CPQ Procurement Process

Acquiring a sales configurator is likely to be a critical project for any enterprise as it will affect and put requirements on the rest of the business. For this reason it is essential to adopt a methodical approach to the procurement process, which can be broadly broken down as follows:

1 Identify the requirements for a sales configurator

Identify the main pain points in your organization e.g. long lead time for quotes, low margins or incorrect quotes. Consider using external help if necessary to scope this phase.

2 Draft a specification

Concentrate on end results as different vendors may have different methods to fulfill your requirement.

3 Identify and pre-qualify suppliers

Check our list of key vendors, ask for personal recommendations and check the financial situations of the vendors. A list of 5-10 vendors is a recommended amount, as the RFI-responses need to be read and analyzed. Be clear that added marketing material to the responses will disqualify the vendor as to keep the responses clear and to the point.

4 Request-for-Information (RFI) process

Send out a short and clear RFI to the pre-qualified vendors. Don’t overdo this by adding hundreds of detailed questions of how to solve specific problems. Concentrate on main functionality, how they price the software and financial aspects. Be very clear on the timescales of the selection process. Don’t allow certain vendors to do presentations in this phase, as this phase is only to qualify the vendors for next phase and you do not want to skew the result.

5 Select 3-5 vendors for the detailed analysis

As each analysis of the vendor is going to take time, don’t select too many. On the other hand, don’t make the list too short as in an early phase like this it is difficult to differentiate between the vendors. Again, consider using external help if necessary.

6 Detailed analysis

Put together a small example of how your product is configured, priced and quoted. Don’t overdo the example by adding hundreds of items, concentrate instead on a typical configuration problem within your company. Send this example to the vendors together with an invite to present the example. There is no substitute for a “face to face” meeting here, as you want to really understand and be able to ask questions.

7 Pre-select one of the vendors

Get the supplier to implement a pilot for one (sub-set) of your products. Don’t spend too much time (more than 100h) on this, as you want to be able to consider it a sunk cost, and try a different vendor. Ask the vendor to do all of the implementation on-site together with a selected member from your team, to be able to really understand the software. Make sure all workarounds and problems are documented. If you are not happy with the vendor, try implementing the same product with your second choice.

8 Negotiate the contract

Make sure to focus on:

  • Conditional phases, what happens if the vendor cannot fulfill your requirements
  • Deliverables/milestones
  • Source code, who owns the custom implementation
  • Project management

9 Sign the contract THEN get them to start work on the pilot phase

Don’t forget:

  • Acceptance testing
  • Wind back systems and data if pilot phase fails
  • Main phase
  • Acceptance testing
  • Go live
  • On-going monitoring
  • Stable continuous operation
  • Final payment

Monitor the delivery and take active and immediate steps to ensure the compliance with the terms.

10 Post implementation services

Don’t forget to plan for maintenance and future enhancements.