- For smart, connected product strategies to succeed they require a product lifecycle view of configurations, best attained by integrating PLM, CAD, CRM, and ERP systems.
- Capgemini estimates that the size of the connected products market will be $519B to $685B by 2020.
- In 2018, $985B will be spent on IoT-enabled smart consumer devices, soaring to $1.49B in 2020, attaining a 23.1% compound annual growth rate (CAGR) according to Statista.
- Industrial manufacturers will spend on average $121M a year on smart, connected products according to Statista.
Succeeding with a smart, connected product strategy is requiring manufacturers to accelerate their IoT & software development expertise faster than they expected. By 2020, 50% of manufacturers will generate the majority of their revenues from smart, connected products according to Capgemini’s recent study. Manufacturers see 2019 as the breakout year for smart, connected products and the new revenue opportunities they provide.
Industrial Internet of Things (IIoT) platforms has the potential of providing a single, unified data model across an entire manufacturing operation, giving manufacturers a single unified view of product configurations across their lifecycles. Producing smart, connected products at scale also requires a system capable of presenting a unified view of configurations in the linguistics each department can understand. Engineering, production, marketing, sales, and service all need a unique view of product configurations to keep producing new products. Leaders in this field include Configit and their Configuration Lifecycle Management approach to CPQ and product configuration.
Please see McKinsey’s article IIoT platforms: The technology stack as a value driver in industrial equipment and machinery which explores how the Industrial Internet of things (IIoT) is redefining industrial equipment and machinery manufacturing. The following graphic from the McKinsey explains why smart, connected product strategies are accelerating across all industries. Please click on the graphic to expand it for easier reading.
CPQ Needs To Scale Further To Sell Smart, Connected Products
Smart, connected products are redefining the principles of product design, manufacturing, sales, marketing, and service. CPQ systems need to grow beyond their current limitations by capitalizing on these new principles while scaling to support new business models that are services and subscription-based.
The following are the key areas where CPQ systems are innovating today, making progress towards enabling the custom configuration of smart, connected products:
- For smart, connected product strategies to succeed they require a product lifecycle view of configurations, best attained by integrating PLM, CAD, CRM, and ERP systems. Smart, connected product strategies require real-time integration between front-end and back-end systems to optimize production performance. And they also require advanced visualization that provides prospects with an accurate, 3D-rendered view that can be accurately translated to a Bill of Materials (BOM) and into production. The following graphic is based on conversations with Configit customers, illustrating how they are combining PLM, CAD, CRM and ERP systems to support smart, connected products related to automotive manufacturing. Please click on the graphic to expand it for easier reading.
- CPQ and product configuration systems need to reflect the products they’re specifying are part of a broader ecosystem, not stand-alone. The essence of smart, connected products is their contributions to broader, more complex networks and ecosystems. CPQ systems need to flex and support much greater system interoperability of products than they do today. Additional design principles include designing in connected service options, evergreen or long-term focus on the product-as-a-platform and designed in support for entirely new pricing models.
- Smart, connected products need CPQ systems to reduce physical complexity while scaling device intelligence through cross-sells, up-sells and upgrades. Minimizing the physical options to allow for greater scale and support for device intelligence-based ones are needed in CPQ systems today. For many CPQ providers, that’s going to require different data models and taxonomies of product definitions. Smart, connected products will be modified after purchase as well, evolving to customers’ unique requirements.
- After-sales service for smart, connected products will redefine pricing and profit models for the better in 2019, and CPQ needs to keep up to make it happen. Giving products the ability to send back their usage rates and patterns, reliability and performance data along with their current condition opens up lucrative pricing and services models. CPQ applications need to be able to provide quotes for remote diagnostics, price breaks on subscriptions for sharing data, product-as-a-service and subscription-based options for additional services. Many CPQ systems will need to be updated to support entirely new services-driven business models manufacturers are quickly adopting today.
Configure-Price-Quote (CPQ) continues to be one of the hottest enterprise apps today, fueled by the relentless need all companies have to increase sales while delivering customized orders profitably and accurately. Here are a few of the many results CPQ strategies are delivering today:
- Companies relying on CPQ are growing profit margins at a 57% greater rate year-over-year compared to non-adopters.
- 89% improvement in turning Special Pricing Requests (SPRs) into sales by automating them using a cloud-based CPQ system.
- 67% reduction in reworked orders at a leading specialty vehicle manufacturer due to quotes reflecting exactly what customers wanted to buy.
- 23% improvement in upsell and cross-sell revenue by having the CPQ system intelligently recommend the optimal product or service that has the highest probability of purchase and best possible gross margin.
- CPQ strategies excel when they are designed to reach challenging selling, pricing, revenue and operational performance goals versus automating existing selling workflows.
Another factor fueling CPQs’ rapid growth is how quickly results of a pilot can be measured and used for launching a successful company-wide launch. Pilots often concentrate on quote creation time, quoting accuracy, sales cycle reduction, automating Special Pricing Requests (SPRs), up-sells and cross-sells, perfect order performance, margin improvements and best of all, winning new customers. These are the baseline metrics many companies use to measure their CPQ performance. Throughout 2017 these metrics across industries are accelerating. There is a revolution going on in selling today.
5 Ways CPQ Is Revolutionizing Selling Today
Cloud- and SaaS-based CPQ solutions are quicker to implement, easier to customize to customers’ requirements, and available 24/7 on any Internet-enabled device, anytime. Many are designed to integrate into Salesforce, further accelerating adoption seamlessly. The following five factors are the primary catalysts revolutionizing selling today:
- Designing in excellent user experiences (UX) is the new normal for CPQ apps – CPQ vendors are competing with the quality of user experiences they deliver in 2017, moving beyond packing every feature possible into app releases. This is having a corresponding impact on adoption, increasing the number of sales representatives and entire teams who can get up and running fast with a new CPQ app. The net result is reduced sales cycles, growing pipelines, and more sales reps actively using CPQ apps to increase their selling effectiveness.
- Integrating with legacy CRM, ERP and pricing systems in real-time are using service-oriented frameworks gives sales teams what they need to close deals faster – Legacy CPQ systems in the past often had very precise field mappings to 3rd party legacy CRM, ERP and pricing systems. They were brittle and would break very easily, slowing down sales cycles and making sales reps resort to manually-based approaches from decades before. In 2017 there are service-oriented frameworks that make brittle, easily broken mappings thankfully an integration practice in the past. With a loosely coupled service framework, real-time integration between CRM and ERP systems can be quickly be implemented and sales teams can get out and close more deals. Leaders in the area include enosiX, who are enabling their customers’ sales forces to enter sales orders into SAP directly from Salesforce, saving valuable selling time and increasing order accuracy.
- Competing for deals using Artificial Intelligence (AI), machine learning and Intelligent Agents are force multipliers driving greater sales – Salesforce’s Einstein is an example of the latest generation of AI applications that are enabling sales reps and teams to gain insights that weren’t available before. Combining customer data with these advanced predictive data analytics technologies yields insights into how selling strategies for different accounts can customize to specific prospect needs. Selling strategies are more effective and focused when AI, machine learning, and Intelligent Agents are designed in to guide quoting, pricing and product configuration in real-time.
- CPQ apps optimized for mobile devices are enabling sales reps to drastically reduce quote creation times, sales cycles and increase sales win rates – For many companies whose sales teams are in the field calling on accounts the majority of the time, mobile-based CPQ apps are how they get the majority of their work done. Salesforce’s Force.com is one of the leading platforms CPQ software companies are relying on to create mobile apps, further capitalizing on the already-established levels of familiarity sales teams have with the Salesforce platform.
- The vision many companies have of synchronizing multichannel and omnichannel selling as part of their CPQ strategies is now attainable – One of the greatest challenges of expanding sales channels is ensuring a consistently high-quality customer experience across each. With on-premise CPQ, CRM and ERP selling systems, this is very challenging as there are often multiple database systems supporting each. This is a breakout year for omnichannel selling as cloud-based CPQ systems and the platforms they are built on can securely scale across all selling channels a company chooses to launch. Being able to track which CPQ deals emanated from which marketing program, and which channels are the most effective in closing sales is now possible.
- Providing real-time responses 24/7 on any mobile device anywhere is the new normal in 2017.
- 54% of B2B companies selling online report that their customers are using smartphones to research purchases, and 52% say that their customers are using smartphones to buy online
- The majority of CEOs (86%) see mobility as essential to creating and sustaining a competitive advantage.
- Industrial manufacturing CEOs prioritize mobility (73%), cybersecurity (72%) and data mining and analysis (70%) as their top three priorities for attaining competitive advantage.
PriceWaterhouse Coopers (PWC) annually surveys global CEOs to learn about their current and future priorities, plans and technology adoption trends. PwC’s 18th Annual Global CEO Survey (free, no opt-in) is based on interviews with 1,322 CEOs located in 77 countries. The survey provides valuable insights into the strategic direction enterprises are taking with technology investments.
The following graphic from the report illustrates the strategic importance CEOs are placing on mobile technologies:
Competing On Accuracy, Speed And Responsiveness Is How You Win Today
CEOs at the world’s leading industrial manufacturing companies share a common focus on how to continually improve the accuracy, speed, and responsiveness of their companies using mobile technologies. A recent study by research firm Forrester shows that 54% of B2B companies selling online report that their customers are using smartphones to research purchases, and 52% say that their customers are using smartphones to buy online.
Being ready to respond with complete quotes, pricing, order status, delivery dates, updated service information on a 24/7 basis on any device anywhere is the new normal. Amazon’s ability to take orders, process, ship and deliver them in some cases all within 24 hours is driving up expectations in B2B selling too. And a key part of making sure you can compete in 2017 and beyond is by having an integrated mobile apps strategy that provides customers the information they need when they need it.
The following are five ways real-time mobile apps delight customers and streamline manufacturing:
- Enabling configure, price and quoting (CPQ) apps to provide real-time updates on any device, anywhere wins more deals and keeps customers sold on doing business with you. According to a recent Gartner study, the competitor in any deal who is the first to produce a quality quote will win the deal 70% of the time. Given the competitive intensity around delivering the first, highest quality quote possible, having mobile apps that are based on real-time Salesforce and SAP integration is a must-have. From the very first interaction with any new prospect to closing a sale, having mobile apps that deliver real-time information gained through CRM and ERP integration is key.
- Being able to answer “When will my order ship?” anytime, anywhere on any device, at any time is what it takes to win and keep customers today. It’s time to challenge the outdated assumption that customers only want to speak with you when your legacy systems are available. The best manufacturers are modeling Amazon today, providing real-time alerts on when orders are being prepared to ship, providing e-mail and text alerts and delivery times and shipping information. Mobile apps need to be used to extend past the boundaries of legacy systems that don’t meet the minimum expectations of customers today. The CEO of an electrical machine manufacturer told me that once he was able to launch mobile apps for his customers, there was a 76% reduction in order status calls to the enterprise sales teams and 13% increase in sales the first six months these apps were available.
- Getting in control of quality and being able to manage customer expectations and relationships to positive outcomes with accurate data. Quality, compliance, inbound inspection and quality assurance are applications that often are isolated from CRM, ERP and customer service systems. The lack of integration between these systems wastes valuable time in getting back to customers on how best to solve quality problems and address questions they may have. That’s why it’s so important to have compliance, product quality, and quality assurance data delivered on mobile apps in a context the customer can use. Having this data available over mobile apps, enabled for customers’ use via Salesforce integration, reduces problem escalations and provides greater accuracy. Enabling quality data on mobile apps also helps to unify operations and production, giving everyone on the shop floor visibility into quality levels of order and long-term, over product lines being produced. Making data and reporting available company-wide often requires integration to SAP ERP and legacy systems, with companies including enosiX emerging as market leaders.
- Reducing Field Service call cancellations and delays by accurately communicating parts and staffing requirements shows respect for your customers. There is nothing more frustrating from a customer’s perspective than waiting for a field service technician to show up, only to find they don’t have the necessary parts or are told the problem was completely different than the one that needs to be solved. By enabling Salesforce integration with field service apps and providing customers with real-time alerts to their mobile devices via an app, field service calls can lead to solved problems and higher customer satisfaction faster.
- Providing customers with real-time updates via mobile apps on delivery dates driven by supply chain conditions helps in managing expectations while giving production planners the information they need to meet demand. Manufacturers whose business models rely on rapid inventory turns, tight production schedules, and thin margins are the leading early adopters of mobile technologies for logistics and supply chain coordination. Enabling mobile apps to provide the latest updates on Available-To-Promise (ATP), Capable-To-Promise (CTP) requires SAP integration across the Salesforce platform. Being able to provide updates on how suppliers are potentially impacting their delivery dates on orders is invaluable in managing expectations over the long-term.
Integrating ERP, CRM, and legacy systems lead to greater manufacturing innovation, setting the foundation to move beyond business models that don’t stay in step with customers’ fast-changing needs. Bringing contextual intelligence into manufacturing that centers on customers’ unique, fast-changing requirements is a must-have to keep growing sales profitably. By integrating ERP, CRM, SCM, pricing and legacy systems together, manufacturers can provide customers what they want most, and that’s accurate, fast responses to their questions and perfect orders delivered.
Integration Powers Manufacturing Innovation
Enabling a faster pace of innovation in manufacturing starts by using systems and process integration as a growth catalyst to profitably grow.There is a myriad of ways integration will transform manufacturing in 2017, and the top 10 ways are presented below:
- Real-time visibility across selling, pricing, product, manufacturing and service improves the speed of customer response and makes planning easier. By integrating legacy SAP ERP systems with CRM, pricing, product catalog, Manufacturing Execution Systems (MES) and service, telling customers in real-time the status of their orders is possible. Having real-time data on manufacturing operations provides planners with the visibility they need to optimize production schedules, including fine-tuning Material Requirements Planning (MRP). By orchestrating these areas of manufacturing more efficiently, customer satisfaction increases, the potential of upselling and cross-sell improves and less order fulfillment errors turn into higher profits.
- Making analytics the fuel manufacturing needs to move faster, attaining time-to-market goals and exceeding customer expectations. One of the quickest ways manufacturers are going to use integration to fuel greater growth in 2017 is by using analytics to measure operations from the customer’s perspective first. From quality management to order fulfillment and meeting delivery dates, every manufacturer has the baseline data they need to begin a customer-driven analytics strategy today. Integration is the catalyst that is making this happen. Making quality a company-wide focus begins with real-time integration of quality management and broader IT systems. enosiX has taken a unique approach to real-time integration, streamlining quality inspections and inventory control for beverage equipment manufacturer Bunn.
- Improving new product success rates by integrating CRM, pricing, product catalog, service, and Product Lifecycle Management (PLM) systems are enabling manufacturers to create new product lines that drive new business models. For consumer electronics and high-tech products manufacturers serving B2C (business to consumer) and Business to Business (B2B), speed and time-to-market are a core part of their business models. Capitalizing on the speed of customers’ changing requirements is more important to stay ins type with than competitors, however. To do this, manufacturers capturing feedback from service and PLM systems and then putting it into context using CRM systems can innovate faster than competitors who track each other instead of customers.
- Configure-Price-Quote (CPQ) will continue to be one of the most effective strategies manufacturers can use for accelerating sales in 2017, made possible by the real-time integration between ERP, CRM, pricing and manufacturing systems. Winning new customers and closing deals often comes down to being faster than competitors at delivering accurate, complete quotes and proposals. By integrating CRM, ERP, and pricing systems manufacturers can trim days and in some cases weeks and months off of how long it takes to produce a quote or proposal. CPQ will continue to accelerate in 2017, gaining momentum as more manufacturers move beyond their manually-based methods of quoting and opt for more integrated approaches to excelling at this vital selling activity.
- Industry 4.0’s many advantages including creating smart factories are dependent on the real-time integration of traditional IT and manufacturing systems increasing production speed and quality. Engraining greater contextual intelligence into every phase of manufacturing increases shop-floor visibility. It also makes planning more efficient and customer-driven. The key to revitalizing existing production centers and getting them started on the journey to becoming smart factories depends on the real-time integration of IT and manufacturing systems.
- Personalizing pricing strategies by customer persona and segment using real-time integration between CRM, pricing, accounting and finance systems to optimize profitability. Manufacturers doing this today also have propensity models that define which customers are most and least likely to accept up-sell and cross-sell offers. For many manufacturers, this level of pricing precision is possible today with greater systems integration. By having pricing strategies defined by persona and segment, measuring just how much speed and time-to-market matters to each is possible by measuring sales rates of new products and services.
- IT system security companywide improves with tighter real-time integration as long-standing legacy systems are updated to enable greater connectivity with newer systems. When manufacturers choose to pursue a more focused, urgent strategy fo systems integration to improve manufacturing performance, system security often improves companywide. It’s because longstanding legacy systems, often the most vulnerable to unauthorized use, get re-evaluated at the operating system and integration levels. The result is company-wide IT security improves when real-time integration is attained. For manufacturers where 70% or more of their materials and costs are from outside their owned production centers, this is more important in 2017 than ever before.
- Sensor data generated from the Internet of Things (IoT) combined with advanced analytics is transforming manufacturing today and will accelerate in 2017. Manufacturers with globally-based operations are piloting and using IoT strategies in daily operations today. A few are working with semiconductor manufacturers to design in their specific requirements at the chip level. Having real-time integration in place between ERP, CRM, pricing and services systems provides the scalable, secure foundation to build advanced analytics and IoT platforms that can scale over the long-term.
- Market leaders in manufacturing are designing in real-time integration to their connected products, enabling new sources of revenue. General Electric’s approach to monitoring jet engines in flight and providing real-time data to aircraft manufacturers including Boeing and airlines globally is an example of how integration is enabling entirely new business models. A global aerospace manufacturer who requested anonymity is working with integrated circuit developers Broadcom, Intel, and Qualcomm to create chipsets that can provide sensor-based data on an entire jet’s health in real-time anywhere in the world, anytime.
- Greater visibility and speed are coming to supply chains, enabling manufacturers the ability to take an accepted quote and turn it into build instructions in real-time. Automating the steps of taking a quote and turning it into a bill of materials, scheduling the best possible work teams, and orchestrating parts and materials all is becoming automated from quote approval. From a customer’s perspective, all they see is the approved quote and activity starting immediately to provide the products they ordered. By having this level fo real-time supply chain integration, speed becomes the new normal and customer expectations are met and often exceeded.