How CPQ Systems boost sales automation and CRM

By John Moore, CIO |  Enterprise Software, CRM

A company that changes what it sells may also have to change how it sells. That's the case for Ceridian, a Minneapolis-based company that originated as a payroll outsourcing service bureau.

Ceridian has gone through a business transition in recent years in which it has emerged as a cloud provider of human capital management (HCM) services. In 2011, the cloud push got underway with Ceridian's investment in Dayforce, which provides software-as-service-based HCM solutions. A year later, Ceridian acquired Dayforce and launched a cloud offering that bundles human resources, payroll, benefits, and time and attendance, among other functions.

Related: Why SaaS HR Software Is Ready to Take Off

Larry Dunivan, CIO of Ceridian, says the modernization of Ceridian's product portfolio and its reinvention as a cloud company has compelled a shift in how it goes about the sales process. One element of that new look: A configure, price and quote system.

CPQ software aims to speed up the sales cycle, helping reps configure product and service offerings, price them appropriately and generate sales quotes for customers. "A big part of that modernization model," Dunivan says, "is to give the sales force the tools they need to be more responsive to customers."

With that in mind, Ceridian selected the Apttus CPQ and contract management offerings. Ceridian is piloting the cloud-based solution, which is slated to go into production in the next 60 days.

CPQ a Growing Niche Within CRM Systems

Companies in industries ranging from computer hardware to healthcare are also adopting CPQ technology. "It's a small but growing niche-one of the hotter growth areas in Sales 2.0 technologies," says Peter Ostrow, vice president and research group director for customer management and sales effectiveness at Aberdeen Group.

Ostrow describes CPQ as one of the next-generation technologies that bolt onto customer relationship management systems. Essentially, the technology represents another tab within CRM, operating alongside traditional CRM tabs such as sales forecasts and inventory. He says CPQ buyers are primarily organizations selling fairly complex, high-priced products.

Although CPQ doesn't have to link with CRM, it typically does. Ceridian's Apttus deployment links with Salesforce.com, for example. The company also integrates CPQ with its marketing automation software, Oracle's recently acquired Eloqua, Dunivan notes.

Apttus is closely linked to Salesforce.com as a matter of course. The software runs on Salesforce infrastructure and is sold through the Saleforce AppExchange, according to Apptus CEO Kirk Krappe, though a company doesnt have to be a Salesforce customer to use Apttus.

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With its close ties to CRM, CPQ extends sales automation beyond opportunity management and into adjacent sales activities. CPQ is among the enabling technologies that seek to optimize what Ostrow terms the "lead to win" process through which a sales opportunity makes its way through the pipeline. "The idea is to automate part of the process, especially where repetition is slowing people down," he says.

Configuring a product or set of products each time a quote goes out is one example of time-consuming repetition. With CPQ, however, the sales organization doesn't have to start from scratch. The technology captures what other sales reps have done with other accounts and provides a wizard-driven process that lets a rep readily create a quote, according to Ostrow.

Organizations can also establish guardrails in the system that keep sales people within corporate policies such as discount rates or payment terms. Quotes that go above a discount threshold trigger an approval workflow. Similarly, a request for 90-day payment terms versus a 30-day corporate standard will kick off an exception process.

"When [sales reps] do go outside the boundaries, there is an expedited way of getting approval from executives," says Kamal Ahluwalia, chief marketing officer at Selectica, a CPQ software vendor. Selectica, which provides a workflow and approval process through its software, counts Cisco Systems and IBM among is customers.

Ahluwalia says a customer can define the people who need to approve various exceptions, and in what order. There can be multiple approvers as the process moves up the executive chain, he adds. Each executive in the chain can give the green light, reject the variance or request more information. "They can make an informed decision without slowing down the process."

CPQ Enables End-to-End Sales Workflow

Prior to adopting CPQ, Ceridian used Word documents and spreadsheets to handle configure, price and quote functions. It also attempted to use certain modules associated with its on-premises enterprise resource planning (ERP) system to do the job.

Ceridian's new approach involves the Apttus deployment and the implementation of new contracting documents, Dunivan says. The biggest benefit is an improved customer experience. Before Apttus, when Ceridian delivered a quote, it would include all the additional items the company offered. The other items weren't relevant to customers and often confused them, he says.

Apttus, on the other hand, focuses just on the relevant products when it dynamically creates a quote. The system and revised contracting documents reduces the size of a quote and contract from an average of 60 pages to about 10 pages.

The automated solution will likely speed up sales as well as making the sales process easier on customers. "We anticipate significant decreases in the amount of time it will take to negotiate a sale," Dunivan says, adding that deals will take days to conclude instead of months. He also expects the number of artifacts to increase once Apttus goes live.

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Overall, Apttus becomes part of an end-to-end, integrated process that begins with sales lead, moves on to quoting and an approval workflow, and continues straight through to billing. Here's how it works at Ceridian:

  • A lead is automatically passed from Eloqua to Salesforce.com.
  • When the sales rep accepts the lead and needs to generate a quote, the rep can launch Apttus from the sales opportunity within Salesforce.
  • Using Apttus, the rep can configure the quote based on products of interest. The quote is generated and attached to the opportunity.
  • If the rep changes the terms and conditions, that action triggers an approval process that is handled though Apttus, which routes the changes for approval. The quote is not released to the customer until the appropriate authorities grant approval.
  • Once the sale is closed, Salesforce creates a customer record-if the customer is new-and billing information. That billing information feeds into Ceridian's Oracle billing system.

Ostrow cites other potential CPQ benefits. CPQ systems aim to help reps meet their sales quotas and crank out more proposals, he notes. The Aberdeen Group, in a survey of CPQ-using organizations and non-users, finds that 58% of the sales reps met their quotas among the CPQ users, while 46% met their sales goals in the other organizations. Aberdeen also discovers that the CPQ users were able to generate 20.9 proposals, quotes or RFP responses per rep per month. The other group managed 14 per rep per month.

CPQ offers soft benefits as well. The technology can cut down on pricing and order inaccuracies; Ostrow says that means "more time spent getting things sold and less time fixing errors and mistakes."

Interest in CPQ Grows, Albeit Cautiously

Industry executives say interest in CPQ is growing among enterprises. The increased attention stems from the recognition that sales automation impacts not only revenue, but profitability and customer satisfaction.

"These are areas of concern for not only sales but the entire enterprise," Krappe says. "The quote-to-cash process is the single link between top-line, bottom-line results and customer satisfaction. No other process is as critical for maximizing the value of capturing revenue in a profitable way and meeting the needs of customers."

Adds Selectica's Ahluwalia: "Speed is the No. 1 driver. Business changes very rapidly today. Products and pricing change much more frequently than they used to. Market conditions change, competitive offerings change, customer demands change-all requiring today's business to be agile."

Related: 5 Elements Your Cloud Infrastructure Needs to Enable Application Agility

This dynamic environment, Ahluwalia says, forces companies to companies to use technology to support all their sales channels and not rely on individual brilliance.

Getting to the benefits of CPQ isn't a simple undertaking, however. Ostrow says CPQ ranks on the high end of the complexity spectrum among the sales enablement technologies he covers.

"It's not just plug and play," he says, noting that adopters should take the time to get the application right before it goes into production. He suggests rolling out a system on a test basis, with a limited set of users, to work out the kinks.

Making a good first impression is critical with the sales department. CPQ will end up dead in the water if users find it doesn't understand their world. "With a sales audience," Ostrow says, "you have one chance to give them an application they embrace."

John Moore has written on business and technology topics for more than 20 years. His areas of focus include mobile app development, health IT, cloud computing, government IT and distribution channels. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.

Read more about business process management (bpm) in CIO's Business Process Management (BPM) Drilldown.

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