7 Job-Saving Reasons Why You Should Implement a CPQ Before an ERP

by | Mar 10, 2020

Decisions, decisions. Do you need a new ERP? CMS? CRM? CPQ? Not sure where to start? This article will help you understand 7 key reasons you should implement a configure price quote (CPQ) solution before your next enterprise resource planning (ERP) software investment.

You’ve noticed your organization has a problem. You are not as efficient as you need to be, and it’s costing you. But where do you start? Do you help the sales team, the ops team, the finance team, all of the above? A common mistake many organizations make is trying to find one magic software solution that delivers on the elusive promises of digital business transformation. But here’s the not-so-little secret: there is not one single magic software solution that delivers everything your organization needs.

One glance at the chiefmartec.com Marketing Technology Landscape Supergraphic confirms that.

Should you get a new CRM, an ERP, a CPQ, or maybe you need a new CMS, MAP, DAM or some other software solution? The simple reality is that there are so many acronyms in the alphabet soup of technology platforms that it can make your head spin.

This article will help you make sense of two of these platforms, the CPQ and the ERP, plus why you should prioritize one before the other.

To start, let’s ensure we’re all on the same page about what these platforms are.

What is CPQ?

Configure Price Quote (CPQ) is a software tool designed to help sales teams simplify slow and inefficientclunky selling processes by configuring complex products, ensuring accurate pricing, and generating quotes. CPQ platforms often work in conjunction with CRM and ERP systems, especially with manufacturers of make-to-order and engineer-to-order goods. CPQ software combines business rules, pricing rules, and product selection rules into a single repository to deliver real-time data to distributed sales teams. The combined functionality delivers high ROI potential, faster and more accurate sales quotes, fewer order mistakes, and improved sales rep productivity.

For purposes of this article, we consider the functionality of eRep CPQ and may use terms such as eRep and CPQ interchangeably unless otherwise noted.

What is ERP?

Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP provides an integrated and continuously updated view of core business processes using common databases maintained by a database management system. ERP systems track business resources—cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data. ERP facilitates information flow between all business functions and manages connections to outside stakeholders. 

Now that we are clear on what these platforms offer, its obvious that many businesses can benefit from both. And with everything an ERP can deliver, you’d think it’s a no-brainer to get started there.

Not so fast.

Here are 7 reasons why you should implement a CPQ before an ERP.

#1- CPQs Drive Sales, ERPs Do Not

Image courtesy iDealRep

“Nothing happens until someone sells something.”

That quote has been attributed to a number of people, including Peter Drucker, IBM’s Thomas Watson, and Arthur “Red” Motley among others.

Driving revenue growth is a key goal for most organizations. ERPs help drive efficiency across the organization, but revenue growth is not a direct outcome of an ERP implementation. To drive revenue, you need tools that can help your sales teams have a fast and easy way to sell and quote faster. Being able to generate more quotes will in turn generate more sales. Further, when the quotes are prepared in eRep, those quotes can easily be turned into orders, which can then be sent to the order processing team to handle business as usual while you are going through the ERP selection, design, customization and implementation process.

Bottom Line: eRep CPQ helps drive the revenue that will pay for your ERP implementation.

TL;DR

eRep CPQ helps drive the revenue that will pay for your ERP implementation.

#2 – ERP is Inward Focused, CPQ is Customer Focused

The utility of an ERP solution will help you inside your organization. Those benefits may come for your inventory control, your material handling department, your accounting and finance teams, or for customer service. But it’s rarely helpful for your sales teams.

 Although ERPs will often have some sort of a contact manager or possibly even have a quoting module, the feedback we hear from sales reps and sales leaders are that these tools are often slow and too clunky for their sales team to quickly be able to generate quotes. The reason is that ERPs often require more information to produce a quote than is truly needed, or even more information than a salesperson may have at the time they need the quote created. Questions such as what plant will the product be assembled, what vendor will supply the materials, and when is the job start date, etc are rarely critical to effectively creating a quote for the customer, and more often they cause needless delays to the sales process.

Bottom Line: Don’t lose sight of your customers while focusing on your ERP.

TL;DR

Don’t lose sight of your customers while focusing on your ERP.

#3 – Sellers Need Quoting Tools

Whether you’re working with internal sales teams, regional sales offices, dealers, distributors, manufacturer’s rep firms or value-added resellers; every sales rep needs to be able to quickly and accurately deliver quotes to their customers or risk losing the deal to a more responsive competitor.

It’s rare to find an ERP solution that has a quoting module that can handle inside and outside sales channels in a cost-effective way. Sure, you could purchase an ERP license for each of these sellers from third-party companies that need access to your information, but the reality is that it is very cost prohibitive. Combine the cost factors with the often-clunky quoting process and learning curves for third-party sellers, and it’s clear your sales channels would struggle.

Aside from faster quoting, guided selling features, and document generation, one critical feature lacking in most ERPs is pricing and special request workflows between sales reps, sales managers, and third-party sellers or purchase influencers. Other missing functionality may include product selection tools (link), economic analysis, spreadsheet-based RFQ uploads (link to Distributor edition?), and the ability to email non-users of the ERP system.

Further, today’s sales reps need access to information in real-time and on any device. eRep CPQ is a mobile-responsive, cloud-based application that is available 24/7 and works on any device with an internet connection, which gives sellers the ability to respond to customers at any time from anywhere.

Ultimately, sales teams need the functionality of CPQ platforms, while production, purchasing, order fulfillment and finance departments need the utility of ERPs. eRep CPQ acts as a bridge between your sales departments and these other departments, helping the entire organization accelerate growth. That’s why eRep has open APIs to create intuitive experiences for sellers while still sending relevant data to your ERP.

Bottom Line: eRep helps you quote faster, sell smarter and accelerate growth.

TL;DR

eRep helps you quote faster, sell smarter and accelerate growth.

#4 – ERP Implementation Timelines are Notoriously Long

Remember, the growth driver of an organization is revenue growth, and our clients tell us they experience an average sales growth of 30% after implementing eRep and they are quoting 75-90% faster. On top of that, they’re improving their order accuracy with eRep’s rules-based pricing configurator platform which further helps them be more profitable.

According to a 2019 study, only four in ten (42%) organizations that completed an ERP implementation did so on time, with the average actual timeline coming in at 16 months. And that time is AFTER the specific ERP vendor and implementation partner have been selected, a process which often takes another six-to-nine months. All told, you’re looking at a process that will likely take around two years or more to complete. Do you really want to stymie your sales channels for two plus years while implementing a solution that will have minimal benefits to those channels?

The reality of what we’ve seen over the last twenty-plus years watching various manufacturers and distributors implement ERP systems is that they usually take a lot longer to be implemented than what was expected, and the costs are usually higher than what was budgeted. That causes a hold on everything in your organization, which doesn’t help your sales team drive additional revenue. And it certainly doesn’t help the customer experience.

Bottom Line: Don’t waste years focused on an ERP while a CPQ can boost sales fast.

TL;DR

Don’t waste years focused on an ERP while a CPQ can boost sales fast.

#5 – ERP Implementation Does Not Guarantee Success

Clients often come to us first looking for a solution to pain points for their sales teams, and through our conversations they often discover many other underlying issues that occasionally cause them to seek an ERP to solve their problems. Certainly, there can be wisdom in looking for a new ERP, as they are powerful platforms that can provide tremendous benefits to organizations who successfully implement them. However, ERP implementation carries a fair amount of risk, and the results of a failed implementation can be disastrous and lead to millions in cost overruns and lost revenues.  In fact, analysts have found that roughly 75% of ERP projects fail. Even major companies like Nike, Hershey’s, and Revlon are not immune to ERP implementation challenges.

One specific ERP that we hear about repeatedly is SAP. In full disclosure, we have performed successful SAP/eRep integrations with multiple clients. However, what we often hear many times is that not all of the modules get fully implemented because the client runs out of money. Whether budget overages are from scope changes, lack of adequate planning, organizational issues, or simply the unexpected cost of the consultants that cause the overruns; the problem is that what may have started as a search for a remedy to  sales issues has now expanded into a multi-year ordeal that has hamstrung profitability.

Bottom Line: Keep the revenue flowing by minimizing disruptions to your sales channels.

TL;DR

Keep the revenue flowing by minimizing disruptions to your sales channels.

#6 – ERPs Prioritize Function over Aesthetics

Quotes, sales proposals, product brochures and even technical submittals are customer-facing documents. As such, your customers are evaluating your offerings against your competitors, therefore how you present your company matters. ERP platforms do not deliver the ability for sales reps to create fantastic-looking quotes and proposals, nor can they quickly create quote-specific product documentation or technical submittal packages.

With eRep CPQ, your quotes to customers will always be professional and the designs can be tailored to the needs of your organization. You can choose whether to show line item pricing, product images, product descriptions, and many other options as you design your custom quote form to help you wow your customers. Additionally, you’ll protect your company image by ensuring consistent quote formats from all sales reps. Finally, eRep’s document generator saves your reps thousands of hours each year by producing quote-specific documents for all relevant line items of your quote. In just a few clicks, you’ll have all your cut sheets, wiring diagrams, sales sheets, brochures and other information ready in a single pdf that can be printed or emailed to your customers. You won’t find functionality like that in an ERP, nor will you find it in other CPQ platforms.

Bottom line: Close more deals with sharp, professional, and consistent quotes and proposals.

TL;DR

Close more deals with sharp, professional, and consistent quotes and proposals.

#7 – Don’t Let Your CPQ Integration Be a Roadblock

One thing that we’ve heard prospects say over the over the years is that they want to get their ERP system up and running first, then get it integrated with eRep. And I think the reality is that you can integrate it now or you can integrate it later. You know, it doesn’t really cost that much to do the integration in the grand scheme of things.

That’s because eRep comes with open APIs and it’s ERP agnostic. You can choose to integrate with your current system, wait to integrate with your next ERP, or use it as a standalone solution. Primarily, you need to base the decision on the number of transactions you’re doing each week to determine whether it makes sense to do the integration now, later, or do it for both systems. Once an API is established between the eRep application and your existing or new ERP, it can be migrated to another ERP anytime.

Bottom line: Whether fully integrated or used as a standalone solution, your reps will benefit from eRep.

TL;DR

Whether fully integrated or used as a standalone solution, your reps will benefit from eRep.

Bonus: eRep CPQ offers full portability and no long-term contracts

If you’re still convinced that you can handle your quoting inside your ERP once you have fully implemented, go for it. Since it will take you between 12 and 24 months to go live, eRep can serve as a bridge between where you’re at today and where you’ll be with your ERP. You won’t be tied into any long-term contracts like you often find with other software platforms, and you can easily port your eRep data into your new ERP system. Simply cancel your subscription, and our team will work with you to get your data exported. But the best part is you will have the increased sales through the use of the eRep platform, and those increase sales will undoubtedly better position your organization for the future.