BigMachines: Getting Bigger and Better - Part I

I recently attended Gartner’s CRM Summit in Scottsdale, Arizona (US). During the conference, I bumped into several old acquaintances who are working for various customer relationship management (CRM) software vendors. One of the vendors that attended the conference was BigMachines, a provider of inventive software-as-a-service (SaaS) configure, price, and quote (CPQ)/quote-to-order (Q2O) solutions.

Generally speaking, Web-based product configurators empower user enterprises to sell more, faster to their customers. These customers can be either other businesses or individual consumers.

In this Internet era, enterprises need solutions that provide them with efficient tools to boost their business-to-business (B2B) and business-to-consumer (B2C) e-commerce processes and productivity. In particular, those companies that sell products through both their direct sales forces and their channel partners globally require that their quoting and configuration applications have the ability to easily maintain and update product catalogs and price books, while reducing the costs of handling inaccurate orders.

From its beginnings as an Internet startup founded by a few MIT graduates in 2000, housed in a small office in Foster City, California (US), BigMachines has grown into a global on-demand software company with US offices in Chicago (global HQ) and San Mateo, as well as international offices in Frankfurt (Germany) and London (England). The company also has a product development and service office in Hyderabad (India).

In 2008, at the time that TEC’s vendor research article was published, BigMachines was celebrating yet another record-breaking year and its hundredth customer (see “Quote-to-order: A Newcomer Causes a Stir in the Market”). The company had a record year in 2008 and has seen a combined revenue growth of 265 percent over the past three years.

I was invited to attend the company’s annual BigIdeas 2009 user conference in Chicago in early October, but had to decline due to prior commitments. At least I had the chance for an in-person update briefing during a lunch break at the CRM Summit, and I'll go into the latest developments at BigMachines over the last 12 months or so.

But before analyzing these events at BigMachines, let me explain why such CRM-oriented solutions are needed at all. While TEC’s previous article “The Complexities of Quote-to-order and Possible Solutions” goes to great lengths to explain the typical conundrums of selling mass customized products via multiple channels, what follows now are some concise pain points in the sales processes within various kinds of companies.

General Value Proposition of On-demand Q2O and CPQ Solutions

For example, many traditional manufacturers have complicated product configurations, an abundance of available options (features), accompanying constraint rules (logic programming), and tricky engineering calculations for product performance issues. These enterprises also must keep track of constantly changing product specifications due to regulatory requirements, new inventions, or to simply further please and impress customers (and outflank competitors).

For their part, wholesale distributors, online retailers (or “e-tailers”), and software providers have complex pricing scenarios with multi-level discounting and pricing systems for stock-keeping units (SKUs). These companies are trying to extend these proliferating SKUs out globally to users with refined local price, currency, sales tax, and language requirements.

Moreover, insurance companies, financial service providers, telecommunications, and independent software vendors (ISVs) have to manage contract renewals for customizable service and maintenance (S&M) contracts or subscription services. In addition, some manufacturers and distributors offer service and warranty contracts for configurable product and service offerings.

To address these issues, BigMachines recently released its Renewals solution within the BigMachines 9 platform to streamline quoting of annuities, support contracts, and more. Users can select service contracts to renew directly from CRM or enterprise resource planning (ERP) system databases.

Product line items covered under those contracts are automatically pulled into BigMachines 9. One can then extend the contracts’ service start and end dates by quote or line item, and even repackage multiple existing contracts. BigMachines’ competitor Webcom has been offering similar capabilities since 2006 under its WebSource CPQ Assets solution.

Finally, high-tech and medical products manufacturers that often have to deal with several product categories yearn for efficient approval processes for special one-off manufacturing and pricing requests. Packaging workflow rules around price and margin thresholds into a standard sales quote or proposal format becomes a tremendous challenge here.

Regardless of the industry, frequent mergers and acquisitions (M&As) can introduce new product lines and SKUs, and thus new pricing challenges. Sectors that are releasing new products and conducting monthly or quarterly pricing updates face other challenges. For instance, when new licensing programs are devised at an ISV, virtually all products have to be renumbered and re-priced (i.e., “re-SKU-ed”).

Traditional Pain Points vs. Desired Outcome

Prior to the advent of SaaS Q2O or CPQ solutions, enterprises often used a raft of cumbersome spreadsheetsMicrosoft Word documents, and other diverse and incoherently leveraged homegrown tools for engineering calculations, constraint rules, proposals, and data maintenance. In some better cases, companies might still be using on-premise Q2O software solutions, which are now reaching legacy status in the highly collaborative and viral Web 2.0 world.

The following are typical challenges, pain points, and associated inefficiencies, as a result of using these outdated and disparate tools and solutions:

  • It becomes difficult to rapidly communicate the latest and current product specifications and pricing to all direct sales force and indirect sales channels across the globe.

  • Too much replication of data and entry of order information can produce a high rate of errors in data submitted to the order-entry system; this order inaccuracy of both price and product specifications creates nightmarish challenges for the finance, order processing, and logistics departments.

  • Inconsistent proposal formats and content cause inconsistent (and reputation-damaging) messages to be sent to customers.

  • Pricing and quote approval processes are inordinately time-consuming.

Conversely, by replacing these disparate point solutions, a unified enterprise-wide Q2O/CPQ application should be able to deliver the following capabilities:

  • simplification of complex quoting processes (to improve sales productivity), while ensuring more accurate data in the final sales order (to eliminate order write-offs, rework, customer return credits after the sale, etc.);

  • ability to promptly find the correct SKUs, generate their prices, and receive approvals for discounts and special products;

  • production of consistent and professional output in multiple formats and languages; and

  • integration with existing transactional systems such as CRM, ERP, order management systems (OMS), etc.

So, What’s New at BigMachines?

Well, the current snapshot is that the vendor has successfully implemented about 170 customer deployments of its Q2O solutions and continues to grow its staff (to over 150 employees) and its customer base (over 70,000 licensed users), in addition to growing its revenue over 50 percent per year. This success continues even in this difficult economic climate.

From initially targeting industrial equipment manufacturers (thus the "BigMachines" name), the vendor has since attracted companies that sell products and services through direct and indirect sales channels in many other industries, including software, high tech, medical, financial services, telecom, media, and others. BigMachines customers include Fortune 500 leaders as well as many small and midsized growth enterprises.

Part 2 of this blog post series will continue with recent events at BigMachines. Your views, comments, opinions, etc., about BigMachines and about the Q2O/CPG software category per se are welcome in the meantime. We would also be interested in hearing about your experiences with these software solutions (if you are an existing user) or your general interest in evaluating these solutions as prospective customers.
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