by Peter Sayer

What is CPQ? Automating quotes for customized solutions

Jul 16, 2021
CRM SystemsERP Systems

Configure-price-quote (CPQ) software automates the order quote process, from gathering a customer’s needs to delivering a detailed quote for the customized products or services that can fulfill them.

Three miniature packages sit on a computer keyboard.
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Configure-price-quote (CPQ) is the process by which a vendor of products or services ascertains how to meet a customer’s needs, configures a customized solution to meet those needs, and tells the customer how much that solution will cost to construct and deliver.

The eponymous three-stage process breaks down as follows:

Configure: All manner of products and services can be customized these days, from computers and cloud computing services to cabinets, cars, conveyor belts and more. Customers (and sales staff) may need help navigating the many options available for customizing a product or service, as well as the ways in which a choice for one facet of customization may restrict or open up options for another.

Price: Pricing of customized products and services can be very complex, ranging from, at its simplest, a quantity discount, to a measure of the scarcity of components, the difficulty of manufacturing, or the salesperson’s determination of the value of the solution delivered or how much the customer can afford.

Quote: Once price has been established, the potential customer needs the offer set out clearly in a document they can compare with rival bids, and submit to management for approval. If accepted, the quote will form the basis for the order and the invoice further down the line.

CPQ software

CPQ software automates what used to be a manual process, in which sales staff were required to look up how to calculate the cost of various options in a company sales manual, and so on. CPQ software can be used internally by sales staff as they speak with the customer, or directly by the customer through an online configurator, in which case the quote might appear as just another web page in the order process.

The software can also act as a recommendation engine for the salesperson, helping them identify the most appropriate product for a customer’s needs, or reminding them of related products and services they might upsell.

Some CPQ software solutions include artificial intelligence for optimizing prices based on what it thinks a customer will pay. Such tools are highly reliant on obtaining clean and complete data from the company’s customer relationship management (CRM) system.

CIOs will need to ensure that CPQ software connects with the enterprise IT infrastructure at a number of points: the product catalog to enable configuration, customer database to deliver the quote, order management to fulfill the order, and invoicing to ensure the correct payment is collected.

CPQ software vendors

Major CRM and enterprise resource planning (ERP) vendors include CPQ software as an integral part of their offerings. There are also a number of specialized CPQ software vendors that offer additional features or expertise in specific industries, and are ready to integrate their wares with whatever you’re already running. Some of the most popular include:

Aspire Technologies: Aspire’s flagship CPQ tool is QuoteWerks, which it describes as a bridge between CRM and accounting. It offers integrations with Salesforce, SugarCRM, Zoho CRM, and others, and can send tailored quotes directly through platforms such as Outlook or Gmail.

CloudSense: CloudSense is a configure-price-quote and order management platform built on Salesforce, targeting the communications, media, and utilities industries. The company handles everything from design through implementation to ongoing support of its product.

Conga: Conga moved into CPQ software through its merger with another Salesforce ISV, Apttus, in early 2020. Its portfolio now covers a broad range of digital commerce and customer lifecycle management functions built on the Salesforce platform.

Configure One: Configure One adds CPQ functionality to, SAP, IFS, Dynamics 365, and Oracle solutions that include NetSuite, JD Edwards, or Oracle Sales Cloud. It’s now part of Revalize, a privately owned software conglomerate that also offers PIM, payment, analytics, design, and simulation tools.

IBM Sterling CPQ: IBM acquired Sterling Commerce from AT&T in 2010, and now offers a range of e-commerce tools. Its CPQ offering is designed to handle multi-channel, multi-tier distribution models and to integrate with existing ERP or order fulfillment systems through a service-oriented architecture.

Microsoft Dynamics 365: Rather than develop a CPQ tool for its cloud-based CRM and ERP platform, Microsoft architected Dynamics 365 to make it easy to integrate third-party tools from its solutions partners. Over 100 are featured in its AppSource online store.

Oracle Configure, Price, Quote: Oracle offers its CPQ tool as something to integrate with a CRM system or ERP system, or as a bridge between the two, handling configuration of products and services through prepackaged integrations with Oracle Commerce and Oracle Subscription Management. For those that don’t want to integrate a third-party solution, the Salesforce CPQ tool features guided selling and the possibility to set contracted prices for repeat customers.

SAP CPQ: SAP’s cloud-based configure-price-quote software integrates with the company’s Sales Cloud platform, but also with third-party CRM systems such as Microsoft Dynamics or Salesforce.

Vendavo: Building on its range of stand-alone price guidance and margin analysis tools for the enterprise, Vendavo now offers a full CPQ tool with AI price optimization for integration with existing CRM platforms and SAP ERP systems.