Product Configuration Tools are a key tool in the sales process that help to "customize" or "personalize" a product. They can be used by Sales Reps or by End Customers.
The underlying idea is that certain configuration rules (e.g. If a tool user selects Product A then Product B has to be added automatically) are too complex and unknown to the user and so these tools help the user to build and order complex products correctly.
Various tools have various capabilities but they all put their rules in a "Knowledge Base" also referred to as a KB.
Below is a screen shot from Dell.com that I will use to clarify the Product Configuration Tool basics. This Product Configuration Tool can be used by the End Customer and/or the Sales Reps.
The screen shot below shows a Dell laptop - Latitude 15 3000 Series. The 3 different options below the picture are different "starting points" for the Latitude 15 3000 Series base model. All of them have different selections and different price points. It follows a basic good/better/best approach (from left to right).
In addition to that Dell also shows a chat window that will allow the user to chat with a Sales Rep. There is the possibility to lease the product and the information about the lease rates, it also shows savings/discounts (meaning there is a List Price and there is a discount for this product even to an unnamed account, there is shipping information and finally the user can either buy the product as is or can "customize" it. Customizing refers to changing default selections.
Now since we all have a basic understanding on what a Product Configurator is let's look at the 5 W's (Who, What , When, Where, Why).
- Who is using the Product Configuration Tool?
- Sales Force (Pre-Sales, Field Sales, Inside Sales, maybe Product Management, Product Marketing).
- Do they use the tool offline and/or online?
- How much information do they need in the tool? e.g. do they need to see pricing options while they configure a product? Or is it sufficient to show the pricing afterwards (in the quote part of the tool) ? Do they need to see any pictures of the product?
- The complexity of the products will determine who is using the Product Configuration Tool
- Channel Partners (e.g. in the case of Dell they might work with Arrow to sell their computers)
- While the basic Product Configuration Rules (e.g. If user selects Product A then Product B is added automatically) apply to every Channel Partner, each Channel Partner will have their own prices. Hence they need a capability to upload these prices (e.g. List Price, Discounts, Surcharges) into the Product Configuration Tool.
- Channel Partners might want to add other products (e.g. in our Dell example above they might want to add some products from Hewlett Packard or Lenovo)
- End Customers
- They will use online configuration tools like the Dell example above
- Product Configurations can be saved in the "shopping cart" for a certain period of time. When a product becomes obsolete there needs to be an agreed upon logic to replace them or empty the shopping cart
- What products are used in the Product Configuration Tool?
- simple products (e.g. laptops, ultra books, desktops)
- This will also determine who is using the tool. If the products are simple more users can use the tool. Keep training requirements in mind
- complex products (e.g. servers, Racks of servers, networking products)
- Hardware/Software/Service products (e.g. Service products that require a Service Level Agreement (SLA) are not the best fit for a Product Configuration Tool)
- When is the Product Configuration Tool used?
- Online
- I already mentioned this above. If a configurator is only used online a cloud product configurator like Apttus could be used
- Offline
- If the tool will be used offline or (e.g. for security reasons or because the Sales Rep does not have Internet connection while he is with the client) , then this will require a different tool
- Where is the Product Configuration Tool used?
- Tied into a CRM environment (e.g. Use of Apttus from Salesforce.com)
- Tied into an ERP environment (e.g. Use of SAP Variant Configurator in SAP eCC). Is this the same tool as in the CRM environment?
- As a standalone tool
- On the Internet
- Why is the Product Configuration Tool used?
- To simplify ordering customized/personalized products
- To ensure correct materials/skus are selected and with them the correct prices are retrieved
- To streamline the ordering process (e.g. check if a Software Customer is eligible to upgrade from 50 to 75 users by checking the "installed base" information in the configuration tool, for HW it might check if a product is available before it is shown in the product configurator)
If you are not very well versed in these tools it is a good idea to engage specialists who can help you to ensure you are selecting the right tool(s) for your situation.
Some examples of Product Configuration Tools.
Note: Keep in mind that all these tools need to be able to integrate with your backend system (e.g. SAP eCC, Oracle)
- Apttus
- Cameleon Software
- BigMachines
- Axonom
- SAP Variant Configuration / SAP SSC (Solution Sales Configuration) / SAP IPC (Internet Pricing & Configurator)
- NetPRM
- Configure One
- NetformX
- Experlogix
Hope this Overview helps to shed some light on the CPQ (Configure, Price, Quote) area.
