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  • CPQ |
    August 8, 2018

Learn Lessons From 4 CPQ Projects That Failed

By Graham McInnes, Sr. Principal Product Manager, Oracle

As a leading vendor of configure, price and quote solutions, we at Oracle see several constants in the industry. One is when starting to investigate CPQ, there are internal challenges that can’t be solved by repurposing existing tools. Another is using CPQ as a transformational change agent that’s been designed to evolve the organizational up the maturity scale. In both of these, it’s not unusual to see new executive leadership brought in to help guide the organization to the next stage of development. We see this all the time.

The challenge is that new executives, often in a rush to affect an immediate outcome, may make hasty decisions. As the old saying goes 'a new broom may sweep clean, but an old one knows all the corners'. Hasty evaluations of CPQ solutions are typically heavily weighted in favor of minimal licensing costs while ignoring the important nuances of the implementation of the solution. It’s painful to watch a company select a CPQ solution that’s either not up for the challenge, or is unsuitable for the organization. Outcomes are often long, arduous projects costing millions of dollars, wasting countless staff hours, and ending executive careers.  Here are some examples.

# 1 Communications Company - Scope Creep Drives Rising Costs

After spending $3 million on a CPQ contract, they needed extra functionality to cover additional product lines. So, the CPQ vendor revised their development roadmap to accommodate them.  But after building that functionality, to cover the implementation of the solution, the vendor requested and was awarded an additional $4 million dollars! Three years later, in order to deploy, the vendor asked for an additional $500 thousand dollars to complete the solution for a single product!

Cost:

  • $7.5 million dollars direct spend.
  • 36 months lost opportunity time and countless staff hours.
  • Result was a quoting tool still unable to support multiple product lines.

Lesson learned: Don’t count on promised roadmap functionality to solve challenges you have today. Go with the CPQ solution that offers the most robust product feature set and has a proven history of delighting companies, like yours.

# 2 IT Technology Provider – Shape Up, or Ship Out

Executives selected a niche CPQ vendor, expecting their company to be an important customer and receive greater levels of engagement. However, they didn’t anticipate overwhelming the vendor with their project that struggled for over three years before it ultimately failed. The executive team was fired and replaced. The new team rushed through a new CPQ evaluation and nearly selected the lowest cost vendor with an even smaller customer base than the first failed project vendor. Cooler heads prevailed when execs realized the career-ending potential of another lengthy project failure.
Cost:

  • Careers ruined for executive staff
  • 40 months lost opportunity cost.
  • 200 staff months wasted.   

Lesson learned: The primary focus of a CPQ project needs to be the transformational impact on your business, not on nurturing and developing a CPQ vendor and their software.

# 3 Industrial Manufacturer – Failing to Plan is Planning to Fail

This firm ran a pilot project with a small, low-price vendor using a limited set of products in a minor division of the company. The pilot dragged on for 18 months before management pulled the plug. Ultimately, the selected configurator didn’t function nor did the integrations with their enterprise software. The organization re-scoped the project as a global solution with a heavy emphasis on thoroughly blueprinting their requirements, data needs and engagements.

 Cost:

  • 18 months of lost time
  • 72 staff months wasted

Lesson learned: Pilot projects can waste time and resources. If you're unsure of how product functionality applies to your particular needs, demand a series of demos showing solutions that are similar to your challenges and how they’d work in your business. If you’re unsure of the value of CPQ, commit to a vendor that truly understands your business and has a history of delivering successful projects. 

# 4 High Tech Manufacturer – When in a Hole, Stop Digging

This business created a CPQ solution by extending the configurator functionality of their legacy ERP system. The resulting process combined a series of disconnected tools in a manual workflow that used email for approvals. Rolling out a new product required arduous modeling of ERP product definitions. The user experience was terrible.

To create a baseline quote, sales staff manually worked through 50+ different product parameters, many of which required pre-existing knowledge or training to set correctly. Frequently, the quotes generated by this system included expired SKUs, each of these necessitated manual troubleshooting and intervention. 

Cost:

  • Tremendous time invested to maintain the system
  • The quoting solution was still ineffective and inaccurate.

Lesson learned: To address a sales efficiency problem, focus on a CPQ solution designed to maximize the sales user experience. Can it present products in the way that a sales user and customers think of them? Does it allow you to define and govern what you want to sell so that only valid products are added to quotes? Does the solution provide automated rules-based approval steps to ensure that quotes are commercially validated before converting them to, and order?

Oracle CPQ Cloud - Breakthrough Opportunity Analysis (BOA)

In Conclusion

Drawing the line and calling a CPQ project a failure is a difficult and painful organizational decision to make. For dozens of businesses that found themselves in this position, Oracle has helped them pick up the pieces and get back on track for a successful CPQ deployment. Based on these experiences, we have a proven methodology that delivers a clear path forward.

Our preferred starting point is to organize a comprehensive two-day workshop called a Breakthrough Opportunity Analysis (BOA). The purpose of this workshop is to;

  • Map your current processes and supporting systems
  • Provide a holistic understanding of the business process flow
  • Identify opportunities for improvement, and
  • Engage all organizational functions associated with sales processes.

We’ve lead 100s of these workshops to work through many different transformational challenges with other organizations. The outcome of a BOA workshop is to build a sensible, supportable business case based on industry standards, best practices and existing customer reference cases. The BOA provides a clear path forward so that picking up the pieces of a failed project can be much easier even if there are highly charged politics and emotions from the previous experience. 

Let Oracle help you get back on the right CPQ track with a BOA.

For More information

 

Read the executive paper - Financial Impact of Selecting the Wrong Configure Price Quote Solution

Gartner Positions Oracle CPQ Cloud as a Leader

Learn more about Oracle CPQ Cloud
 

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