Apttus

  • April 8, 2016
  • insyte-cpq-infographicVirtually every CPQ (Configuration, Price, and Quote) software vendor on the planet has a credible solution for the processes from which the category gets its name. That’s the good news. Unfortunately, the world has moved on. Most CPQ is effective for helping to promote transactions, especially the sales transaction, in which a buyer or buying entity makes a one-time purchase of a bill of goods. Typically, it’s so many from column A, a different number from column B, and something different from column C. It might be an annual order but you can bet that last year and next year’s manifests won’t look identical.

    CPQ is very useful when the vendor is in a competitive environment and the customer needs to iterate on the order. (Do we really need so many from column A?) The vendor wants to be as responsive as possible to drive the deal to close especially because experience shows that the first vendor with a revised or corrected quote often wins the business.

    What’s changing in the world of CPQ is that customers are in need of more than a single transaction today. The rise of subscriptions has meant that things change all the time now, or at least more frequently than they did a short time ago. So the business processes that CPQ needs to support are far more numerous than what supported the transaction.

    As subscriptions rise the vendor needs many more things from a CPQ system or whatever you call the software that oversees contracts, incentives, renewals, ecommerce and more. If you’re selling through an indirect channel your CPQ system might need to expose a PRM channel. Likewise, while you might have a billing system tied to your ERP and financials, your CPQ system is going to need at least lookup capability into orders and bills. Finally, your ability to be with customers in their moments of truth anytime and anywhere means you’ll need an ecommerce salient and a mobility capability that your sales people can use and soon, the same functionality for customers who’d rather just do it themselves.

    Does your company need all of this in a CPQ system today? Probably not but the writing is on the wall. As selling becomes more automated it will be increasingly important for vendors to have access to a broad solution set that goes well beyond what was adequate a few years ago, something for what’s needed down the road.

    As the IoT comes into its own we know that there will be machines communicating with machines—we’re already comfortable with the idea that sensors will report to other machines or even people that something needs attention. But take this a little further and you see that algorithmically driven businesses processes will take over some of the purchasing responsibilities. At that point having a CPQ system that can work through channels with other systems to identify needs and keep transactions within contractually agreed guidelines will be essential.

    As good as today’s CPQ might be there’s already room for improvement and that should inform anyone in the market for CPQ. So for the vast numbers of businesses that don’t yet have and use CPQ but who need it (not everyone does) there’s good and not so good news. The not so good news is that it’s getting late and you’ll fall behind if you’re using a combination of spreadsheets and Word to generate quotes—especially if they need an extra day for approvals. The good news is that there are credible products on the market to automate and take the friction out of much that is manual right now. Even better, getting started now with a clearer idea of where this is all heading means you can evaluate the players in the context of these future needs and make one decision that should stand the test of time.

     

    Published: 2 years ago


    Transaction_3D-512Configure, price, quote (CPQ) software was once a barely thought about branch of CRM falling under the heading of sales enablement. But lately, it’s been getting a lot of attention from a familiar source, Salesforce.com. The question is why?

    You can easily argue that many forms of business don’t require CPQ so that’s a possible reason it’s been in the background forever. For instance, if you sell a service, chances are reasonable that you need to develop a customized statement of work with calculated estimates of time, materials, labor and few of those things come out of a catalog. Services sales has its own version of CPQ but it’s different and a story for another day.

    CPQ’s sweet spot focuses on line items, quantity, extended prices, add-ons and discounts but why Salesforce’s sudden interest in CPQ? I can think of some reasons. Some, if not most, CPQ systems like Apttus, also manage contracts and you can’t really have a valid contract about a deal unless there’s an itemized list of materials, promises, and all the rest. The same can be said on a services statement of work (SOW) but that’s, again, another story.

    In today’s marketplace many deals are consummated almost without human contact. Two people might get together to specify a need and the sales person will develop a quote and the haggling is conducted electronically, if at all. But the pace of business is so torrid these days that the turnaround time needed to develop a quote, get it approved by your boss, and into the hands of the customer is shrinking. If you can’t deliver quickly, your competition can, which would place you at a serious disadvantage. Subscriptions add a new wrinkle since those deals can be consummated with zero direct human contact. Customers have come to expect contracts as quickly as they can make selections.

    So in thermonuclear terms you could say that there’s an arms race ongoing in many markets to ensure that each sales team is adequately supplied with the tools that enable rapid and accurate quoting. Understandably, vendors like Salesforce want to ensure they can offer their customers a choice of quality solutions and they need to be able to do this at the enterprise level which often requires that the emerging vendors staff up.

    So, a few weeks ago Salesforce Ventures, Salesforce’s corporate investment group swung into action. They led an investment round (the B round) that garnered $41 million for Apttus, a high-flying CPQ vendor. Apttus’ claims to fame are multiple and include being built on the Salesforce1 Platform (very important to Salesforce) and offering some innovative technology that enables the user to access and use Microsoft Office products like Word and Excel to build quotations. No more wrestling with product catalogs and hand writing the first draft for your department admin to decipher. It’s a productivity tool for certain.

    Not to be outdone,  Steel Brick made a similar announcement raising $18 million in a series B round led by Shasta Ventures with participation from existing investors Emergence Capital and new investor, (tada!), Salesforce Ventures. That’s two CPQ vendors running on the Salesforce1 Platform that Salesforce has taken an interest in.

    It’s not strange to see a big dog like Salesforce stuff multiple arrows into its quiver and it’s a big market so I am sure the CPQ players will be able to differentiate well enough for the time being.

    What’s ahead? It’s just me, but I don’t think CPQ by itself is enough to build a story around that you can take to the public markets. In an era of universal platforms CPQ is a good thing to have but it is a feature at the end of the day. It will never be a platform outright, we are too far down that road. All that plus larger vendors’ thirst for end-to-end product and business process coverage suggests either a merger or acquisition or both — the order of events is not clear.

    You could imagine such a scenario for almost every category in the Salesforce AppExchange yet that won’t happen because Salesforce needs a well functioning ecosystem capable of generating billions in annual revenue if it is to reach its goal of becoming one of the biggest software companies in the universe. But CPQ is different, in many ways it is core to selling and CRM, and for that reason I could envision a scenario where one or both of these companies gets acquired by Salesforce as many other core competency companies have already. By investing early, Salesforce might be seeking to identify the right time and price.

     

     

     

     

     

     

    Published: 3 years ago


    Cliff-House-by-Modscape-lead-537x442The idea of an omnipotent software platform and the evolution of Customer Science go hand in hand. Customer Science is the upshot of my idea that we’re in the process of converting from random acts of CRM in the front office to a more structured, efficient, and predictable approach to conducting front office business. Platforms make Customer Science possible.

    The emphasis on collecting and analyzing customer big data has taken up most of the brain space in the discussion about the front office but it is only half of the Customer Science story. The other part is what vendors do with the information they distill from customer data. They might simply use a fragment of analysis to tell customers that other people almost like them bought product B when they bought product A but that’s like carpet bombing when a laser guided approach would work so much better.

    A better approach to the new vendor customer relationship implied by Customer Science is to use the information to first construct journey maps and metrics and to then put in place business processes mediated by powerful software that leverages all of the new kit that’s come to market over the last few years, in short the platform. That includes workflow, social, transaction oriented analytics, and mobility solutions for starters. All of these specialized components have to be part of the underlying platform on which the solutions rest. Thus platform has become a big deal.

    Platform is arguably much more important than the messaging surrounding it might suggest. The vibe I get from the messaging is that platforms are cool and, well, don’t you want to be cool? That’s early market messaging, the kind of thing that vendors spout when the use case is still being fleshed out, but platform is already much more than this.

    In reality, if the Customer Science light bulb shines brightly above your head, platform is essential for the simple reason that the modern, Customer Science driven front office can’t possibly write by hand all of the software you’d need to support a single business process across desktop, laptop, iOS, and Android let alone integrating apps from Salesforce, Oracle, Microsoft, and SAP. Thus platform has become the new application table stakes for our industry and making apps on platforms that are open to the rest of the universe is a business necessity.

    The big attraction of a platform, at least one constructed properly in my humble judgment, is that for the most part it exists a level above raw code and that it can generate the code for the business process on all of the platforms that a business wishes to deploy — one specification for all user interfaces the business is likely to need from the handheld device to the desktop.

    Additionally, a platform, rather than the application, should be the point of integration with third party apps so the platform must be able to support apps working together whether they are all written natively or they come from widely different sources. The capability to do all of this was once science fiction but today’s leading platform vendors make it look easy.

    From a business perspective, it’s a game changer. Software companies (and most other companies) have always sought out ways to lock in customers. Prior generations relied on compilers and database standards to carry that load with the result that getting applications to simply exchange data was viewed as reason to celebrate. No wonder it has always been so difficult to string together multi-vendor support for common business practices.

    Platform is bigger than all that and one example of its impact is the Force United Consortium a group of vendors with applications built on top of the Salesforce1 Platform. They include Apttus, FinancialForce, and ServiceMax among others. Their extra value add is that their disparate applications not only integrate well with Salesforce products but that their solutions are almost indistinguishable from Salesforce and each other at the foundation level because they are platform native meaning they use the same objects from the Salesforce toolkit. Of course, they do vastly different things too and that’s the point.

    The consortium elevates the members as well as Salesforce to the status of an uber application, sharing data but even more importantly sharing metadata that supports the business processes on a common platform that make Customer Science possible.

    We’ve come a long way from the times when computer automation was mainly about making data more accessible to better support manual business processes. Big Data gave us the insights to understand customers in ways we never could before and platforms are enabling process automation not simply data storage and retrieval.

    There are still things that only people can do in this highly automated environment but the new science and platforms make the people involved in the processes much more productive and importantly they provide better and more intimate association with customers. Ironically, process automation is still not widely accepted, it is only gradually becoming part of the landscape though of course, leading practitioners have already gotten and digested the email. Perhaps next year it will see greater emphasis for the rest of us.

     

    Published: 3 years ago


    baby new yearI’d like to say it’s going to be a good year in CRM and I firmly believe it, though I can’t offer a single all encompassing reason for my optimism though there are plenty of small things that begin to add up.  In an earlier time the metaphor might have been “straws in the wind.”  So what are they?

    First, the economy is looking better but that’s faint praise.  Things are not as bad as they were a few years ago, for instance the economy is adding in the neighborhood of 200,000 jobs monthly but I read an article the other day that said at this pace it will be another five years before we’re back to the employment level before the crash — in part because we need to absorb all the people who are entering the workforce.  But as I like to say, black ink is better than red no matter how little there is.

    More concretely, in our financialized economy, the markets are healthy and the broad CRM industry is doing its part to pump out new public companies.  While all of them can’t be Salesforce caliber there have been many recent IPOs and the new year looks to have a few more teed up.  That at least shows us that companies are evolving as they should and finding markets for their wares.

    As usual, companies that are expanding the margin of our markets are the ones to keep an eye on.  While I have seen my share of emerging CRM companies as an analyst and a judge in CRM Idol, the ones that are most interesting are those at the margins while the companies that try to reinvent the wheel don’t usually capture the imagination.  Companies that I am watching for the year ahead include Xactly, InsideView, TreeHouse Interactive, Scout Analytics, Full Circle CRM, Lattice-Engines, HubSpot, Apttus, and Zuora.  My good friend Paul Greenberg will publish a list of a bazillion companies he likes in his watch list.  This is not intended to be all inclusive, just a smattering of companies I am well acquainted with.

    All of these companies are expanding the margin of the market, expanding our horizons, and while only a few will have an IPO this year, the rest are worth keeping tabs on for sure.  IPO candidates in my humble opinion include Xactly, Zuora, Apttus, and InsideView.  Interestingly, none of these companies is what you would call a social company, which shows that there are more margins than just social.  However, each is squarely positioned as a SaaS value proposition and that says the cloud is a live and well.

    Xactly is reinventing compensation management, not just for sales where it got started but in every department of the enterprise.  Zuora is making the subscription model mainstream by making accounting and finance in this new world easy.  Apttus is a double or triple threat offering configuration, pricing, and quotation technology but they also have invented a way to be into and using Microsoft Office applications in conjunction with SaaS products like Salesforce. The result is a new kind of uber app.  Lastly InsideView started as a sales intelligence tool but is expanding its footprint to provide sales and marketing teams with the data and insights they need to pursue opportunities.

    I am warming up to TreeHouse because they have an interesting product line including partner relationship management (PRM) and marketing automation.  PRM is one of those things that has come and gone more than once over the last twenty years, always with different players.  I think this time might be significant as increasing numbers of vendors seek quality partner channels as a means of streamlining their operating costs.

    If there’s a theme for the last group — Scout Analytics, Full Circle CRM, Lattice-Engines, HubSpot — I’d say it’s analytics.  You might not think of HubSpot as an analytics company, and I don’t think they are one.  But analytics is a part off what they do when they provide inbound marketing solutions.  Inbound, done right, can be a big boon to business.

    The other three offer mainstream analysis, if not analytics.  Full Circle focuses on marketing management which I have written about many times because I think the idea of understanding the data and the metadata of marketing programs can do much to make you look smart if you’re a marketer.  Lattice loves to crunch data about marketing and the sales process and they do it well.  I don’t know any sales manager who doesn’t want better knowledge about all of the processes his or her team is involved in and Lattice is one way to get it.

    Lastly, Scout has more mainstream analytics but for subscription companies and they make a good partner for Zuora.  Subscriptions generate mountains of customer use data that can be used to predict everything dear to a subscription company’s balance sheet — I mean heart.  With Scout’s analysis of use data, companies can spot revenue opportunities as well as danger signs like potential churn.  Any way you slice it, this makes knowledge and that translates into market power.

    So that’s some of what I am looking at as we start the year.  I think it will be a year of base hits with an occasional sprinkling of home runs.  Many, though not all, of the companies in this article have raised significant cash over the last year indicating both that the VC markets believe in their stories.  But this also means clocks are ticking, investors want to see some returns and IPOs or private sales are on deck.  Either way this makes for an entertaining start to the year.

    Published: 4 years ago


    Calendar-2014-28Once a year I write a post that tries to predict some of the big happenings of the year ahead.  The success of these efforts relies on clear thinking and objectivity — trying to figure out what will come to pass rather than what I want to see happen.  It’s hard but thankfully no one ever checks up on me a year later.

    First, let’s take a look at the general economic outlook.  The global economy is improving, unemployment is trickling down at least in the U.S. and there are some bright spots like improvements in manufacturing and construction.  The Federal Reserve is poised to get a new leader and Janet Yellen has been nominated though at this writing it is far from certain that she’ll pass the senate because she’s a Keynesian after all.

    But in a recent Op-Ed in the New York Times, Martin Feldstein, a professor of economics at Harvard, who was chairman of the Council of Economic Advisers from 1982 to 1984, under President Ronald Reagan, suggested a very Keynesian stimulus so perhaps some further stimulation of the economy could be in the offing.

    Long story short, the economy is looking better than it has for some time but it’s not great.  On the other hand, there is a goodly amount of capital floating around looking for homes in late stage start-ups and the class of potential IPOs looks strong with names like InsideView, Xactly, Apttus, TOA Technology, ServiceMax, FinancialForce and many others.  None of the CEO’s want to talk about that stuff, it’s like each is a pitcher in the dugout in the 8th inning of a perfect game.

    All of these companies offer SaaS solutions and all are available on the AppExchange which suggests that my universe needs to expand.  Nevertheless, the Exchange is a good place to look for signs of opportunity.  I suspect application stores or exchanges are going to be very important incubators for new ideas in front office computing so I’ll continue watching them for new signs of life.  You never know what you’ll find.

    I expect a continuation of a trend that started last year in which marketing became the new darling of the front office suggesting that customer service (which is always important) is cycling out.  Service is where vendors go during downturns so that they can try to protect existing revenue streams and, of course, SFA takes a back seat.  But after a year of marketing hoopla I think the stage is set to put more wood behind the sales arrow to begin reeling in some of the leads that new marketing systems have been nurturing.  So I am looking for new activity in the SFA part of CRM.  But not just any activity.

    I am still digesting the Bluewolf report “The State of Salesforce” that came out just before Dreamforce.  One of the most intriguing findings from the report is that community is the new CRM.  If that’s true, it is fairly easy to postulate significant changes to the way we sell.  Perhaps sales people will become more involved with communities sponsored by their companies as a way to accelerate sales processes and lower the costs of making customer calls.  What sales manager wouldn’t like that?

    But I think the hidden message is that community will evolve more as a marketing and service hub, than as a sales tool.  Sales will be a by-product of a lot of customer-to-customer interaction.  Currently communities are mostly thought of as a part of marketing or as a part of service but I do not think it too far fetched to consider the possibility that community will become its own entity on a par with sales, service, and marketing — its primary consumers.  Away from its departmental blinders, the community might be more able to take action to benefit all departments instead of just one.

    Run well a community can provide a lot of information to a company and at some point it might make sense to give it its own charter and budget rather than having it mooch off the budgets of marketing or service.  I suspect when that happens it will get a new name.  Right now we have IT, which takes a technology perspective and that perspective is valuable.  But this new entity will be more focused on information development or intelligence.  This seems right and I like everything about it except the moniker.  No one is going to want to work for ID, just a hunch but I can’t see calling the new department the intelligence department.  Given the NSA’s reputation right now, we’ll keep clear of that.

    This transition won’t happen over night so it won’t be complete in 2014, which sort of gets me off the hook in prognostication.  But from another perspective, the oft quoted Gartner idea that the CMO will have a bigger technology budget than the CIO in a couple of years, I think, goes to the heart of what I am saying.  But it won’t be the CMO’s budget, it will be the CIDO’s or whatever we decide to call him or her.

     

    Published: 4 years ago