Moving Beyond PLM and CPQ: How Emerging Technologies Address Configuration
Manufacturers have two common approaches to “configuration”: Some companies approach it solely from the perspective of sales and marketing, while others will always start with engineering. While there are some benefits to the sales/marketing approach – it can lead to a significant divide within the organization over ensuring that what is offered to customers is what the business actually can provide.
Configuration describes how
Manufacturers sometimes overpromise what they’re able to deliver – in part because there’s a lack of transparency between the different departments of the enterprise. Sales and marketing departments want to offer whatever customers are looking for – but if they lack insight into how that tactic will affect the engineering team… or if they do not understand the options that actually are available… there will be problems as a result of that approach.
Such an organization likely needs a solution that can be configured to bridge the divide between what sales/marketing make available and what engineering can deliver.
The challenges of using CPQ alone
If you’re just taking the sales and marketing-based perspective, which is typically what happens when using a Configure Price Quote (CPQ) approach, you don’t have a full view of all the available options for your customers – or, perhaps more important, of the options you cannot deliver. What can happen in this situation is that sales and marketing departments start offering products or features they’d like to sell – only to realize the engineering department cannot manufacture or deliver those options.
This leads to an uncomfortable situation when the sales rep has to go back to the customer and say, “Sorry, we cannot actually sell you what we promised we’d deliver.”
That’s clearly bad for business, puts a major constraint on those customer relationships. In the worst case scenario, your customers may seek out a different vendor who can provide what you failed to deliver.
Working with CPQ alone, there’s a significant lack of transparency. You might have an idea about the revenue you can get from selling a product, but if you don't really know what the effect of that idea will be on the engineering or manufacturing side of your business, you don't know what the resulting manufacturing costs will be. And that means it’s very hard to predict what your revenue will be from selling these new products or services.
The CPQ-only tactic also leaves you with a lack of insight. After all, if you're selling something that you have not sold before, then typically you will not know the complications to come from the design you have adopted. It’s common for manufacturers to want to offer new products to the market, and then to ask its engineers to make them. But if you have very little insight into the different options you’re trying to sell and what kind of impact that has on your engineering team, it is difficult to figure out the actual cost of trying to sell those options.
The challenges of using PLM alone
For other manufacturers, such as those that produce complex machinery for other companies to use, it may make more sense to have a more engineering-centered approach. Historically, product lifecycles have been linear processes, with Product Lifecycle Management (PLM) systems handling design and engineering from beginning to end. In many situations, this works fine.
However, many manufacturers today work to provide customers with the ability to configure their products to meet their unique demands while gathering the resulting data and behavioral patterns to spot emerging trends. The traditional linear method cannot be used to manage this new world of increasingly complex products, and it poses serious difficulties for manufacturers starting their digital transformation.
CLM can bring it all together
Configuration Lifecycle Management (CLM) can address the challenges of either approach that are primarily focused on one side or the other. Integrating PLM or CPQ with CLM offers the scale required to satisfy dynamic customer requirements and the rising complexity of products – without affecting current customer installations and processes.
CLM provides a single source of configuration truth. By enabling product designers and engineers to execute configurations, interact directly with logic and connect to the rest of the business – as well as supply chain partners, vendors, and even customers themselves – it helps lay a foundation of tight collaboration between departments.
On the CPQ side, configuration solutions can help ensure you quote only what can be manufactured based on sales and engineering, creating an aligned product definition.
Bringing it all together
In short, CLM is a technology for bringing different views together. Engineering-driven companies that have an inside-out view often are driven by product capabilities. However, they may lack the ability to see what impact new engineering changes have on sales, revenue, and on the market in general. Marketing-driven companies with an outside-in view may lack transparency about what might be sold and what impact selling new products might have on engineering, manufacturing, and future maintenance cost.
CLM is not about changing the main point of product view for a company – that is, from inside-out to outside-in or vice versa. It is about providing clarity and making sure you understand the impact of decisions being made when engineering, changing offerings and selling products. CLM provides the insights you need to manage product complexity, deliver what you’ve promised, and to do both of these profitably.
Anders Rasmussen is a senior principal software developer with Configit, an advanced sales configuration and guided selling solution for manufacturers of complex products.
