Imagine the technology services and consulting industry hiring the very brightest minds to reimagine their sales process and rebuilding everything from the ground up. Would these capable minds come back and recommend spreadsheets, email approvals, and manual proposals?
Quoting in technology services looks a lot like it did 20 years ago. It’s slow and expensive, it’s error prone, it lacks visibility, and it often misses revenue opportunities. But, a quiet transformation is taking place as Services teams embrace a new technology: Configure Price Quote (CPQ) for Services. These teams are gaining new streams of frictionless revenue, innovating their pricing models, building attractive solution bundles, and radically simplifying their sales process. And, without spreadsheets, they are achieving a level of revenue and resource demand visibility once considered impossible.
Quoting Services Really Is Different
Services is a different animal. What the outside world doesn’t understand about quoting professional services is that it’s a very broad spectrum. It can be as simple as a block of hours or a line item with a price, but it can also be more complex, requiring effort estimation based on many variables. It can include project phases and stages that change from opportunity to opportunity. It can require adjusting the hours on the project timeline to reflect the unique requirements of an opportunity.
What the outside world doesn’t understand about quoting services is that it’s a very broad spectrum.
Pricing can be time-and-materials, fixed-price, cost plus, outcome-based, or a combination. Unlike with products, discounting isn’t just a percentage in need of an approval. With services, reducing the price often means changes in scope, timeline, or resources, which impacts risk, not just margin.
Contrary to popular belief, Services teams don’t quote resources, but rather, they quote skills. Required skills vary considerably from quote to quote and from resource to resource, even when the resources share the same title. The list of things that make quoting services different and sometimes complicated, could go on and on.
Until recently, CPQ software was designed for product and manufacturing companies, not services-focused operations. But, that has changed as CPQ has been re-imagined and purpose built for services and technology products:
- Simple to complex quotes (Service + Tech Product + Subscriptions)
- Solution catalogs
- Microservices & customer self-service purchases
- Guided selling and rules-based estimation of effort
- Automated proposal and SOW content
- Resource availability and reservation (during quote)
- Quote analytics
CPQ natively captures the valuable details of all quotes and turns those details into always available, always updated, valuable information.
CPQ’s Powerful By-Product: Real-Time Visibility
It might just be a by-product of CPQ adoption that gets the loudest standing ovation: demand intelligence and forecasting. CPQ natively captures the valuable details of all quotes and turns those details into always available, always updated, valuable information. Real-time intelligence means spreadsheets disappear, and get replaced with accurate answers to fundamental questions:
- How much revenue and margin could be earned for any period of time?
- What skills are needed, for which clients, starting on what date, and for how long?
- How would our revenue, margin, and skill set forecasts change if we win, lose or change dates?
- What skills are in hot demand?
- Are we deviating from our original effort estimates?
The Future Belongs To CPQ
Constellation Research estimates that companies adopting CPQ see a 300% increase in quoting speed. In other words, it’s a lot cheaper. These companies also introduce new pricing and solution bundling, making them more competitive. They discover “easy”, high-margin revenue streams like the micro services that John Ragsdale from TSIA speaks about with such clarity. When you add real-time demand intelligence, a compelling proposition emerges, making spreadsheets seem woefully antiquated.
When you can sell the way customers want to buy, without painful contortions of process and people, new thinking surfaces. When the sales process is flexible and designed to adapt to changing market conditions, the new thinking becomes new revenue.
When Services teams looked to the brightest minds to imagine better sales pipeline and back-office technology, CRM and PSA adoption was the result. As these same teams look for newfound capabilities in sales, CPQ will be the technology that carries the industry forward.