May 31 by Brion Schweers
Agrarian societies, defined by economies based on maintaining crops and farmland, have existed in various parts of the world as far back as 10,000 years ago. For thousands of years, the barter system was the primary form of trade. With the arrival of the Industrial Revolution in the 18th century, textiles replaced agriculture as the dominant industry with the transition from hand production methods to the use of machines, iron production processes, steam power, and the rise of the factory system. As we reached the 20th century, an explosion of technological advancements including mass-produced automobiles, heavy farm equipment, electronics, and computers gave rise to the role of the professional “salesman” – and along with this evolution came the need for tools that helped them sell increasingly complex products.
Towards the end of the 20th century, as businesses faced increased competition and commoditization of their products, they began to differentiate themselves by providing services that were perceived to have greater customer value than their products alone. Businesses that provided the best service to their customers achieved the most success and separated themselves from their competition. Case in point: the current list of Fortune 500 companies contains more service companies and fewer manufacturers than in previous decades. Today, manufacturing companies now generate more revenue from services than ever before.
The Information Age
With the 21st century came what many refer to as the Information Age, or what others are now referring to as the Knowledge Economy. Indeed, the use of knowledge and information is now a source of tremendous wealth. For example, Google, Amazon, and Microsoft are three of the world’s largest and most valuable companies, each of which have had a large hand in driving the Information Age and Knowledge Economy. Beyond these global icons, many other companies are contributing to these trends by undergoing a digital transformation of their own. Within the past few years, we have seen a rapid rise in the number of companies that offer or plan to offer products through a subscription model, sometimes referred to as the “as-a-service” model. In today’s modern digital service economy, selling offerings in this manner has not only become more commonplace due to market demand, but also increasingly complex. As a result, the job of the professional “salesperson” has become more challenging than ever.
The Service Economy
It is this ongoing evolution of corporate strategy and market demand that led Apttus to the creation of what we now call Full Spectrum CPQ. Companies that used traditional CPQ software often settled for tools that simply help configure their complex products. But the next generation of CPQ customers need an effective tool for selling subscriptions in this service economy (e.g. telecommunication services and more) that allows them to dynamically create bundles then price the solution based on the term of the subscription, frequency of billing and a usage variable. With the advent of the “as-a-service model”, demand to support this use case began to accelerate and drove innovation to support processes (not supported within traditional CRM or ERP systems) such as renewals, changes, swaps and terminations. In fact, the downstream implications that those changes have on a contract, billing schedule and revenue recognition forecast became the genesis of Apttus’ full Quote-to-Cash solution.
Finally, companies that sell complex products often offer professional services that manage the installation and implementation of the solution. Project-based quotes may be the most complex of all and are often managed manually via spreadsheets and email. Many also sell aftermarket services such as premium support to ensure ongoing success with the purchased products. The process of quoting service programs where hundreds of assets must be linked to a single entitlement makes it essential to be able to link quotes to a service contract.
Across the broad range of enterprise accounts that Apttus typically sees, only about 50% of companies using CPQ sell complex products, while 90% of them sell subscription products. Roughly 40% sell aftermarket services and 60% percent sell professional services. Even more interesting is that more than 50% sell products in at least 2 categories and 20% of the enterprise companies sell products in all 4 categories. If you sell a combination of products and services, shouldn’t your CPQ tool support them all? What would the value be to your company and your customer if they could receive a single quote from you that included a combination of products and services?
Read our recent press release to learn how Apttus’ Full-Spectrum CPQ enables enterprises to sell more effectively in the modern digital service economy by supporting:
• Subscription Products: easily manages and renews subscriptions, usage-based billing, and revenue recognition
• Aftermarket Services: recommends and links configured products with required or associated services
• Professional Services: enables accurate estimation and execution for support teams, integrating CPQ with Enterprise Contract Management
• Complex Products: purpose-built to work with the most sophisticated catalogs and address complex products and subscription services together
Be sure to listen to Brion Schweers (GM, Apttus Quote-to-Cash) and Frank Sohn (Novus CPQ) as they discuss Full-Spectrum CPQ on the recent edition of CPQ Podcast Series 2018, now available on iTunes, Google Play, and Stitcher.