March 22 by Eric Dreshfield
This blog was originally posted by the AppSource Team on the Microsoft AppSource blog.
The manufacturing industry is shifting so dramatically that some cite this as a fourth industrial revolution. Digital technology has transformed how customers think about purchasing products and thus how manufacturers are selling them. Apttus, a Microsoft partner, has developed a Quote-to-Cash (QTC) solution that is helping manufacturers use cloud technology to dramatically improve the efficacy and efficiency of their sales process.
Below is an interview with Gopkiran Rao, moderated by Colin Masson, Global Industry Director of Manufacturing Solutions at Microsoft. Gopkiran is the Senior Vice President of QTC Solutions and Industries at Apttus. This is the first in a two-part series on the changing industry and the impact of new technology on how manufacturers approach sales.
Colin Masson (CM): We’re hearing a lot from our customers these days about changes in manufacturing. Are you also seeing a fundamental shift in the industry?
Gopkiran Rao (GR): Yes, definitely. Digital transformation is affecting every aspect of manufacturing. We’re seeing companies pivot quickly to digital channels such as E-Commerce so they can integrate seamlessly with partners to sell and service customers in real time. A big driver for this is changing customer expectations. Enterprise buyers expect an experience like the browse, shop, buy of retail even when they are procuring complex equipment or manufacturing services. This digital trend has expanded beyond the sales process. Tracking usage and consumption through embedded systems and IoT (internet of things) technologies means that manufacturers can be more creative around how they intelligently create and promote solutions, price and charge for them because they can track real world outcomes. This makes them a lot more competitive with low-cost producers.
Not surprisingly, the most impactful change in manufacturing is the rapid adoption of technology to hide the increased complexity of sourcing, configuration, pricing, contracting and delivery implementation. What the end customer wants today, no matter who or where they are, is a single solution to wrap their heads around for all financing, pricing, and procurement requirements.
“What the end customer wants today, no matter who or where they are, is a single solution to wrap their heads around for all financing, pricing, and procurement requirements.”
CM: Why is there this mounting pressure on manufacturers to change their selling approach?
GR: Most manufacturers have a background of disconnected selling tools and salespeople that are primarily focused on driving new business, but are essentially caught up in a zero-sum game with product competition. As manufacturing moves to a solution-based business focused on capturing and retaining the customer, we see the emergence of this installed base as a massive source of annual, recurring revenue, contributing anywhere from 60-70% of gross sales. The installed base desires a single solution source and access to flexible methods of pricing and payment, such as subscription or usage-based pricing.
Traditionally, the industry has been driven by ERPs (Enterprise Resource Planning software), which are inherently product-centric, so manufacturers are not set up to operate in a subscription economy. We’re not just talking about making one-time sales – we’re talking about things like hybrid products (bundles of custom SKUs, standard and non-standard options and services), hybrid revenue (multiple recurring and one time charges), milestone-based sales and consumption-based rating, billing, and revenue models.
Internally, usage-based consumption models mean that manufacturers now have massive amounts of raw data to work with, offering all sorts of knowledge to exploit in service of customers. Data is also a source of massive competitive differentiation, but it is extremely challenging to take integrate, process, and convert into insights. The question is, how can manufacturers continue to stay engaged with customers, offering ever greater flexibility for configuration, assembly, and pricing presentation while driving costs out of the value chain? How can they implement new revenue and accounting practices that give them control over their install base and the ability to grow over time?
CM: Consumer technologies and expectations may be creating challenges for manufacturers—but we are also seeing 3D printing maturing, mainstream adoption of robotics, and IoT-enabled servitization. All of those technologies enable companies to innovate at a much lower cost and to meet consumer demands for smarter, more complex products. Which of these technologies is having the most impact on the way manufacturers sell products?
GR: The single biggest driver of innovation in manufacturing has been the emergence of enterprise-grade cloud platforms like Azure.
The economics and availability of highly scalable platforms enable QTC solutions like Apttus to do far more than to just automate product configuration or guided selling for sales people. What it does is add conversational and virtual elements in a mobile, social context across the entire QTC lifecycle.
Omni-channel cloud solutions enable manufacturers to deliver near-instant quotes to customers, regardless of location, volume, or complexity of product. This happens in several different dimensions:
1. Drive better outcomes: Connected products and IoT data drive better production yields, control planning, and customer outcomes, be it in terms of factory uptime, speed of execution, or yield percentages.
2. Have more productive customer interactions: Machine learning across multiple channels has enabled customers to interact on their terms, while data from daily product usage has enabled you to surface to them needs they might not even realize they have.
3. Meet customer demands: New technologies are putting the power of complex configuration into the hands of customers. Manufacturers can leverage their knowledge of installed assets to provide customers what they want, including repair services, additional warrantees, or customer-specific configurations or pricing.
4. Interact naturally: Natural, language-based interfaces and machine intelligence are intersecting to make critical processes like quote to cash conversational and mobile. By enabling customers and vendors to collaborate in virtual spaces with technologies like 3-D visual design studios or in mixed reality, they add a social, collaborative element that is transformational for an age-old industry.
CM: Let’s talk more specifically about Quote-To-Cash. Apttus has evangelized the concept for a while—what has made an end-to-end solution more important today than individual point solutions?
GR: Historically, the sales community has struggled with the difficult problem of automating the sales process and creating visibility around how they generate the best possible proposal for an end customer. How do we ensure the best possible revenue for this class of products and segment of customers, as well as optimize pricing and controls to eliminate maverick selling or a loss of profitability?
Today, many of these processes all sit in different silos across the enterprise, resulting in a massive gap between contact with a customer, the point of contract, and the point of cash. Ensure all stakeholders are driving for better outcomes by crafting and drafting better incentive programs, creating segment specific pricing, and delivering promotions that can impact your revenue outcome for the better.
“The third element is moving from retrospective insights to proactive decision-making using predictive and recommendation-based processes”
The third element is moving from retrospective insights to proactive decision-making using predictive and recommendation-based processes. When you do that, you change the game in terms of going from separate CPQ (configure Price Quote) solutions and CLM (Contract Lifecycle Management) solutions to an end-to-end QTC solution that connects the front, middle, and back office.
Try it today
Use Apttus Quote-to-Cash as your QTC solution to automate the sales process, sell more intelligently, and raise your performance in the marketplace. Apttus is recognized as an industry leader by multiple analyst reports, including earning the top score for its offering and market presence in the most recent Forrester Wave report. Try the Quote-to-Cash for Manufacturing solution for yourself on Microsoft AppSource today.
This blog was originally posted by the AppSource Team on the Microsoft AppSource blog.