Configure-To-Order and Configure Price Quote Solutions:
In the digital marketplace, businesses are continuously seeking ways to enhance customer engagement, streamline operations, and drive growth. Many high-tech machine builders and manufacturing companies eventually consider configure-to-order (CTO) or configure-to-quote (CPQ) strategies to mitigate these challenges.
During the implementation, the question arises: where and how do we implement CTO or CPQ? Should it be part of our existing ERP system, or should we accommodate this elsewhere?
Nowadays, standard tooling or modules from the ERP system can help you start this project, but is it the right path for your business? Here’s a guide to help you evaluate which option is best suited for your business.
1. Where Will This CPQ/CTO Tool Support Your Digital Sales Process?
Consider how integral digital tools are to your sales and marketing strategies and where in the buying cycle they play a role. Will they help with early prospecting? What data do you need from a sales perspective? Or will it have a role in product development, learning in which applications your solutions are used?
For example, your CPQ tool could assist purchasers or departments budgeting for the next calendar year, who are exploring the market and still in an early orientation phase. This will help you gather data early on and engage prospects who are exploring the market, allowing you to act before competitors. Usually, this means you’d need more marketing and sales data generated by the tool, which typically is not supported by ERP-driven CPQ functions.
If your tools are expected to play the role of a sales adviser, providing insights into customer preferences and supporting their design process, a bespoke solution might be necessary. The Signify Easy Design In tool is an example of such a design support tool that serves as a digital sales adviser to OEMs looking for the best lighting drivers for their needs.
2. Are We Effectively Prioritizing the Customer Experience, or Digitizing Our Business Process Inside Out?
Examine whether your current digital tools should or shouldn’t prioritize the customer experience. Standard CPQ/CTO modules from ERPs are often built with the company’s operations in mind, potentially neglecting user-friendly interfaces and workflows, but doing the trick. Primarily built for internal usage.
A custom solution, with a customer facing front, allows for a focus on user-centric design, ensuring that your tools are intuitive and engaging, which can foster stronger customer relationships and differentiate your company in the market. An example is 247 Tailorsteel, who understood that a true user-centric order intake with Sophia for web meant changing the flow of the tool.
3. Alignment with Business Strategy
Companies that see digital as part of their innovation and differentiation in the market might find that standard ERP solutions for CPQ/CTO do not support their strategy enough and do not want a vendor to control the digitalization roadmap.
Another helpful model is the Gartner Pace Layered Model that can help you identify where your CQP or CTO tool should align with your IT strategy. The more changes are needed, the higher the level of innovation and turn around time needed in the application.
So, the question to answer is: are you a digital-first company that seeks to differentiate itself in the market with this tool? Then you might not want to source an existing solution but build your own, to accommodate for faster changes.
4.Technological Capabilities
Consider the need for advanced features such as 3D configurators. If your business model requires distinguishing features that set you apart in the marketplace, a customized tool with 3D capabilities might be essential. It provides a dynamic and interactive user experience, enhancing your competitive edge. Our Proflite Casebuilder is an example of that.
5. Handling technical complexities and globalization Issues
Finally, assess the complexity of your data models and integration needs. If the integration of existing systems is complex, a custom solution can be crafted to meet those specific challenges, ensuring smoother and more efficient operations. Examples include integrations with your marketing automation suite or your CDP to understand customer needs/preferences and nurture any leads that result from the tool.
When globalization comes into play, it might even make more sense to choose independently from your ERP system to scale across markets (portfolios) and business units, since there are often multiple ERP systems in place.
When deciding between a bespoke solution and a standard CPQ or CTO, it’s essential to consider your business's unique needs and strategic goals. Tailor-made tools often provide the flexibility and specificity that standardized solutions cannot, offering a substantial advantage in a competitive market. By carefully analyzing these factors, you can make an informed decision that aligns with your business objectives and enhances overall performance.
Want to exchange ideas? Feel free to drop me a line!
Author:
Janinka Feenstra
janinka.feenstra@trimm.nl