A brief history of CPQ

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a history of CPQ

CPQ has completely changed the design of product and service tools. Generating accurate quotes for complex goods and services poses two problems: the margin for human error is very high and generating quotes can be terribly time-consuming (salespeople spend an average 50% of their time quoting or correcting errors).

Thanks to the evolution of CPQ it is now so much easier for sales organisations to provide reliable and accurate quotes (and for customers to select and customise their purchases). The CPQ tool set has been on an upward trajectory since 2016, but in reality it has been transforming the way companies do business since the 1980s.

So where did CPQ come from and how did it evolve to become one of the most successful tools on the market? Here’s a quick look at its history. 

It all started with ERP

In the 1980s, the corporate world began to use digital tools. Companies used ERP (Enterprise Resource Planning) software to manage each function within its organisation.

This is when the first CPQ technologies appeared. CPQ stands for Configure Price Quote. At the time they were just called “configurators”. These configurators were used to manage the sale of products by checking their feasibility and consistency with the information contained in the ERP. Configurators were mainly used in the back office, e.g., with the Cameleon Software solution from Access Commerce.

Configurators gradually evolved over a period of time, and by allowing companies to have a better knowledge about their customers, they started to integrate with CRM systems.

CRM and e-commerce changed the game

Companies quickly began to realise that CRM solutions could improve sales performance, so the the main development of CRM took place during the 1990s, and at the same time e-commerce started to become much more widespread.

During the digital boom, companies were increasingly attracted to the automation of sales processes and time-consuming tasks. Companies were looking for a solution to the problems they encountered in the quote-to-cash cycle. 

At the same time, configurators were becoming front-office solutions and an integral part of the sales ecosystem. They helped to streamline and automate laborious processes. The ancestry of CPQ served one main purpose: to simplify pricing tasks and generating accurate quotes.

However, from the year 2000 onwards, e-commerce increased and Salesforce came on the scene which revolutionised the CRM market and technology overall was evolving rapidly. During this time configurators became an integral part of the sales process and CPQ building blocks became embedded in most e-commerce suites for example in Hybris Software or La Suite in Sterling Commerce.

CPQ solutions take off

CPQ tools have become increasingly popular in recent years. All companies want to accelerate their growth and boost their efficiency by streamlining and automating their processes. They are now confident that CPQ can help them optimise their quote-to-cash processes.

The use of CPQ accelerated significantly in 2010 when Gartner Research published their first CPQ technology report. Since then, the appetite to implement CPQ has not gone away.  

Sales operations have captured the value from using CPQ to grow and deliver a personalised experience to their customers – while keeping costs and production times under control. CPQ also helps automate sales processes and improve CRM while ensuring that consumers get exactly the products or services they want. All these qualities obviously continue to make CPQ an extremely popular business solution.

Conclusion

In just 30 years of existence, CPQ solutions have been completely transformed – they were originally extremely limited and used as back-office tools, but today, CPQ tools provide companies with the means to simplify complex sales processes and generate accurate quotes while providing a personalised and optimised customer experience.

CPQ tools have therefore become essential in today’s market for any company that wants to boost sales and optimise revenue by reducing waste.

‘A Brief History of CPQ’ was written by Omar Bendada from our CPQ partner, Ben Consulting Services. The post originally appeared in French entitled ‘Une brève histoire du CPQ.’ 

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