Expert Advice for Medium and Midsize Businesses

What CPQ Can Really Do For You: #4 - Error Free Orders

Andy Pieroux
Founder and Managing Director, Walpole Partnership

We've been taking a deep dive into the real benefits of Configure, Price, and Quote (CPQ) solutions and what lies beneath the headlines. Now let’s shift focus to a benefit further down the 'quote-to-order' process. CPQ marketing materials often state that it can provide 'Error-Free Orders.' What does that really mean, and why should you care?

Firstly, let's look at where CPQ typically sits in the quote to order process: 

CRM<>CPQ<>ERP/Order Management

One of the key jobs of a CPQ system is to deliver information to a downstream system that will execute the order whether that's delivery of goods, provisioning of a service, or any other deliverable in return for the customer’s order.

Sometimes these downstream systems are highly structured and automated like an Enterprise Resource Planning (ERP) system. Sometimes they’re simpler and often older order management or provisioning IT systems. They may be manual or paper based processes, or a collection of disparate systems. We've seen all kinds but for simplicity sake, we'll refer to them as 'the ordering system', whatever form that system takes.

The ordering system requires inputs that are all the data elements required to make that order happen. They can be product detail, customer information, billing factors, service levels and more. Every organization and system is different.

How Does CPQ Help Provide Error-Free Orders?

Configure - An integral part of a CPQ system is the configuration engine. One main role the configurator fulfills is to ensure that the salesperson or user can only generate a valid configuration, list of parts, or a valid service description. Configuration rules limit the choices that can be made. For example, if you’re selecting components of a car, you can't select rear electric windows on a 3-door car! In short, the configurator ensures that only a valid combination of parts or services are generated as part of the order.

Price - The pricing element of CPQ typically refers to the commercial and contractual aspects of a deal. Rules are enforced at this stage of the process to ensure that all critical information is captured, regardless of the deal type. All customer information can be mandated, or even integrated with a CRM system. Billing terms can be specified and prices established. A good CPQ system allows for every element of your workflow to be defined and all critical information specified.

One of the most important aspects of the commercial terms is the approval of pricing levels and any other non-standard elements of the deal. Discounts can be tracked and approved according to business rules.  Elements like expedited delivery or customer-specific terms can be checked and approved before the quote is finalized with the customer.

Quote - In most CPQ systems, this refers to the ability to take the information that's been captured and to present it in the most appropriate way. This usually means customer-facing documents like proposals, quotes and contracts are accurate and well designed. Equally though, it can refer to the presentation of all the deal information in a structured way such that downstream systems can interpret it easily - either via direct integration, or at the very least, making manual re-entry as simple as possible.

Why Should You Care?

Think about the consequences of an order being generated with inaccuracies. After the customer signs off, there are two main potential problems.

1) Failed orders - At the simplest level, the order may fail at the point an attempt is made to push it into the ordering system. Most ordering systems have controls over what can be entered. Systems that are not designed with each other in mind may refuse to play nicely together.

2) Incorrect fulfillment - Some inaccurate orders may pass through validation in the ordering system and parts may actually be delivered before anyone realizes that they simply don’t work together. If you've ever gone grocery shopping for a meal, but then got home to discover you forgot a key ingredient, you'll understand this. Individually, all the items make sense. But, together, they don't give the desired end result.

When we analyze these scenarios, the cost to the organization quickly mounts up. Orders that stop at the administration stage will often be delayed. This means missed shipment dates and in some cases, it can impact service level agreements (SLAs). Admin time to put things right costs time and money and inevitably, the sales person will need to provide input too. If this means going back to the customer to explain the error, it reflects badly on the salesperson. In some cases it can cost you the deal.

Wait, There’s More!

Sadly, this isn't the worst-case! When inaccurate orders aren't caught before delivery or provision, the customer will receive the wrong item, or a product or service that just doesn't work. This can range from a mild annoyance to severe dissatisfaction - especially if the purchase was something the customer was relying on for a mission critical process. The compound effects can be enormous and the cost of the mistake to reputation and credibility can be grim.

With a well-designed CPQ system that implements well-defined business rules, all these problems can be avoided. Of all the benefits CPQ can provide, ‘Error-Free Orders’ is one of the most important, and with potentially the biggest impact to the bottom line!

What does your organization have in place to provide error-free orders? Learn more in our our new ebook.

* Originally published on walpolepartnership.com.

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