This time of year provides a good opportunity to take a moment and think about where the CPQ (Configure-Price-Quote) and Quote-to-Cash market is and where it may go over the coming calendar year.
Here are my expectations for 2017:
1. CRM Platforms (e.g. Salesforce.com, Microsoft Dynamics CRM, NetSuite, SAP, Oracle) will become even more influential for CPQ Solutions
- This means CRM solutions like Salesforce don’t need to offer all CPQ solutions themselves but instead collaborate with other CPQ Vendors to offer more solutions, for more industries in more locations (e.g. see Salesforce CPQ Partnerships with Tacton, KBMax, Encoway, Model N)
- CRM Vendors are using their systems to establish platforms for different business use cases including CPQ and Quote to Cash. Established CRM Vendors usually have a sizeable Sales Force that reaches considerably more customers than CPQ Vendors. If CPQ Vendors are ready to embrace an alliance with a CRM Vendor they may have an opportunity to benefit from the larger reach of the CRM Vendor(s)
2. I expect to see more Industry specific CPQ solutions
- When more standard CPQ Industry Solutions become available then this will help to commoditize the CPQ market
- While CPQ Industry Solutions do not address the Product Model setup it can still provide valuable implementation guidance (and time savings!) with best practices for a specific industry
- This trend should contribute to reduce CPQ implementation costs further
3. More CPQ offerings will become available
I expect more specialized and innovative CPQ offerings to enter the CPQ market. Examples:
- Basic / Beginner CPQ solutions for small businesses like Verenia’s QuickBooks solution (Aura),
- CPQ solutions for specific business use cases like machine maintenance like G35’s solution,
- Pricing focused solutions that also offer configuration and quoting like BlackCurve’s CPQ solution
4. Product Visualization (2D, 3D, Virtual Reality, Augmented Reality) will play a bigger role
- This topic is too big to cover in a short blog post hence we are working on a Market Research Report that will become available shortly (~late January to mid February) that addresses this topic in detail. Check our website if you are interested
- b. Note that some parts of the visualization market (Visual Reality and Augmented Reality) have very high growth expectations and I expect that this trend will impact CPQ as well
5. Machine Learning and Artificial Intelligence (AI) will find more opportunities where it can be used for CPQ
- While the topic is everywhere and especially impressive at industry events the current use cases are rather limited (mostly cross sell automation)
- Since a number of CPQ Vendors (e.g. Saleforce-Einstein, Apttus-Max) put their teams on this topic I expect good progress concerning high value use cases for Machine Learning/AI on the CPQ Vendor site
- For Customers I expect that many of them will be in a wait and see mode to learn what happens and what the ROI is before any considerable budgets are approved for Machine Learning / AI Projects
6. Integrating CPQ in your existing IT architecture will become easier
- CPQ sits right between CRM and ERP systems and many other systems like Product Lifecycle Management, Contract Life Cycle Management etc. This means a CPQ System typically requires numerous interfaces and these interfaces typically cause considerable work!
- I expect to see more CPQ Solutions to make the necessary interfaces easier to deal with out-of-the-box. Meaning providing more standard integrations between different systems
- This may also be partially addressed with partner alliances offerings from CPQ Vendors and System Integrators etc.
7. Omni channel / Route to Market offerings will become even more important
- Omni channel = Means selling via Sales Team, Channel Partner Team and eCommerce website
- While many Sales and Channel Partner Teams use CPQ tools, the use of CPQ tools on eCommerce websites is still far behind. As CPQ Vendors highlight their Omni channel offerings in marketing and sales efforts I expect that eCommerce CPQ requests and usage will go up
8. More Mergers & Acquisitions
- The CPQ market is still very fragmented and there is only a small number of firms with more than 1000 employees (e.g. Apttus, CallidusCloud, IBM Sterling, Infor, Oracle, Salesforce, SAP). The large majority of CPQ Vendors has between 10-999 employees.
- While currently most CPQ Vendors are successful and still hiring, I expect that, for more comprehensive solution offerings and faster growth, more M&A’s will occur
- The expected M&A activity probably also means for smaller, existing CPQ Vendors (<50 employees) that they should target to grow faster (e.g. with innovative solutions) so that they don’t become Merger & Acquisition targets of their larger CPQ competitors
Note that this is all speculation on my side but it promises to be another interesting year for CPQ!