5 CPQ facts up close
What do you already know about CPQ configuration solutions? Based on the brief study "Variant management and customer relationship management" by VDMA, we have compiled five CPQ facts for you. We hope you'll discover some new facts you've never heard before. Have fun reading!
Fact no. 1 – What does CPQ stand for exactly?
CPQ stands for the three areas Configure, Price, and Quote and is considered the evolution of a pure product configurator. However, the three areas are not entirely separate from each other. Oftentimes, the definition of the three varies from manufacturer to manufacturer. In the mechanical engineering sector, the following definition can be considered generally valid:
Configure: specification of products and services as the basis for quote generation
Price: cost calculation and determination of customer-specific sales prices
Quote: creation of quotes and supporting documents, for example, the calculation sheet
Additionally, the entire product landscape including all variants can be modeled using a set of rules. Sales teams then access the set of rules during configuration and can create valid and error-free quotes anytime.
Fact no. 2 – What is even the purpose of CPQ?
CPQ solutions are used for all kinds of tasks surrounding the process of quote generation. Such tasks include pricing, configuring the ideal product solution, managing requests and quotes, and - of course - generating quotes.
Thus, the focus is on the sales aspects. However, the product management and IT departments are also important for the deployment of a CPQ solution as the existing product structures first need to be imported into the CPQ solution and then enriched with technical and sales-oriented knowledge. The product management team can, for example, analyze low and high runners and generate country-specific analyses.
Figure 1 shows the main applications of CPQ in the mechanical engineering and equipment construction sectors so far.
Fact no. 3 – What is the utilization rate of CPQ?
While ERP, CRM, and CAD systems are popular and widely used, CPQ and PLM systems are significantly less in use although the deployment of CPQ solutions has proven its benefits for many companies for decades.
Companies that deploy CPQ solutions accelerate their entire sales process significantly. CPQ represents a genuine competitive advantage for any company that deploys it. Additional benefits include higher transparency and comprehensibility in quote calculation, reduction of errors during handover processes, and access to the current product knowledge for all employees.
Fact no. 4 – How high is the degree of integration of CPQ into existing IT landscapes?
Figure 3 shows the degree of integration of CPW into the IT landscape in the mechanical engineering and equipment construction sectors. For example, many specialist departments can benefit from secure data exchanges when combining SAP and CPQ.
Starting with precise information on delivery times and inventory to live price checks during configuration to automated quote generation including bills of materials.
Fact no. 5 – What are the potentials of CPQ?
- The customer and their wishes gain even more focus
- Higher success rate with custom-fit and error-free quotes
- Digitalization of sales processes
- Digital lead generation using online configurators
- High transparency by working collaboratively
- Increased modularization and standardization of products
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