Basic Overview: What you should consider before you decide about a new Product Configuration Tool

We start with clarifying what a Product Configuration Tool is.

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).

1. 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
2. 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)
3. 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
4. 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
5. 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. 

An overview of Quote to Cash - first part of a multi part series (starting with Configure/Price/Quote)

I've worked for many years in the Quote to Cash area and this is my short overview of the processes and systems that belong to Quote to Cash. I hope this is helpful since many people who don't work in this area are not really sure what Quote to Cash means.

Before the processes and tools below can be used we need to decide through what Route-to-Market (e.g. High Value Products, High Volume Products) we want to sell our products and services and if we want to differentiate these by Business Unit (e.g. Hardware, Software, Services).

Here are all the processes and systems that belong to Quote to Cash. We start with Configure/Price/Quote processes and tools

1. Product Configuration tools (e.g. used on HPshopping.com, Dell.com)
    - some tools that are offered in this area are SAP Variant Configuration, SAP SSC, BigMachines,
      Apttus, NetformX
    Note: Every tool was developed with a limited number of use cases in mind. Therefore it needs to
    be determined in a thorough investigation which tool is needed for what purpose while we also
    want to avoid double maintenance of tools. For example, we don't want to use a BigMachines
    configurator on our website and a SAP SSC tool for our sales reps. We target to have all the rules
    for these configuration tools in one place.

2. Pricing tools (e.g. List Price in USD, EUR, Purchase Agreement Prices, customer specific
    discounts)
    - some tools are SAP eCC, SAP CRM, a custom developed tool with a DB or a myriad of other
      tools
    Example: There can be one Database for List Prices (in different currencies), one for Purchase
    Agreements, one for Big Deal Customers, one for tiered customers etc.
    All these prices might need to be available at the time the product configuration tool is accessed
    and definitely once the quote is created or maintained.

3. Quote Management (the quote that is handed to the customer needs to be setup in this tool
    - some tools are SAP CRM, BigMachines, Apttus
    When a legal quote is issued we need to be sure that we have for example

• correct customer data (e.g. Customer Number 1234 with address xyz)
• correct product data (e.g. for every SW license we need to have a service product)
• correct and approved prices (e.g. approved by Deal Desk if certain thresholds were exceeded, prices are VSOE compliant )
• Terms & Conditions have been approved (e.g. by Deal Desk)

The quote will be valid for a certain period of time, depending on the region (e.g. Americas, Asia) where it was issued. It could also be necessary that the quote is issued in multiple languages.

These first three processes and tools are also referred to as Configure/Price/Quote or CPQ. These are  sub components of the Quote-to-Cash Process and there are multiple Software companies that offer system solutions in this area (e.g. Apttus, BigMachines, Selectica, Cameleon Software, IBM Sterling, SAP, Oracle).

In order to prevent double work it is important to ensure that the processes and systems in the CPQ area are tightly integrated in the overall Quote to Cash processes and systems. (e.g. if BigMachines is used in the front end CRM tool it needs to flow smoothly to the SAP eCC ERP system). This is not a trivial effort and requires some serious investigation to come up with the best possible solution.

We will continue this overview next week (to come -->  Order Management, Licensing for Software companies, upfront Support for HW and SW products, Support Renewal quotes and orders, Consulting and Education Services, Enterprise License Agreements)