Configuration software systems are often used in a business-to-business (B2B) setting in order to help the sales force provide large, varying, and highly complex quotes and pricing to their customers or prospects. Such software is commonly referred to as “CPQ”, which stands for “Configuring, Pricing & Quoting”. (Techopedia, 2020).
More and more businesses are starting to realize the tremendous benefits that can be obtained through mass customizing their product portfolio, or at least selected parts of it, most often by implementing CPQ software.
However, it can be a bit of a jungle when one has to identify, and implement the CPQ system.
CPQ Software Type
Firstly, one must recognize that there are several types of CPQ software available. Some of the most well-known types include: geometry-based, ERP, expert systems, spreadsheet (e.g., Excel), database (e.g., Access), and traditional programming language (Hvam et al., 2008).
Geometry-based
Geometry-based configuration, is typically seen in 3D modelling software, also known as “Computer Aided Design” (CAD) software.
Here configurators can be build in to the CAD software.
An example could be the 3D-modelling of a wheel rim. The rim might come in different sizes of the nominal diameter, and in different materials. Instead of the designer doing frustrating repetitive work of designing the rim over and over with different dimensions, and materials, she can instead set-up some rules/constraints, and then use the built-in configuration in the software to define and generate various types in seconds.
ERP
Some ERP-systems, have built-in CPQ functionalities and features. An example is the well known and widely used SAP software.
One of the main advantages of having integrated CPQ modules within ERP systems, is the transferring of data. When something is updated in the ERP system, this will immediately and smoothly transfer to the configurator, so that costs, components, bill of materials and other key data is always updated.
A disadvantage of choosing an integrated ERP, CPQ solution is that not all ERP systems offer an integrated solution. The ones that do, vary in quality, since this for many providers is an “additional feature”, and not the core software.
If you are however using an ERP system that supports an integrated CPQ module of good quality, which is able to accommodate the needs of the organization, this type might be the optimal solution for you.
Expert Systems
The expert systems are often used to solve complex configuration problems. They are used to configure numerous distinct products and can be further divided into three basic types: rule-based, model-based, and case-based expert systems.
Model-based systems can be further divided into constraint-based and resource-based expert systems.
For configuration of industrial products, rule-based or model constraint-based expert systems are commonly used (Hvam et al., 2008).
However, according to Hvam et al. (2008), experience shows that rule-based expert systems can be difficult to maintain, therefore, most development today is focused on constraint-based systems. In addition, Hvam et al. (2008) conclude that compared to the other types of programming, expert systems are characterized by high representational strength, high reasoning strength, and high reasoning efficiency.
Spreadsheet
Some small or medium sized companies are starting out with a solution that is more simple and essential compared to the expert systems discussed above, since they build or buy CPQ software created in spreadsheet software such as MS Excel.
This can be a very good point to start in order to move the company in the right direction, and it will in the vast majority of cases be significantly less costly and faster to implement.
Though being a less sophisticated solution, it can dependent on the products in the portfolio and the organization where it is applied, help secure most of the benefits but at a fraction of the cost.
Obviously, such a solution can not handle the same complexity as a dedicated expert CPQ system, so as complexity in or around the organization and the product portfolio increases, it will at one point be extremely difficult to maintain, update and debug.
In summary, a spread sheet solution might be “good enough” for the needs of some organizations, while others will need to place larger investments in time and money in order to implement a sustainable robust CPQ solution
Database Access Control
Another area where configurators are used, are to manage roles, responsibilities, and access of people in an organization. Depending on the configuration one member of the organization might be denied entry to a database, while another has full access to the very same database.
This type of configuration is in the vast majority cases already built in to the control systems of computers.
When implementing CPQ in an organization, it is of incredible importance, that only the right people have the right authorities and accesses. This is a prerequisite for trusting the tool and the outputs obtained.
Traditional Programming Languages
Finally, CPQ solutions can be build within traditional programming languages such as Python, C++, Matlab etc.
It is not too common, since programming languages are not clearly dedicated or optimized specifically to creating CPQ solutions, and thus the solutions will in many cases perform worse than those dedicated expert systems such as Tacton, Configit or SAP.
Criteria of Evaluation Before Choosing CPQ
Having identified the overall type of configuration software, that best matches the faced challenges and needs of the organization, a total of three important criteria will have to be evaluated. Hvam et al. (2008) define the three relevant criteria as : (external relations to the system, including system integration).
- Software functionality
- Software structure
- Software interfaces (external relations to the system, including system integration)
1 Software Functionality
This criteria not surprisingly relates to evaluating whether the functionality of the CPQ software of the chosen type is a good match for the desired end-goals and needs of the organization.
In other words, find the CPQ tool that is best aligned performance wise with what is needed.
This might sound simple, but can in practice be both difficult and time consuming. However, time spent evaluating this criteria is well spent, and will most definitely be worth the effort!
Below is a list of sub-criteria to asses when studying the functionality Hvam et al. (2008):
–Dynamic configuration:
Configuration within a software system is referred to as “dynamic” if the solution space is reduced for each individual choice made throughout the configuration
–Price & cost calculations:
Can the software handle complex pricing principles for computation of costs and prices?
How are prices maintained?
How are various prices handled in different market settings?
How are various monetary standards handled?
How are units handled?
How are specific customer discounts handled?
–Online/offline configuration:
Is it possible to configure online, or only locally?
–Reporting/quote generation:
How much and in which quality can the software generate standardized documentation for specific configurations?
–Sub-models:
Can the software align with sub-models, and if so to which degree?
–Version control:
How well does the software manage version control of product models?
How well does the software manage version control of the software itself?
– Backup:
What backup systems are embedded in the software to counter loss of data or other configuration work?
–Administration of users and system:
How well does the system handle multiple users or other stakeholders with different rights, roles, responsibilities, and restrictions?
2 Software Structure
The second highly important criteria to consider and evaluate, is related to the structure of the CPQ software.
To support the process of evaluating this criteria, Hvam et al. (2008) has developed yet another set of sub-criteria’s, some of which are listed below:
–Type of system:
It is important to be clear of what type of configuration system the will match ones need, whereas the characteristics of the different systems were discussed above in this article.
–Use of technology, client/server environment:
Can the software of choice connect, and function together with other already existing IT-systems?
How can it support integrate and align itself with other systems in general?
–Adaptation of standard systems:
Will the configuration software of choice be able to adapt to known development languages and tools such as for instance VBA, C, C++, Java or Python?
–Web-enabling:
Is it possible to enable the CPQ to web-based solutions, for instance on a web-page?
–Time of reasoning :
How slow or fast can the software reason, according to the configuration problems that are sought resolved with the solution? Does the reasoning happen during compilation, at runtime before any making any choices in the configuration or during run time after the necessary choices of configuration have been made?
–Data security :
How well is the CPQ system at protecting confidential data, such as costs, sales margins or technical data?
–Degree of visualization :
Which degree of visualization does the system support? -No visual representation, 2D drawings and illustration or dynamic 3D visualization?
3 Software Interfaces
The third and final overall criteria that one will have to asses when implementing a CPQ solution, is related to the interfaces of the software, or put in a different way how people interact with the software.
Below is a list of sub-criteria inspired by Hvam et al. (2008) to consider.
–User interface :
How is the user interface, and is it automatically integrated into the software or will it have to be programmed?
Can the system handle multiple user interfaces, for instance varying dependent on the role or department of the person interacting with the software so that a salesman and a planner would have different user interfaces?
–Integration with Microsoft Office product :
Since the majority of all businesses use Microsoft Office products on a daily basis, it is very relevant to evaluate whether the CPQ can collaborate & be integrated with Office desktop applications.
Is it for instance possible to extract or handle data to/from Excel?
Furthermore, another aspect is the intuitive feeling the user has when interacting with the software. If it is similar to the Office products, more people will be able to adapt and quickly learn utilizing the CPQ solution of choice.
–Users :
Additionally, it is important to consider the human factor of the CPQ solution, assessing it according to the people who are to use it!
How many can use the solution and at what cost?
Is it necessary to train resources and if so how much?
Is it necessary to hire external specialists?
Can users of the software use it simultaneously?
–Stability :
Finally, but not less important is the evaluation of the software stability.
How often does it crash, and how stable is operation?
Summary
The CPQ software industry has many vendors offering different solutions, some examples are: Autodesk Configure One; Configit Quote; Oracle CPQ Cloud; SAP Configure, Price, and Quote; and Tacton Systems CPQ.
Knowing how to choose the most suitable CPQ software, can be difficult and complicated. Therefore, it is important to evaluate first the overall type of CPQ system, and then go in to further detail by comparing to three important criteria.
We here at DENWA are Product Configuration specialists and we would be happy to help provide further consultancy. You can book a free 30 min. consulting phone call here.
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References
Hvam et al., Product Customization, 2008, (p. 226-232)
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