Companies across all industries invest millions of dollars in customer relationship management (CRM) and ERP systems to establish corporate standards and automate business support. But a considerable amount of day-to-day business operations flows outside of the core competencies provided by CRM and ERP.
For example, most companies can define their target markets, how they acquire new customers, the channels that support their distribution strategies, and their customer retention practices. When you ask these same companies what IT systems they use to enable these commercial strategies, however, they often refer to third-party systems that operate as IT silos or manual business processes — instead of their own CRM or ERP system.
FPX CEO Dave Batt took readers' questions on how to enhance and extend your SAP CRM and ERP investment by implementing a single Configure-Price-Quote (CPQ) application in the cloud to optimize and automate all Quote-to-Order and Renewal Management business processes. He talked about specific use cases and business benefits, and answered questions such as:
- What business processes go beyond CRM’s capabilities?
- Why is it important to address these business processes with new technology when I am already supporting them manually?
- I have Variant Configurator today; can CPQ support these business processes?
- I use Salesforce.com for my CRM system and SAP for my ERP system. Does CPQ support both of these systems?
- What are some of the business benefits my company can expect from migrating CRM and ERP systems to the cloud?
Natalie Miller: Hello everyone, and welcome to today’s Q&A on optimizing and automating your configure-price-quote processes in the cloud. I’m Natalie Miller, features editor of SAPinsider and insiderPROFILES, and I’m thrilled to introduce today’s panelist, FPX CEO Dave Batt. Dave has over 25 years of executive leadership experience and is an expert in CRM and sales effectiveness solutions.
Hi, Dave, thank you so much for being here today to answer readers’ questions SAP CRM and SAP ERP in the cloud!
Dave Batt: Thank you, Natalie, and a warm welcome to all on the live Q&A chat today. I’ll kick off the session today with a couple of statements and then begin addressing questions. FPX is a software vendor and strategic partner of SAP. We provide enterprise-caliber, configure-price-quote (CPQ) applications. FPX CPQ can operate as a composite application within your existing CRM systems (cloud or on premise), as well as a standalone, end-user application.
Currently in version 8 release cycles, our products are mature and market proven. Our product strategy is aligned to address a classic challenge each of you face today — business flows outside the core competencies provided by your CRM and ERP applications. As a result, critical business processes are manually executed. While many companies can clearly define their commercial strategies, it’s a challenge to define operating strategies to support the business processes that span their CRM and ERP systems.
Comment from Guest: Can you address the security concerns of moving CRM and ERP to the cloud?
Dave Batt: Yes. FPX was the first software vendor to provide a multi-tenant software-as-a-service (SaaS) CPQ application. The initial release was in 2004, and currently the FPX product release cycle is v8.8. The application architecture is set up so that the data management layer, rules, and administration is a database application (not a deployment customization). The FPX cloud-based CPQ application is protected through a tightly controlled, managed security program, administered by our Tier 1 hosting provider, as well as the processes implemented by FPX. FPX maintains 24X7X365 security monitoring of our VM Ware platform and provides Distributed Denial of Service (DDOS) services, managed firewalls, strict security patch, and anti-virus and malware protocols. FPX’s application architecture enable companies to run their most sophisticated business processes in the cloud with confidence.
Comment from Guest: What are the direct benefits of CPQ in the cloud?
Dave Batt: Business cases vary from company to company and from industry to industry. If I were to distill this to a common denominator, it would be to focus on a particular business process associated with CRM strategies: the quoting process. The cloud enables companies to extend the quoting process out beyond their direct sales organization and push it to indirect sales channels, commerce channels, and service channels. By doing so, companies experience:
- Increased sales performance
- Reduction in quote and order errors
- Overall improvement in gross profit margins
Typical FPX customers see multi-million dollar returns in less than one year.
Other benefits are published as case studies and customer success stories. Check out this link to an insiderPROFILES case study to see the benefits Fujitsu Network Communications got from pursing a CPQ strategy.
Comment From ithomsen: Would the solution also support a “price-per-test” business model, where customers are offered an estimated or fixed price for each test they plan to run, but where the final yearly consumption obviously is unknown at the time of the quote?
Dave Batt: Yes, FPX’s application supports this business model and associated business processes in the life sciences, media, and research industry sectors. I am happy to discuss this in more detail; let’s connect offline.
Comment from Guest: I have variant configurator today; can CPQ support these business processes?
Dave Batt: Yes. FPX CPQ sources the definitions in variant configurator and leverages that with pricing definitions, business rules, and customer definitions to create a commercial or sales bill of materials (BOM). A specific example would be the engineer-to-order business process. FPX with variant configurator can add guided selling and solutions to direct sales channels, but also to dealer networks and distribution networks.
Comment from jbrown: What business processes go beyond CRM’s capabilities?
Dave Batt: CRM, specifically Salesforce automation (SFA) systems, does a good job at creating centralized contact management, lead distribution, and sales forecasting. However, today’s CRM/SFA systems do not have advanced configuration functionality, pricing execution, multi-channel quoting, order capture, sales contract management, eSignature, and contract renewal automation. Each of these functions are business processes that too many companies still run manually or in siloed applications that are disconnected from their CRM/SFA systems.
Comment from Guest: Are there certain industries that would best benefit from a CPQ solution?
Dave Batt: Some industries that best benefit from a CPQ solution are discrete manufacturing, telecommunications, life sciences, media, aerospace, financial services, and professional services, as well as many sub-sectors within these industries.
CPQ will greatly benefit any company that:
- Manufactures, sells, or provides product components bundled together as an end product/solution
- Provides sophisticated services
Comment from Guest: I use Salesforce for CRM and SAP for ERP; does CPQ support both?
Dave Batt: Yes, FPX is the only company in the CPQ market that is a certified Salesforce.com AppExchange vendor and a SAP-certified Partner Edge CPQ vendor. Because FPX is platform independent, our application supports straight-through business processes that start in Salesfoce.com and end in downstream order entry and order management systems in SAP.
FPX’s Salesforce.com competencies are as follows:
• FPX has been a certified AppExchange ISV since 2004
• FPX has productized integrations to Salesforce.com, making it easier for clients to perform configure-price-quote business processes within Salesforce.com, in downstream applications, as well as in e-commerce applications
(see appexchange.salesforce.com/listingDetail?listingId=a0N300000016Z7REAU for more information)
FPX’s SAP competencies are as follows:
• FPX is a certified hybris Extend Partner
• FPX has productized integrations to SAP solutions for customer engagement and commerce , making it easier for clients to perform configure-price-quote business processes within the solutions, in downstream applications, and to SAP ECC back-office systems
(see www.hybris.com/en/partner/hybris-extend/fpx for more information)
Comment from Andy: Who typically drives the decision to look into a CPQ system? Is it the sales reps themselves?
Dave Batt: Sales organizations are commonly the end user of a CPQ application. However, enterprise-caliber CPQ systems must also be able to support engineering and product teams in order to specialize the CPQ process, such as engineer-to-order.
Comment from Gary B: What business processes do I need to document before implementing a CPQ application?
Dave Batt: Generally speaking, start with how your products and services are quoted by channel (direct sales, indirect channels, and/or commerce channels). Also define differences by geography (global versus local) and differences by product families.
From there, define how the quote moves through the order entry process.
After these are defined, a CPQ product or strategy firm can share with you leading practices, benchmarks, and define processes that can be improved.
Comment from Tom: How does CPQ complement SAP’s cloud for customer solution?
Dave Batt: FPX is a certified hybris Extend Partner with productized integrations to SAP Cloud for Customer, making it easier for clients to perform configure-price-quote business processes within SAP solutions for customer engagement and commerce¬¬, both in downstream applications and to SAP ECC back office systems. Click here for more information.
Comment from Guest: I’m concerned about change management and user adoption. What’s the learning curve with a CPQ solution?
Dave Batt: Great question. Change management is a bigger effort than user adoption. FPX’s CPQ application can operate within your existing SFA products (Salesforce, SAP Cloud for Customer, SAP on premise, Siebel/Oracle, and Microsoft Dynamics). That helps drive high user adoption because end users don’t have to learn a whole new application interface or bounce from their SFA tool to a CPQ tool.
Comment from ithomsen: How would the variant configurator support such a model on the front end through CPQ in the cloud and mapped to a back-end fulfillment process managed in SAP ECC?
Dave Batt: FPX pulls the product definitions and valid engineering configurations from the variant configurator and then provides the end user (sales) marketing definitions.
Comment from Guest: We have rule-based pricing for our services, so our quote process can get tricky. Can we set up rules in CPQ? What considerations are there for creating rules and pricing?
Dave Batt: Yes, FPX’s applications allow you to create and maintain rules across a variety of data sets. For example: product catalogs, price books, and business attribution like bundles, discounts, programs/offers, and customer definitions.
Comment from Guest: How does FPX’s CPQ solution handle big data?
Dave Batt: Extremely well. This is a big topic, and we don’t have enough time to cover this properly with the time remaining. Some of the data sets commonly leveraged by CPQ applications include customer definitions in CRM and ERP systems, product catalogs, and price books. Many companies have begun to look beyond these data sets and want to leverage their order history, existing contracts, and even emails with keyword search to pull structured and unstructured big data into their CPQ application. FPX leverages this big data so its clients can enable real-time price optimizations rather than simply quoting a static price. Another use case example is transforming product/service quoting into guided selling based on history, trends of ideal configurations, bundles, or solutions. I am happy to discuss offline and share how we incorporate big data and predictive analytics for companies such as Honeywell, Airbus, AT&T, American Express, Hitachi, and Splunk.
Comment from ahns: What are some tactics for selling the new process to my internal teams?
Dave Batt: Below are some suggestions based on business area:
• Market: Improves velocity for new product introductions, programs, and offers
• Sales: Sell more, faster
• IT: Eliminates manual business process and creates global standards that can be centrally governed
• Executives: Achieve double-digit incremental revenue growth and single-digit margin/profit improvement
Comment from Guest: How does FPX’s CPQ solution integrate with hybris?
Dave Batt: Productized integration where FPX operates as an advanced configuration engine in SAP hybris systems. We have a data sheet for this (click here).
Natalie Miller: Many thanks to everyone for joining today’s chat and for your great questions, and tremendous thanks to Dave Batt of FPX for these insightful answers!
Dave Batt: Thanks for the time, everyone!