By Andy Pieroux, Founder and Managing Director of Walpole Partnership Ltd.
The first time I ever saw an Enterprise Resource Planning (ERP) system, it was the late 90s and I’d been quite excited about seeing this mythical beast. The company I worked for had long struggled with many out-dated and disparate mainframe systems. Like many other organizations, we were seduced by the possibility of ‘one system to rule them all’ and invested heavily in ERP.
I completely got the concept; one database, interlocking processes, a seamless transition of sales orders to manufacturing, logistics and accounts. The future was bright! Meanwhile, the Internet was growing and Amazon, eBay and Boo.com (remember them?) were revolutionizing the way consumers interacted with enterprises. In my mind, it was easy to conflate the two and I imagined a brave new world in which a modern computing experience was on its way to a desktop near me.
And then I saw my first ERP user interface. Google ‘ERP User Interface’ and then click the Images tab and you’ll see what I mean. Ugly.
With few exceptions, you'll see functional ERP screens laid out in a logical sequence for data entry. In 20 years, not much has changed. The user experience (UX) was underwhelming then and it’s barely made marginal gains since. I’m not saying ERP systems don’t work - quite the reverse. Once a transaction is started, a well-designed ERP system will handle that order quickly and efficiently, triggering activity, booking revenue and costs and is generally productive.
But why must ERP systems look so boring? One key reason is they are designed with the sales order as an input. When an order arrives, the sales activity has usually already happened, so the order is presented as ‘ready for processing’. The assumption is that the order is good to go, and from the point of ERP entry, we kick off a linear process. The needs of this process input are a clearly defined set of fields or attributes where none can be missing. The screens we saw earlier are the logical way of entering the same data, over and over and over.
However, this is completely different compared to when a salesperson closes a deal. Here, we’re concerned with a highly interactive process of working through various possibilities to hit the moving target of customer needs while navigating competitive offers across the wider business environment. This world of ’what-ifs’, negotiations and last-minute changes to close the deal is full of constant, dynamic uncertainty that requires different systems to enable it. Customer Relationship Management (CRM) and other customer experience (CX) systems are founded on this principle and are more effective at managing it.
Organizations that do not realize the difference between these two mindsets can become unstuck quickly, and it is here where Configure Price and Quote (CPQ) solutions can help. I’ve often heard the view that there are two types of configurators - a sales configurator and a manufacturing configurator. The latter is concerned with precision and detail - very much an integral part of many ERP processes, and vital to accuracy. The former is designed to aid the sales process; to be flexible, fast, to guide the seller and even the buyer through choices. Do not confuse the two.
It’s critical to enable your sales force and sales operations teams with the tools they need to manage uncertainty and end up with a well-defined output. A well-designed CPQ system will enable your sales operations teams to get the most from their customer interactions.
CPQ to the Rescue
By placing CPQ in front of your back-end systems, it can give your ERP the outward facing makeover that it so badly needs. This is not just a veneer, although it can replace those soulless data-entry screens, which makes me very happy! It is about connecting customer-centric revenue generating activity with the pragmatic efficiency of ERP. It’s the missing link between CRM, CX and ERP by protecting margins and fixing incorrect accounts receivable ledgers and inaccurate orders while giving salespeople and customers the tools and experiences they need.
Aberdeen Group identified that when organisations integrate CPQ with ERP, they see several benefits;
CPQ won’t correct inherent problems in a badly designed ERP system (you shouldn’t put lipstick on a pig after all). But the modern, seamless lead-to-cash journey enabled by CPQ with ERP won’t need any airbrushing at all.