ROI (Return on Investment) is important for any IT expenditure. Moving from buying infrastructure, software and services to more affordable monthly subscriptions does change the business justification for it, but doesn’t remove it.
On CPQ systems some savings are obvious because they are human factors:
A customer happy to self-serve a quote is cheaper than a sales person doing it on behalf of that customer. Especially when the customer has many choices and can ‘experiment’ with different configurations. Imagine having to contact Sales to re-work each quote version? Pre-CPQ that was standard practice.
A sales person quoting may be cheaper and more effective than a sales specialist quoting (especially low value deals).
A configuration that works first time avoids costly, high profile returns.
They’re all obvious benefits and are easy to calculate: the number of quotes customers do, the number of quotes sales do, the value of the quotes sales specialists do, the reduction in sales error returns etc.
What about Hidden Savings? Here’s a great example based on the sector channelcentral servers: the IT Channel.
Stock Turns
This is basic economics – the faster stock turns the less expensive it is due to lower capital tied up in stock and less price erosion. In IT the pace of development is so fast that products depreciate – before they’re sold. Any Distributor that buys for stock is taking a risk. CPQ helps to lower that risk. Here’s how:
Any good CPQ application has a variety of tactics to promote specific products against a range of similar products:
Top Recommended
Promotional Rebates or BOGOF
Incentive Points
Auto-Add
Included in Bundles
Banners.
Showing real-time stock means that customers can optimize their quotes for low lead-times.
Reporting.
Reporting.
Reporting.
Reporting
Strong emphasis on this one. The reason is that it’s often an afterthought with CPQ. A customer will provide an amazing brief yet reporting won’t even be mentioned.
CPQ is the future. This is not a slogan it’s genuinely the future: it quotes for things you haven’t sold yet. Most businesses track the weeks of stock they have against sales out (i.e. THE PAST). Sure, do that but why not fold in data from your CPQ Application – it’s free from channelcentral!
Factoring in your run-rate pipeline will invariably show two extremes:
You have inventory that nobody is quoting. That’s mostly bad: but always bad if it’s aged inventory. That’s really bad if you haven’t negotiated price protection with your vendor.
Your customers and sales people are quoting inventory you don’t have or have low inventory on. That’s also bad. Frustrated customers and sales people plus lost business.
The costs of lost sales and writing down aged inventory would outweigh the costs of channelcentral’s CPQ subscriptions. We may be under calling our ROI…
With the availability of the internet and explosion of eCommerce, consumer marketplaces have grown significantly over the last two decades.
B2B marketplaces are now predicted to grow significantly as the purchasing area of choice for the business purchaser.
channelcentral was interviewed in the November 12, 2019 Forrester research report, ‘Think SKUs, Not SOWs: How Marketplaces Will Shake Up Tech Selling’, which has identified B2B sales are struggling to accommodate more complex purchases in marketplaces.
Tim Moyle, channelcentral CEO is quoted, “Marketplaces, even Amazon Business, face issues selling complex, configurable tech products.”
channelcentral predicts that a key requirement from B2B buyers purchasing in a B2B marketplace will be the ability to see relevant add-ons, as well as product comparisons, visible pricing and reviews.
channelcentral has existing solutions to improve the B2B buying of complex product configurations in a Web Store environment. Currently the boost! Suite of flexible Web Data Services aimed at improving customers’ eCommerce experiences using Compatible Options, Recommends and Attach Patterns.
This same concept can be applied to B2B marketplaces. Just one area of improvement in the B2B marketplace evolution, nevertheless, an important one, to make the purchasing experience relevant.
User experience covers a variety of topics. A poorly designed user flow or a badly designed screen layout is irritating, but nothing gets users more frustrated than application latency. On initial launch, a CPQ application can have really good performance, but over time it degrades: application optimization is not a single task, it’s more like a maintenance contract! CPQ applications spawn data, valuable data and simply archiving that
At channelcentral we used to speak about a four second rule. It’s an arbitrary number, but we believed that if a user didn’t see a result on click within four seconds they’d click again as the assumption is they didn’t click correctly OR the application needs a reminder. Today: four seconds needs to be nearer one second – user expectations are higher due in part to the Smartphone experience.
channelcentral recently undertook an architectural review of the applications that run in its “CMS” framework. One finding was that a lot of latency was caused by “Web Services” where applications pull in data to enrich the content with time sensitive data (notably price and inventory). Users were experiencing wait times of between four and 10 seconds and that was clearly unacceptable.
The Development Team looked at Microservices (MSA: Micro Service Architecture) as a potential solution to latency caused by data requests. Once deployed, application performance improved by up to 10X.
Moving from monolithic to modular has other benefits in terms of deployment, fault detection and code maintenance. There are some ‘cons’ with Microservices, but improving performance to that extent makes it an architecture we’re investing in.
Lots of channelcentral’s competitors use a Software Licensing billing methodology: cost per seat usually. Some bill based on utilization: the more you use the tool, the more you pay. It’s proportionate. It’s fair. It’s also madness; here’s why:
• Customers don’t like variable costs, at all.
• If you, or your customer, is trying to promote the use of CPQ tools versus manual ways to provide quotations to customers then why tax on use?
• Does adding a customer, or processing a quote, cost a CPQ Company anything?
• Win/Win billing systems (e.g. taking a commission from orders) quickly turn into Lose/Win or Win/Lose.
From the outset channelcentral set out to avoid ‘Tax on Use’. An annual subscription covers the cost of the service and includes the license, hosting, support and IT integration services. It includes unlimited utilization by Employees and Customers. Those subscribers know exactly what they were going to pay for the contracted term. Customers like predictable costs.
The more the customer uses the CPQ Application the lower the cost per quote or transaction. If channelcentral improves the functionality of the CPQ Application, resulting in better results or greater utilization – the subscriber is getting ‘More for the Same’.
On a similar thread some of our competitors have different costs for different feature sets. This is a stealth tax – demanding higher costs for features that already exist and don’t really cost more to add. Having a fully inclusive service for a customer adds to the subscription feel and generates greater goodwill and loyalty.
channelcentral’s experience is that its subscription model promotes higher utilization and delivers better results, with less complexity than models that tax on use.
Companies that operate Cost Plus margin are now supported. HP iQuote’s International reach means that it encounters different accounting practices. A recent experience has been that there are countries where Retained Margin is not common (the HP iQuote default margin calculation). Instead, Cost Plus is the standard calculation in this region.
To ensure that HP iQuote fits a country rather than a country fitting HP iQuote, there is a new “Host Variable” which means a Distributor or Reseller that hosts HP iQuote can choose whether the margin calculation is Retained Margin or Cost Plus.
Example: Cost Plus is €100 * 1.05 and Retained Margin is €100 / 0.95.
To request a change from Retained Margin to Cost Plus simply contact channelcentral.net via the Feedback Form requesting this change.
Here’s a useful guide to how little you could pay for HP iQuote. HP iQuote is a cloud application – here’s the commercial model.
Free Access
Many, many HP Partners use HP iQuote without paying for the service at all:
Any Authorized HP Distributor can access a free version of HP iQuote called “No-IT”.
Many Distributors offer Resellers free access to HP iQuote through their Web Stores or through our Universal/Clone Services.
Subscription
The subscription for HP iQuote costs $800 per Month. Within that subscription there are free Banner Advertisements to generate margin for the Host. Given there are free versions why would a HP Distributor or Reseller pay the subscription and become a Host? The 2 main reasons are:
To deploy a customer system a Distributor or Reseller must be a Host.
To control the stock and price shown in HP iQuote you must be a Host.
HP Partners that operate in multiple countries can apply for Framework pricing and this will reduce the cost per country. Either way the Return on Investment is there.
Distributors that provide Resellers with iQuote via the iQuote Clone Service get real-time reports in iQuote. From the Management Page Management Users can view the following information for each Clone in a simple table:
Margin by HP Business Unit.
Total Users and Active Users (last 3 months).
Quotes generated MTD and last month.
We’ll be extending this function in the near future to allow Distributors to create new Clones.
Improved reporting from the iQuote Management Page live now. Download a report on demand that provide a Monthly view (current and historic). See graphic below.
The report includes unique Quote ID, Quote Name, Creator, Dates (started and edited), Status, Family Name (e.g. DL380 G7), Systems v Options (Pitch Rate) and Value. So it can be used for a variety of report requirements. Specific reports on certain option types (for example) are available on request.
If you run current month you get Month to Date. We’ll add a CSV export shortly although you can copy and paste it. Note: if you have iQuote integrated into your Web Store the report INCLUDES that activity. Distributors cannot view data from their Clones but Clones can view their own data.
UK and Irish iQuote Users pilot HP Care Pack Warranty Auto-Attach. If a quote is started from the browse menu or from Quick Launch (where you know the system part number) iQuote will add the Number 1 HP ranked (and therefore supported) Care Pack Warranty to the basket automatically. If you want to change this for another Care Pack Warranty no problem it’s quick to de-select from the basket.
Multi-BU Support: it works for HP ProLiant, HP StorageWorks Commercial and HP Commercial Notebooks, Desktops and Workstations. ISS, SWDc and PSG in HP parlance.
Not only is this a major timesaver but it is also aimed to increase the pitch-rate for these services (the number of times they are quoted against a system unit). Higher pitch rates mean higher attach rates and that’s margin to HP and its channel. It will go live in the USA soon – same process but we have to call the basket a kart. There is potential for the rest of Europe also to have this great new function.
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