SAP CPQ Transforms the Sales Process

Constellation Research’s latest report has found that SAP’s configure, price, and quote offering, SAP CPQ, prompts both behavior change and better customer interactions in the complex world of sales.

What is a CPQ system, exactly? Every sales interaction has a few distinct components; namely, the development of a set price for an item, any necessary adjustments, and then presentation to the customer.

This can be viewed, in a simple format, as the purchase of an ice cream cone on a hot day. A single scoop has a set price, and additions like toppings or extra scoops will adjust the price. In this example, it’s an easy — and delicious — transaction. But many sales processes, especially in the B2B setting, can become complicated very quickly, with variables like specific configurations, pricing changes, the combining of products and services, and multiple validation requirements across an organization.

This is where SAP CPQ comes in. The sales configuration solution is designed to allow clients, sales teams, and partners to accurately and efficiently create proposals and configure, price, quote, and order complex products and solutions that deliver what the end client needs.

Nicole France, vice president and principle analyst at Constellation Research, recently did a deep dive into SAP CPQ and presented results in an offering overview, “SAP CPQ Transforms the Sales Process.” The full paper, available here, first offers a brief overview of the inception of SAP CPQ, noting that the solution capabilities were acquired as part of SAP’s purchase of CallidusCloud in 2018.

Part of the CallidusCloud acquisition, and since becoming part of the SAP Customer Experience portfolio, SAP CPQ has evolved to support direct sellers, channel or reseller partners, and commerce channels that enable customers to purchase directly online.

How does CPQ serve customers today? As France explains, “SAP CPQ aims to solve several primary challenges. One is responding to demand from customers and distributors for self-service buying channels. Another is managing the increasing complexity of pricing, which can be as complex as product configuration. This is particularly true for combinations of products and services. In this scenario, configuring deals becomes more important than configuring products per se.”

Notably, SAP has built artificial intelligent (AI) capabilities into SAP CPQ to help with both guided selling and deal analysis, and it integrates with a wide range of customer experience solutions both within SAP and externally.

While CPQ systems have their origins in manufacturing, where deal sizing and configuring can become extremely complex, technology buyers from all industries are today recognizing the value in investing in CPQ. Notable applications for use include integrating distinct sales organizations after acquisitions and developing quotes in organizations where multiple sales units are involved, up to a point of 100% accuracy.

France notes, “SAP CPQ streamlines, simplifies, and automates the administrative aspects of providing pricing quotes, proposals, and contract terms. Greater speed and accuracy benefit all parties: buyers, sellers, production, fulfillment, legal, and finance. SAP CPQ has the added benefit of nesting within a broader set of related capabilities designed to facilitate the entire sales process.”

She continues, “Many of SAP CPQ’s customers manage extremely large portfolios of products and offerings. In some cases, those portfolios include products with millions of possible variations. For these types of customers, effective CPQ tools must be able to support both complex configurations and large deals that include many thousands of line items in a single quote… SAP CPQ allows coordination across all potential sales channels as well as the ability to manage separate options for each channel.”

For customers that are embarking on a search for a new, or replacement CPQ system, France advises: “The buying process may be a crucial element of customer experience, but it is only one element of building durable customer relationships. Because SAP CPQ forms part of the overall SAP Customer Experience portfolio, it lends itself to sparking change in other aspects of the customer experience as well, notably marketing and customer service. The insights generated by SAP CPQ shape a different set of conversations between and among departments. Make the most of those discussions to extend customer-centric transformation.”