularly important for high-volume quotations. SAP CPQ offers a role-based approval process for this purpose. The quotation can thus be forwarded to higher-level units, which can reject or approve it.

Information on margin and contribution margin provides further security. A reminder function ensures that this step does not unnecessarily delay the submission of the offer.

By integrating SAP CPQ with SAP CLM, the contract lifecycle management application, future contract creation can be further accelerated and legal, financial, and regulatory risks can be minimized.

A major advantage of the cloud-based solution is that product selection and configuration can also be carried out on site at the customer's premises. It is possible to see "live" how the respective configuration affects price and budget.

This personal involvement of the customer in the initial steps of the quotation process can protect the sales department from unpleasant surprises such as vagueness in the final quotation and accelerate the customer's decision to buy.

Sales success is only possible if the right product is offered at the right price at the right time. Attractive and targeted offers are also an important aspect of customer satisfaction and loyalty.

Of course, this is often a real challenge with complicated, variant-rich products. Solutions like SAP CPQ help to optimize the complex process and make it secure.

If the CPQ system is also seamlessly integrated into the CRM and ERP environment, the entire lead-to-cash process is decisively accelerated.