CPQ Outlook 2018
As in the last two years I am providing my expectations about where I think the CPQ (Configure-Price-Quote) and QTC (Quote-to-Cash) market will go in 2018.
While 2017 was an interesting year with lots of interesting events like
- Forrester issued the Wave Report for CPQ
- Vendavo acquired Endeavor CPQ
- HGGC expanded their investment in FPX
- CallidusCloud announced CPQ integration with SAP Hybris Cloud for Customer
- Configure One acquired the Autodesk CPQ business (after they joined Autodesk in 2015)
- CPQ Podcast was launched in August
- Godard Abel left Salesforce CPQ to join G2 Crowd
- CloudSense raised $77M from Vector Captial
- Tacton raised $12M from GRO Captial-led Consortium
- Vendavo filed patent infringement suit against Price f(x)
- Valooto receives $3M funding
And many more, I expect that 2018 will be equally interesting!
Note that numerous expectations were part of the CPQ 2017 Outlook as well and I adjusted where and as needed.
Here are my expectations for 2018
1. Artificial intelligence
- It is hard to escape the Artificial Intelligence topic/hype these days. So I expect that you read and heard about this everywhere in connection with CPQ (e.g. Salesforce-Einstein, Apttus-Max) and without any CPQ connection (e.g. Amazon Echo/Alexa, Google Home/Google Assistant etc. )
- As people are getting used to have Virtual Assistants like Amazon’s Alexa in their daily lives I expect that they will ask for these (for now mostly Natural Language Processing & Machine Learning) capabilities at work too.
- While Apple’s Siri (and other apps) have been around for quite some time it seems that Amazon’s Echo and Google’s Home devices have reached a high penetration (at least in the US). Just check your local Best Buy Store
- I had a number of CPQ Leaders on the CPQ Podcast that talked about it (e.g. Oracle, Apttus, Salesforce, CallidusCloud, PROS and IBM) and they are all excited about the opportunities (e.g. Up Sell, Cross Sell, Price Optimization, Product Recommendations for Products the customer does not currently have etc.)
- Similar to last year I still expect that numerous customers (especially SMB) are still in a wait and see mode to learn what happens and what the ROI is before any budgets are approved for Machine Learning / AI Projects. For Large Enterprises I expect that these capabilities will become much more important and urgent this year
- I expect that the use of Chatbots in CPQ becomes more widespread especially in customer support functions
- Price Optimization (think descriptive, prescriptive and predictive analytics) is another topic that is tackled with AI/ML/DL and you can expect more CPQ Solution Providers to offer more capabilities in this area
- While growth here has been slower than I expected this is still an area to watch
- So far customers were interested in visualization capabilities but decided to delay once they understood the required effort and costs
- Nevertheless I see the visualization requirement more often and expect that there will be growth, especially in combination with eCommerce
3. eCommerce / Omni Channel
- Using your CPQ tool for an eCommerce website has been an objective for quite some time but this still requires more work than “just” exposing the Product Configurator including Prices to external customers
- To truly enable client self-service it is important to ensure a client can use the configurator without training. Which means the current way a typical user interacts with CPQ should be reviewed to come up with an “Amazon-like” (meaning simpler/more intuitive) buying experience for the customer
- To reduce the maintenance of an eCommerce CPQ solution the CPQ data should be setup once and then be available to all desired users (Sales Reps, Channel Sales Reps and End-Customers) with the desired customer experience (User Interface, Pricing, Help, Chat capability etc.)
4. Integration of CRM – CPQ –ERP
- I still see customers asking many questions (and mentioning numerous concerns) about Data Integration between CRM-CPQ and ERP Systems like “What is the difference between native vs. non-native CPQ solutions?”, “What do I need to consider when my pricing source system is in my ERP?” Check this Blog Post Series (Note: This will soon be available as an ebook on www.NovusCPQ.com) to learn more. A very important topic probably for years to come
- I expect that productized solutions in this area like Enosix (SAP integration into SFDC) Jitterbit etc. will become more successful
5. Simplified CPQ maintenance (More Product Managers, less IT)
- General trend in this area has been for a while that Product Managers (or more general: business SME’s) can provide the maintenance vs. technical/IT users
- Simplified User Interfaces and functionality improvements are expected to make this more accessible for business users
6. CRM Platforms influence what CPQ Solutions are used
- Still true and with Salesforce expected to gain many more customers in 2018, as well as with a strong presence of Microsoft CRM this will continue to influence CPQ buyers heavily
7. Industry 4.0 / Smart Manufacturing
- This topic is not new but it will stay interesting for the manufacturing industry and many other industries especially since the number of devices is still growing .
- IoT should be interesting for CPQ Solution Providers beyond improving machine maintenance. Nevertheless I don’t expect any huge new IoT capabilities for CPQ in 2018
- Check this IoT report from Vodafone (done by Analysys Mason)
8. More Mergers & Acquisitions
- Based on interest from VC and Private Equity Firms I experienced in the last year I expect that this will remain a hot topic in 2018
- It also remains interesting to see if Apttus targets an IPO in 2018. Since they received a $55M Funding Round E in September 2017 it may take a while to find out
Another expected development to watch in the CPQ world is the modularization of apps and the use of Micro Services and what that means for CPQ Solutions (e.g. faster implementation, less customization, getting value faster). Subscribe to the “CPQ Podcast” if you want regular updates on CPQ focused topics.
Note that this is all speculation on my side but it promises to be another interesting year for CPQ!