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How CPQ has evolved and why it keeps growing

Why CPQ continues to grow

April 05, 2018

 

 

Configure price quote, or CPQ, is big business – even if relatively few people really know what it is.

CPQ has remained a relatively niche term due to its use in a specific set of industries.

However this could be set to change. Read Gartner’s Magic Quadrant for Configure, Price and Quote Application Suites and it’s clear CPQ is growing faster than ever:

“Gartner estimates CPQ revenue at $1.1 billion in 2017, up 36% year over year” with “the CPQ market to increase 25% annually through 2020, indicating its importance for B2B sellers.”

These numbers, along with the evolving use cases for CPQ, suggest the solution is graduating to the mainstream.

So, apart from making it less awkward for people who work in CPQ to answer the “what do you do?” question at social events – what does this continued growth really mean for CPQ?

Having been named a CPQ Visionary by Gartner for consecutive years, we’re well positioned to give you an overview of how CPQ has evolved and why it continues to grow.

What CPQ looks like today

An abridged version of Gartner’s market definition of CPQ reads:

‘CPQ is part of the larger quote-to-cash business process…Leading CPQ solutions support the creation of quotes and capturing of orders across multiple channels of customer interaction.’

The fact the description begins by calling out that CPQ is part of a wider solution is telling. Both in terms of the direction of CPQ, and the way successful organizations are now implementing technology.

Today configure price quote is just one part of the wider functionality that makes up the modular and agile integrated platforms favored by digital leaders. Based on its CRM of choice, an organization can use the likes of the Salesforce Appexchange to pick and choose CRM-native apps. Easy to integrate and delivering specific functionality, these apps can quickly provide a joined-up digital experience across channels. The type of responsive digital experience that’s just not possible using an Enterprise Resource Planning (ERP) system.

Only naive vendors would push CPQ as the stand alone sales configurator it was once perceived to be. The market has caught on and realized that to keep up with disruptors and provide the requisite experience in today’s digital era, organizations have to go beyond CPQ. Something our CEO has been talking about since 2015.

But don’t write CPQ off as an old dog unwilling to learn new tricks. The solution continues to grow because it has evolved. Its progression means CPQ remains a vital component in delivering that all important seamless experience for your customers.

Where is CPQ’s growth coming from?

Gartner’s report suggests that the CPQ market has grown healthily since 2016 – and will continue to do so. But why? Where’s this growth coming from?

Firstly the rise of SaaS has reduced costs, naturally opening up the market to organizations that previously found CPQ implementation costs prohibitive.

More pertinently, organizations are looking beyond the ‘C’ of CPQ and realizing that CPQ is useful beyond the configuring of products. This has opened up a range of new industries and opportunities for vendors.

Organizations are looking beyond the ‘C’ of CPQ and realizing that CPQ is useful beyond the configuring of products. This has opened up a range of new industries and opportunities for vendors.

Originally, configure price quote was used in industrial manufacturing to configure complex product sets. Telcos also caught on quickly, and while this application of CPQ is still useful in these industries, it also provides so much more.

For industries with less complex product sets, configuration isn’t such a worry. But there’s a growing acknowledgement that CPQ’s pricing and quoting functionality provides a demonstrable impact on both bottom line and customer experience.  

CPQ’s evolution from a solution for sales transactions to one that enables a more holistic sale – incorporating the management of the likes of services and subscriptions – has broadened its appeal.

This means we’ve seen organizations in industries ranging from energy and logistics, to government and higher education, using CPQ to provide a seamless sales journey across the customer lifecycle.

Even as customer expectations evolve configure price quote still delivers valuable outcomes for enterprises globally. Ultimately, until these results are surpassed by another solution, CPQ will continue to grow and remain a must-have application for today’s digital enterprises.

To compare the key CPQ vendors download your complimentary Gartner CPQ MQ here.

gartner download

Gartner Inc., Magic Quadrant for Configure, Price and Quote Application Suites, Mark Lewis, Melissa A. Hilbert, 29 January 2018

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.