‘Big Rocks’ to address in your CPQ transformation

As companies evolve to sell solutions that combine products and services with a bundled pricing and discount strategy, they often wonder how to keep things simple to sell these new, integrated offerings. During this journey, organizations realize that their existing sales tools are difficult to scale and are inadequate for selling these solutions and fail to serve the needs of indirect and direct sales channels.

To address these challenges, businesses can adopt Configure, Price, Quote (CPQ) tools, an essential enabler for sales and service teams to simplify how they assemble, price, discount and articulate value for a tailored customer solution. The demand for CPQ platforms has grown rapidly with the market for CPQ solutions projected to reach nearly $5.8 billion in 2026. (1) CPQ vendors highlight the revenue and productivity improvements make the case for investment in these solutions:

• 15%-20% improvement in sales quota attainment

• 20%-30% reductions in time to generate a quote

• 5%-20% improvement in average deal size

When beginning a CPQ transformation, it can be difficult to draw boundaries on scope. Anything related to product and pricing quickly impacts how the business thinks about opportunities, contracts, order management and billing. How can companies achieve meaningful CPQ-driven optimization without unwinding the whole operation? Understanding the following “Big Rocks” — the main priorities — in CPQ design is critical to confirming that foundational design elements are anchored in value drivers.

Big Rock No. 1: Simplify the product catalog and rules

A habitual lack of discipline around maintaining the product catalog leads to superfluous and outdated SKUs, crowding the user interface and increasing the costs to store and maintain stale data. In the initial stages of a CPQ transformation, it’s important to rationalize the product catalog so that the new tool enables the go-forward product strategy. Companies can accomplish this by:

• Eliminating SKUs that are not required for future sales

• Consolidating SKUs by using configurable product attributes

• Refreshing product rules to govern what can and cannot be sold together  

Big Rock No. 2: Streamline quote approvals

Manual and time-consuming quote approval processes are among the chief complaints from sales teams. Makeshift approval processes accumulate over the years as new stakeholders, business priorities or acquisitions add new approval requirements. Redefining quote approval procedures is an essential part of positioning CPQ tools to optimize approval times, tracking and permissions. To do this, answer the following questions:

• What requirements should trigger an approval?

• What are the distinct paths to route an approval?

• Who requires permissions to grant an approval?

Big Rock No. 3: Know the limitations of boundary systems

A CPQ tool is the bridge between opportunities, contracts and orders. Because the tool sits at the center of critical applications — customer relationship management, contract management and enterprise resource planning platforms — it must be designed in a way that considers any limitations of the boundary systems with which it will integrate. The initial design must effectively integrate with boundary systems and be able to evolve as those systems change. Consider the below questions when addressing the boundary systems:

• What is the complete inventory of systems that will integrate with the CPQ tool?

• Do any boundary systems have planned transformations that may influence how CPQ features are developed and deployed? If so, consider what CPQ development should be deferred or delivered in coordination with that transformation.

• Are there boundary systems for which the business is not willing to invest in enhancements or changes? If so, the CPQ design must work within these limitations.

Maximizing value: What metrics can the above actions improve?

Elements prioritized in design are anchored in the value they can deliver. CPQ designs that address the Big Rocks early deliver value through sales productivity gains (cost-of-sale reductions) and optimization of IT operating costs.

When a future-state CPQ design is initiated, understanding the value that can be unlocked by focusing on these Big Rocks enables companies to make the associated key design decisions to confirm early stakeholder alignment, avoid costly rework and establish a technical architecture that can be scaled as boundary systems evolve. By addressing areas that offer distinctive value metrics, organizations demonstrate a joint value proposition for the transformation that delivers both business and technical efficiencies. This can accelerate executive buy-in for subsequent phases of the undertaking and pave the way for a successful CPQ transformation.

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