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PROS Inc.’s New Mission-“Big Data” Sales & Marketing Apps

Written By: Predrag Jakovljevic
Published On: June 3 2013

The first part of this report takes a close look at the expansion of PROS, Inc., a leading provider of prescriptive pricing and revenue management software, first into the business-to-business (B2B) arena, and then into big data apps for sales and marketing. In this second part, we (TEC) speak to Andres Reiner, president, chief executive officer (CEO), and director of PROS, about some of the issues we discussed in the first part and about PROS’ current state of affairs.

Reiner joined PROS in 1999 and became the CEO in 2010. He has held a series of positions at PROS with successively increasing responsibility, including senior vice president of product development and most recently executive vice president of product and marketing. In this most recent role, he was responsible for global marketing and alliances, product management, science research, and development of PROS' next-generation software products. He was also responsible in large part for PROS’ European growth and the expansion of the company’s sales and marketing efforts worldwide.

Prior to joining PROS, Reiner held various technical and management positions in technology companies including Platinum Technology and ADAC Healthcare Information Systems. He holds a Bachelor of Science degree in computer science from the University of Houston and he attended Rice University’s Jesse H. Jones Graduate School of Management.

andresreiner.jpgTEC: What PROS solutions are selling best and what is the door-opening capability?
AR: Our software solutions enhance business agility by enabling our customers to improve and automate their pricing processes, including analyzing price performance, setting and publishing mass list price updates, communicating price changes across global organizations, automating deal quoting processes, and enforcing pricing controls. Better pricing processes can result in stronger controls and an improved customer experience.

Price execution (setting price lists, determining pricing “waterfalls,” and providing min/max guidance for the sales force) bundled with the price optimization science (ascertaining customer segmentation and willingness to pay [WTP]) are the best sellers nowadays. Compare that with three years ago or so when the main door opener was automation, i.e., setting prices using rules. We are also seeing a shift in sales folks becoming the buyers, whereas in the past the focus was on selling to pricing analysts and managers. Sales managers and reps are becoming increasingly keen on learning about customers buying preferences, as well as to be able detect the risks for customer attrition.

TEC: What are the most active industries for you?
AR: Service parts, hi-tech, chemicals, and industrial manufacturing have been the most active in the B2B pricing space. In the B2C pricing space, we have a 75 percent market share in the car rental business.

TEC: What is the current state of affairs in the business to business to consumer (B2B2C) and spare parts pricing segments?
AR: As I mentioned earlier, spare parts pricing has been one of better performing industries for us, especially given that we haven’t seen Servigistics much in this space after being acquired by PTC. The B2B2C space is not that active, and it has seen much more action outside the US. The complexity in this space is in how to handle the rebates that a manufacturer might offer directly for the consumer, while the distributor (middle man) is not aware of that and is offering its own rebates.

TEC: How are the public cloud products, Price2Profit and Quote2Win, doing—as expected, better, or worse?
AR: We have rolled Price2Profit into Quote2Win, and the product is doing OK. PROS’ historical focus has been on-premises (including private cloud/hosted) solutions for very large corporations. Our cloud solutions for SMBs are still in their infancy, and mainly done via inside sales. This segment requires a different business model and sales, and our goal is to see major results in three to five years. We are also busy developing a few more cloud SMB products that are in their incubation, so please stay tuned in that regard.

TEC: Are the “Configurable-Prescriptive-Scalable” themes still winning the day, or have there been some new-order winning capabilities?
AR: Yes, perhaps with some modifications with regard to using “prescriptive” to also detect customer preferences from connected big data and using our science (that discovers correlations). Our solutions can be configured to meet each customer’s business needs through configuration rather than custom code. The configuration capabilities define both a business layer (including definition of user workflows, executive dashboards, analytics views, approval processes, and alerts), as well as a data layer that permits configuration of data structures, including hierarchical dimensions, pricing levels, and measures. Much of the business-layer configuration can be performed by a business user without IT personnel involvement. The data layer requires professional services to configure and implement our software solutions.

Perhaps “Prescriptive Real-time Innovative” could be a new tagline. Prescriptive would relate to our data science, Real-time is about the completeness and configurability of our solution, while Innovative is about having referenceable customers and 98 percent contract renewals. We preserve the configurations as part of an upgrade, allowing our customers to more easily upgrade to new versions of our solutions, when available.

TEC: As you position PROS as a big data company, do you foresee a different competition?
AR: It is certain that our expansion into sales and marketing effectiveness from mere pricing management will bring us new competition (but also potential complementary partnerships). We have already seen some deals where we competed with the configure, price, quote (CPQ) players, given that about 30 percent of those deals do not need strong product configuration capabilities (for an area where we don’t offer solutions). On the other hand, PROS has partnered with BigMachines for delivering pricing insights for CPQ projects. Thus, the future will be about federated cloud-based solutions where some solutions will one day compete and the other day complement each other. Our future vision is to provide a big data cloud for enabling sales and marketing effectiveness.

TEC: How do you help customers accommodate the pricing of brand new products, with no history from which to extrapolate?
AR: Still painstakingly by making certain assumptions based on the history of similar products and product lines. Forecasting and predicting is never an easy science, but that is why there should be adjustments as soon as some meaningful history comes from a brand new product. Value-based pricing that LeveragePoint offers can be helpful here, but it is not scalable for a huge number of stock-keeping units (SKUs). We are thinking about somehow using value-based pricing methods in creating surveys for reference customers and then using those responses for future pricing decisions.

TEC: Do you still release about three product versions per year, and still have most of your customers on the latest release?
AR: Absolutely, and, as I pointed out earlier—there is no pesky custom code at our customers (we are very religious about it). Also, we provide tools to customers to be backward compatible for the last several product versions, in case they have missed (or did not want to do) upgrades. In contrast, most of our competitors’ deployments are lengthy custom projects with hefty professional services. We provide standardized configurations of our software based on the industries we serve, and offer professional services to configure these solutions to meet the specific needs of each customer.

Our software solutions have both a single code base and a single integrated database, and currently operate in some of the largest, most complex, and demanding IT environments. PROS has developed a configuration workbench for deploying software modules, to mitigate the need for custom coding. This facility consists of a library of more than 40 functions, a rule editor, a segmentation modeling feature, and administrative interfaces to enable implementation teams to work with a common code base to expose features; define or arrange rules, formulas, workflows and layouts; and audit changes.

TEC: Where do you see geographic expansion in the near future?
AR: We sell and market our software solutions primarily through our direct global sales force and indirectly through our partner ecosystem of resellers, alliance partners, and system integrators. Our sales force is organized by our target markets in manufacturing, distribution, services, and travel, and is responsible for the worldwide sale of our solutions to new and existing customers. We are a global company that conducts sales, sales support, professional services, product development and support, and marketing around the world. Our headquarters is located in Houston, and we have an office in London, UK, we also conduct development activities in the US, India, and Bolivia. We plan to expand our operations in international locations to meet the strategic objectives of our business. Asia is a growth market, and we will use both the direct and channel model. For example, we have channel partners in China and Brazil.

Recommended Reading

An Update on Zilliant (and the B2B Pricing Market, in General). September 24, 2010.
LeveragePoint Adds Value to B2B Pricing – Part 1. January 12, 2012.
The (Underappreciated) Value of B2B Pricing Software. October 13, 2011.
Two Vendor Execs Discuss the Current B2B Pricing Market (and its Future). January 13, 2012.
Vistaar Technologies Asserts its Pricing Value Proposition. September 21, 2012.
 
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