21 Aug What to expect when you’re expecting . . . CPQ
by Kevin Willemse
It’s an exciting, scary time. You’ve been reading up and even joined online communities to learn more about the experience. Everyone says, despite the disruption and responsibility, it’s an amazing and rewarding journey. You’re starting to get tired of all your friends who won’t stop talking about how their worlds have changed since they took the plunge. Maybe you’d be great at it, and deep down you know it’s something you’re just putting off, it must happen sometime, right? You’re just nervous, and even though everyone’s experience is different, you want the facts. The time has come. It’s time to bring a new Salesforce CPQ instance into the world!
Fortunately, we’re here to help you with common questions that nervous first-timers have. Relax. We’ve been there before, and everything’s going to be fine. And while you’ll need more definitive, precise answers relative to your exact situation, we can help you prepare to become the best parent—sorry, CPQ project sponsor and administrator—you can be.
Will I need help raising my CPQ?
We have nothing but support and admiration for single parents. However, in the world of CPQ, having someone by your side from start to finish can help prevent many sleepless nights.
Any CPQ solution—depending on your rollout approach, readiness, individual needs, and internal platform capabilities—can very quickly become complex. There are many ways (some good, some not) to configure CPQ to perform a certain calculation, apply logic, run rules, and introduces features that even the most seasoned Salesforce administrator may not be familiar with.
Going it alone may seem like a great idea at first, but too often we see overspent budgets, internal user group conflict, delayed or failed projects, and poor adoption where CPQ has been assigned as “another internal IT project.” According to Salesforce, “When CPQ is deployed and used correctly, most users report an average of 15 percent in increased efficiency.” That is six hours in a 40-hour week! It is a business transformation initiative that requires extensive experience and invokes strategic considerations alongside a very niche and nuanced technical skill set.
If you do decide to go ahead and raise your Salesforce CPQ singlehandedly, here are some recommendations:
First, make sure you identify and engage all business units that may be affected, or provide input early on, all the way from marketing to order management, finance to customer care. Remember to invite them to the “baby shower” (requirements and user testing sessions) and bring them along the journey as if they were family.
Second, key project members (administrators and developers for sure, but business representatives and sponsors as well) should undergo formal product training and gather hands-on experience.
Third, start off small. Identify, design, and build the most valuable core feature sets of the CPQ solution for your organization and deliver these first. You can always grow from there, and your learnings from your firstborn will serve you immensely the second time around.
Fourth, have a change management and training strategy, or at least awareness, in mind throughout the project. You don’t want anyone telling you your baby is ugly.
Fifth, perhaps consider engaging a qualified Salesforce CPQ system integrator for the upfront advisory portion of the project to develop a strategic implementation and change management roadmap that you can then develop and deliver internally, knowing a trusted advisor is steering you toward success (as well as knowing someone to call on if the going gets too tough).
What will my CPQ cost?
Fortunately, the average cost of a Salesforce CPQ project is far less than 21 years’ worth of food, shelter, and college education. But it’s still difficult to define.
All the typical influences surrounding similar projects of a business-transformation nature apply to CPQ: complexity, user base, organizational and systems readiness, and the selected components from the Salesforce Quote-to-Cash shopping basket all play a factor here. There is no sticker price on a CPQ project.
With that in mind, there are still ways to assess whether your Quote-to-Cash implementation may exceed its expected budget and ways to acknowledge challenges that could inflate the final sticker cost due to complexity or non-preparedness. The following are scenarios or situations that could cause this and should be considered during budgeting:
Complex Pricing or Configuration Rules. A catalog with 10 products which are configured, priced, and contracted in 100 different ways is more expensive to implement than 100,000 products sold in a handful of consistent, defined ways. When considering CPQ, spend time finely mapping and analyzing the way a product moves through the sales process; the various iterations and processes it goes through from “a SKU in our catalog” to “PO-ready” will give you an idea of how complex your product rules need to be. If you discover your sales process involves multiple approval iterations, custom pricing models, bespoke massaging of contract or quote terms, or other once-off activities that delay an already-difficult sales cycle, you should question your pricing and configuration logic. Another giveaway is any time your quotes are moved “out of” your quoting platform and into spreadsheets or offline collaboration tools, then “forced back” into the quoting tool for final processing. This is not sustainable, and a clear indicator that your product rules cannot be (or simply are not being) applied consistently or elegantly during the selling motions, and that your CPQ configuration may need to simplify these rules (preferred) or be heavily modified to suit them (with attached costs).
Inflated Product Catalogs. If you have hundreds of thousands of SKUs that are running rampant, are not well classified, are created ad-hoc based on individual sale events, or generally have multiplied far higher than they ought to be, then cleaning up and normalizing the product catalog into something that can be used meaningfully in CPQ logic could be considerable effort. Conversely, a well-formatted, consistent, and established product database (an exercise you could conduct internally beforehand) sets the stage for a smooth, cost-efficient adoption of CPQ regarding product identification, pricing logic, and configuration rules. That’s not to say having thousands of products is always challenging, nor that a dozen products cannot present significant complexity. It’s all about how well defined your product hierarchy and classification methodology is, how scalable it is, and the quality of data inside.
Poorly Documented and/or Antiquated Business Processes. CPQ implementations are most efficiently delivered (across all aspects, including cost) when they are modeled around established, well-documented, and current processes. In a study conducted by research firm IDC, “companies lose 20 to 30 percent in revenue annually due to inefficiencies.” If you have not recently developed (or overhauled) and adopted accurate business process maps throughout your Quote-to-Cash cycle, tied to roles and persona journeys, now is the time to do it. Not only will this bring down the overall cost and timeline of your CPQ implementation, it will also ensure adoption and deliver measurable value almost immediately by aligning and accelerating the real-world processes it is built around.
ERP Dependencies or Integrations. Salesforce CPQ is a data-centric, rules-driven application that potentially introduces complex product configuration logic and pricing calculations. It also extends into the order fulfillment and contract management portions of the organization. If the underlying data that drives product criteria and logic is mastered and remains in ERP systems or external repositories, some heavy lifting may be required to ensure neither system’s data is compromised, nor the overall expected capabilities from the CPQ end product. This not only applies from the ERP-to-CPQ perspective, but also during the postconfiguration CPQ processes where orders need to be fulfilled, contracts set up, renewals and amendments managed, and service levels maintained. These postsale records and events are traditionally managed in back-end ERP systems, but a well-implemented Salesforce CPQ solution often takes over these transactions and hands them off to the ERP, usually just for financial and billing purposes. These are just a few examples of how—if you have enterprise-level ERP systems in play, or disparate data sources mastered across various repositories—CPQ can go far in relieving, streamlining, or playing nicely with them (thanks to the massive integration capabilities of the Force.com platform architecture). It also hints at increased complexity, and therefore, increased costs.
Modules Implemented. There is a reason why Salesforce CPQ (the product) should more accurately be referred to as “Quote-to-Cash” (the solution). The idea that Salesforce CPQ simply configures a product, prices it accurately, and produces a quote is misleading. Salesforce CPQ is also a sophisticated tool for controlling sophisticated approval processes, generating and managing orders, contracts, renewals, and amendments, and even performing revenue-tracking and billing functions. All these features, either built into the product or available as bolt-on Salesforce modules, may or may not be valuable for your organization. Depending on the final set of requirements from your Quote-to-Cash solution matched to these features, each will require an investment in terms of design, configuration and deployment effort, and some will carry additional feature licensing costs as well.
How long will it take to deliver my CPQ?
Usually, around nine months.
That’s a joke, but it’s not far from accurate for an end-to-end Salesforce CPQ implementation in an enterprise-level business! The truth is, factors such as the size of your business, modules implemented, number of integrations, and data dependencies and requirements all play a factor here (in fact, most of the factors mentioned above that influence cost would likely have some impact on your timeline as well.
If timing is a crucial factor, consider establishing a point in the future when you expect to start delivering value from CPQ. Then share this reasoning with a qualified system integrator during your initial conversations. This will help define the feasible scope that can be delivered across the broad array of CPQ options and modules. From there you can both assess how these deliverables and feature sets fit with your timeline expectations. Preparation and internal assessment are key; important factors must be considered, such as how suitable, mature, or complex your processes, systems, users, or project resources are, as well as efforts around rollout and change management. These honest readiness assessment results, good or bad, will help determine a feasible timeline.
To help you sleep through the night however, know that often a simple, core-module implementation of Salesforce CPQ for a smaller user set without complex or expansive requirements can be realistically delivered and fully stood up in just a couple months. Even enterprise-wide, complex implementations across global operations and multiple selling models are unlikely to run more than nine months. Any more than that, and you should investigate phased rollouts or alignment to an enterprise program to realize value and ROI from CPQ sooner rather than later.
What will be my rewards for having CPQ?
CPQ projects are rarely brought into the world simply for something to love and enjoy; and, thankfully, we don’t wonder what our children’s ROI will turn out to be (well, most of us). In the world of enterprise projects though, these numbers matter, and we need to define our KPIs.
In an earlier blog, Simplus released an actionable set of frameworks and approaches discussing how to identify and build KPIs and metrics specific to CPQ implementation projects. A summary extract of this is given below, but we recommend reading this useful deep dive into CPQ project KPIs by clicking here.
When considering building your KPIs, start at the highest level—your mission or vision statement—and work through the critical business drivers and associated activities to achieve this, to help clarify what should be measured. Then, move into your systems and data sources to identify how technology enables or makes available the required data points needed to feed the indicators.
Be careful to differentiate project deliverables versus actual KPIs. The former is a targeted output result with a defined lifespan; the latter are ongoing, continual improvement measurements against a benchmark, usually without a defined target.
Well-crafted KPIs are the GPS on your travels towards your company goals but are only effective when they are fed accurate data from well-adopted systems, mapped against a desired destination, and observed by users willing to take course-correcting action.
Do I really need a CPQ solution?
Don’t feel bad for asking! It’s up to you and depends on your needs, circumstances, current challenges, and where you see yourself in the future. Here are a few guiding statements that may help you decide whether it really is time to take the CPQ leap, or maybe put it off until a more opportune stage of your business’ life:
“My product catalog is a mess and doesn’t really represent what we sell.
“My sales team spends far too much time manipulating and justifying their Salesforce opportunity data.”
“My team battles to submit, track, or manage quote approvals, resulting in turnaround delays or reduced profit margins.”
“It takes too long for new sales reps to learn how to produce commercially and functionally viable product configurations on their quotes.”
“Due to the nature of our business, pricing and configuration rules are necessarily complex.”
“Producing quote documents that are accurate and attractive happens outside of Salesforce.”
“My Salesforce opportunities and/or quotes objects are overly customized and becoming unwieldy.”
“Our product lines will be expanding, and our current quoting methods and tools will need to be further customized to support them.”
“We are (or are evolving into) a recurring-revenue, contracts-based company that needs elegant and sophisticated ways to produce and manage our contracting processes and associated customer sales, ordering, and pricing processes.”
If you agreed with most of the statements above, chances are good that you are ready to welcome Salesforce CPQ into your life.
Embarking on the Quote-to-Cash journey can be daunting, and at times research seems to produce more questions than answers. We get that. While this blog may not be the definitive guide to CPQ parenthood, we hope it provides some insight into what to bear in mind and how to navigate the biggest questions, and that it brings you a step closer to making an informed decision that realizes your expectations. Moreover, like parenthood, remember that there are many resources and professionals, like the team at Simplus, ready to help you along the way. Good luck!
Kevin is a Principal Consultant with Advisory Services here at Simplus. With 20 years’ experience in business solution consulting and delivery, Kevin has formed, led, and been part of dozens of project teams as an analyst, project and services manager, solution engineer, technical strategist, and change management advisor. With this track record, and having worked on both sides of the consultancy and advisory services table, Kevin creates and encourages open discussion around the impact and considerations of technology, people, and process transformations to take businesses from bold ideas to actionable implementation strategies and roadmaps.