Introduction to CPQ (Configure, Price, Quote), what are “configurators”?

Bill Barlas

Traditionally, an Enterprise Resource Planning, (ERP), system is the ledger in which a company maintains its operations and finance activities. A Customer Relationship Management (CRM) system is the rolodex the sales team uses to track engagement with prospects and gather analytics. In the same way, a Configure, Price, Quote (CPQ)  system can be thought of as the organization's price book or catalog.

Many ask the question, why do I need a CPQ if I have a CRM? Similar to how an ERP is much more than a ledger, and a CRM is much more than a rolodex, modern CPQ systems can fulfill an amazing amount of functionality for internal sales, operations, suppliers, and external sales representative networks. 

Gartner states: "A CPQ application suites is deployed to support self-service sales environments, including business-to-consumer (B2C) and B2B sales environments." It is also the source of truth for pricing, and product configuration information for the company. A CPQ is fundamentally a sales configurator and answers a question sales reps may have: how do I quote faster to win more business? There are a few reasons why companies are compelled to l implement a CPQ:

  • Loss of domain knowledge from the retirement or exit of key resources
  • More business through improved performance in the Inquiry-to-order processes which help reps quote faster
  • Central location for all product information and data which allows more cohesive relationship between sales, sales operations, product management, and operations
  • Quick and seamless updates of pricing
  • Ability for representatives to quote on the cloud, rather than using e-mail and excel. Allows for analytics on what is being quoted in the marketplace

To achieve the full benefit of a CPQ system, the single most important aspect of the project is the system design. This is important in terms of picking a vendor for the system, and performing the business analysis needed to streamline the sales cycle.

The “Configure” in Configure Price Quote  should be considered carefully when choosing a vendor. A configurator's  capability is run through an underlying technology called a “business rule engine”. These engines come in different varieties. Vendors offer rule builders, constraint based engines, and scripting capabilities to create the configurator portion of the system. During selection of a vendor, be wary of flashy demonstrations with unrelated products. The key  is to think through your long term goals for the system, and then work with the vendor to build sample configurations and demos with your data and products. Understanding how the back-end of the system works, and allowing yourself time to test the maintenance of their proposed solution will ensure long term success in maintaining your tool.

About the Author

Bill Barlas is the founder of Quick2Bid. Bill began implementing enterprise software for corporate companies years ago, and prides himself on being caring and communicative in order to drive business results.