What Can Pure CPQ Vendors Do Now?

get-quote.jpgFor a few years now, pundits have opined that the quote-to-order (Q2O)/configure, price, quote (CPQ) realm is not sustainable as a standalone enterprise software category. Lo and behold, in the course of recent months several leading CPQ vendors have been acquired.

The recent absorption of CPQ capabilities by multiple providers of enterprise resource planning (ERP) and other adjacent enterprise solutions (e.g., Infor, CallidusCloud, Oracle, etc.) should be sounding alarm bells for any remaining independent CPQ best-of-breed (BoB) providers. The situation is similar to what occurred in the financial consolidation space with BoB players such as Hyperion, Business Objects, Cognos, and others, and pure CPQ providers will find it tough going.

Selectica and Apttus might have improved their viability by expanding their footprint via handling contract lifecycle management (CLM) and offering configure, price, quote, contract (CPQC) capabilities. Cincom Acquire has a larger parent, Cincom Systems, but what can companies such as Configure One, Configit, FPX, Versata CPQ, Tacton, and Experlogix do if they want to remain independent?

A seasoned marketing expert recently told me:
Four full years ago in January 2010, I predicted the collapse of the independent CPQ market and provided the predictive facts to a former CPQ client. I counseled the company in an eight-part strategy to move the database consolidation assets to what was then the prevailing information/data management term of the day, master data management (MDM), which today has grown into a subset of Big Data, and to also append an analytics engine.

This could transition CPQ vendors like my former client with huge data management capabilities into a new category of solutions that is in hot demand today: intelligently managed big data sets for specific outcomes. Since the CPQ base is product related, I suggested product and sales data management as the natural bridge for CPQ providers who could leverage the vendor’s big data management capabilities.

The client vendor did not move forward with those recommendations (including a related renaming suggestion) and stayed with a CPQ-centric strategy, though today’s market drivers and the clear reordering of priorities to what some call the SMAC stack (social, mobile, analytics, cloud) make it clear that the company had been given good and prescient advice four years ago. (At least the marketing expert was vicariously vindicated by PROS’ recent acquisition of Cameleon Software, which was based on the same rationale.) Further, as an early cloud-based provider, that CPQ vendor would have already been ahead of other providers.

The CPQ vendor in this case continues to exude confidence and growth, but its prospects could have been much brighter (and the company potentially much larger) had it taken the expert's advice and espoused CPQ big data offerings. It will be interesting to watch what will transpire in the future and how these vendors will fare as standalone offerings.
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