Configure, Price, and Quote (CPQ) software is a powerful tool that streamlines the sales process by automating complex product configuration, pricing, and quoting. It enables sales teams to quickly and accurately generate sales quotes and proposals, ensuring consistency and accuracy in both product configuration and pricing.
In today's highly competitive market, businesses must be agile and responsive to customers' ever-changing needs - CPQ software can help. CPQ enhances the customer experience, drives efficiency, and sets companies apart from competitors by enabling sales teams to deliver precise, timely, and personalized quotes.
Traditionally, CPQ software was deployed on-premises, requiring significant upfront investments in hardware, software, and IT resources. However, with the advent of cloud computing, companies are increasingly transitioning to cloud-based CPQ solutions, which offer several advantages over their on-premises counterparts.
In this article, we’ll delve into the numerous advantages (and some challenges) that cloud CPQ solutions offer buyers and sellers. We’ll explore the driving factors behind the impressive 17.5% compound annual growth rate (CAGR) of the cloud computing industry and provide compelling reasons for choosing cloud CPQ solutions over traditional on-premises alternatives.
First, let’s look at some of the benefits that cloud CPQ brings to the table for manufacturing companies. From improved accessibility and collaboration to cost-effectiveness and enhanced security, cloud CPQ solutions can transform how your business creates and delivers value.
Cloud CPQ solutions provide remote accessibility from any internet-enabled device, allowing sales teams to collaborate effortlessly with engineering and other departments, whether remotely or in-office. This enhances productivity, accelerates sales cycles, and increases employee satisfaction.
Cloud CPQ fosters instant collaboration among team members, streamlining the quote creation process, sharing updates, and ensuring open communication. This enables customers, sales, engineering, and shop floor teams to configure products in real-time, keeping everyone informed with the most up-to-date information.
Cloud-based CPQ solutions integrate effortlessly with existing CRM, ERP, CAD, and e-commerce platforms to create a unified sales and engineering environment. Customers can experience the benefits of self-serve configurations and a fully automated CPQ system that generates custom products without human intervention.
Cloud CPQ systems scale to accommodate growing demands and complexity, allowing businesses to quickly adapt to changes in sales processes, customer trends, or product features without incurring additional infrastructure or software costs.
Cloud CPQ solutions eliminate the need for significant upfront investments in hardware, software, or IT infrastructure, facilitating quicker and more cost-effective adoption.
Cloud-based CPQ solutions offer cost-effective, pay-as-you-go subscription models, enabling businesses to pay only for the resources they use. This makes CPQ adoption accessible for companies of all sizes.
With cloud CPQ, your vendor handles all maintenance, updates, and infrastructure, letting you reduce IT costs and focus on core business operations.
Sophisticated cloud CPQ systems provide no-code product and pricing rule engines, empowering non-technical users to create and maintain complex rules and reducing reliance on external resources.
Cloud CPQ providers consistently protect their systems against security threats through regular updates and patches, guaranteeing businesses a secure and up-to-date CPQ solution. Additionally, robust data encryption and privacy feature safeguard sensitive customer, company, and manufacturing IP data, offering comprehensive security for your data.
Cloud CPQ providers frequently integrate industry-specific compliance features that aid businesses in conforming to regulatory requirements. By implementing product rules, compliance and customer satisfaction are ensured, regardless of who configures the product, thus minimizing the risk of fines, penalties, returns, and dissatisfied customers.
Cloud solutions generally offer reduced costs, ease of implementation and use, and heightened security compared to on-premises software, so they have become increasingly popular.
However, businesses must still navigate some challenges associated with cloud CPQ, which we delve into in this section.
Relying on a stable internet connection is crucial for the smooth operation of cloud CPQ solutions. In regions with limited or unstable internet connectivity, businesses may face difficulty accessing their CPQ system, leading to disrupted workflows and reduced productivity.
Cloud CPQ providers invest heavily in securing their platforms, making data stored in their ecosystem far safer than on the average company’s servers.
Nevertheless, some businesses still have reservations about storing sensitive information in the cloud. The risk of data breaches or unauthorized access remains a concern for organizations handling confidential data, trade secrets, or intellectual property.
Moreover, certain countries enforce strict data sovereignty laws, requiring data to be stored within national boundaries. This can limit the use of some cloud CPQ solutions if they don't have data centers within the necessary jurisdiction.
Cloud CPQ solutions are generally easier to customize than legacy, monolithic on-prem solutions. However, you still rely on your cloud CPQ vendor to provide the necessary freedom when it comes to customization. This can make it challenging for businesses with unique requirements.
Again, vendor lock-in is generally more of a concern with on-prem than with cloud software - integrating new systems is more accessible thanks to APIs, and you don’t need to worry about high up-front costs for licenses that mean you can’t afford to switch vendors.
However, there’s always difficulty when switching providers with time and resources required for data migration and system configuration. To minimize the risk, you should evaluate multiple providers and consider solutions to future-proof your operations.
While cloud CPQ solutions can reduce upfront costs, they often involve ongoing subscription fees. These fees can become a long-term expense for businesses, particularly if usage increases or additional features are required. Organizations should consider the total cost of ownership (TCO) when comparing cloud-based and on-premises CPQ solutions.
The future of Configure, Price, and Quote is CPQ in the cloud. As businesses continue to embrace digital transformation and seek innovative ways to streamline their sales processes, cloud-based CPQ solutions offer unparalleled accessibility, cost-effectiveness, and scalability while delivering exceptional customer experiences.
Though challenges such as internet dependency, data security concerns, and customization limitations may arise, the benefits of cloud CPQ far outweigh the drawbacks. By selecting the right vendor and carefully considering the total cost of ownership, your organization can embrace the future of CPQ and let the cloud propel your business to new heights.