The continuing rise in demand for customised solutions is THE top trend in German mechanical engineering. Studies (VDMA/McKinsey study) show that intelligent modular strategies and the use of product configurators in sales present an ideal opportunity to utilise this trend. The focus here is on the desire on the part of companies to offer customers and the market a wide product portfolio (maximisation of revenue) with minimum internal variance on the production side (minimising of costs). However, for many medium-sized machinery manufacturers, the implementation of a solution is a challenge involving many unresolved issues.
We at encoway believe that a well thought out and gradual approach will ensure success. Especially for medium-sized machinery manufacturers, we have developed a low-threshold introduction:
- The Readiness Check,
- The potential analysis,
- and – quite simply – trying it out!
More success in sales – the starting point
For example, salespeople should be able to create customised, error-free quotations quicker and at a suitable price. For example, salespeople should be able to create customised, error-free quotations quicker and at a suitable price. Internal sales should be relieved from having to deal with recurring, complex technical enquiries. If necessary, even customers should be able to find, configure and order the product variants themselves in the extensive catalogue. And in general, the communication of products, solutions and services to the market should be made more attractive.
It is, however, often not sufficiently clear where the company currently stands as regards its starting position and ability to realise projects of this kind. If its experience with “configuration projects” is limited, a lot of questions remain open: Is this actually possible in our company? What kind of success can we achieve? How can we create quick wins? Where do we start? What conditions do we need to create? And will it actually be worth it?
Over the past 15 years, encoway has realised a variety of successful CPQ (Configure – Price – Quote) projects. Based on our many years of experience with the preparation, implementation and follow-up of projects, we have developed “best practices” for a step-by-step introduction.
1. The Readiness Check: Six criteria for assessing the “level of maturity” for successful CPQ projects
“We’re not ready to start a project”. This is the type of self-assessment you will often hear from medium-sized machinery manufacturers. But exactly how ready are you really? What preparation or modification steps still have to be taken?
As an initial project preparation stage, it is advisable to assess the initial situation and the success criteria for a successful CPQ project in a structured way. We call this the “Readiness Check”.
The Readiness Check examines the ability of a company to implement specific, sales-oriented projects in the context of a modular or variant management strategy, from defining objectives to selecting the right data structure.
The following six dimensions form an individual situational analysis for your company:
- Strategy, objectives and organisation
Determine the objectives and context within the company
- Customer expectations and competition
Sum up the context outside the company
- Product portfolio and degree of modularisation
Analyse the structure of the products offered on the market
- Processes and data location
Understand the status of the established processes and data
- IT infrastructure and system environment
Outline the current system landscape
- Staff and expertise
Assess the skills of the employees
Our offer: Two experts from encoway to perform the readiness check together with a selected group of your employees at your location.
As a result, you will find out the maturity level of your company across the above dimensions. You will receive the written results of the analysis and a recommendation regarding the next steps on the path to a successful CPQ project.
As a preparation for a corresponding workshop and as a guideline for your work, you will find a list of detailed questions for the situational analysis here:
2. Potential analysis: Determining added value
“Is a CPQ project really worth it?” A suitable ROI analysis is THE key aspect of any project preparation. In our opinion, only if you can give a firm, well-founded positive answer to this question, should you decide on a CPQ project.
But how should you approach this issue? In our experience, there are two approaches that provide the necessary reliability for a project decision: potential analysis and benchmarking.
On the one hand, every company should assess the opportunities and risks of a CPQ project themselves. To help do this, encoway provides an effective potential analysis.
Our offer: Experienced experts from encoway to analyse with you the potential value contribution of the targeted project in the context of five questions:
- Increase in sales
What value contribution can the project provide through better marketing of products?
What cost advantages can be achieved in sales, construction and order processing?
- Strategic dimension
What overall contribution does the project provide to the corporate strategy?
What internal and external costs are likely to be incurred in the course of the project?
What internal and external factors could jeopardise the success of the project?
As a result, you will receive a list of the key factors for your individual business value analysis. If required, we will work with you to develop your intended project, drawing on our experience.
On the other hand, it is well worth looking at similar companies. Many other companies have already been in your situation and have followed the path to a commercially successful CPQ solution. In our opinion, benchmarking with the expertise providers in the company always pays off. If you are interested, we will be glad to provide you with the opportunity to talk to a company similar to your own.
3. You don’t think it’s possible? Just try it out!
“For us, it will not be that simple – our products are much more complicated.” This is the opinion we sometimes hear expressed in our initial discussions with interested parties. However, this scepticism usually disappears when the first of the company’s own modular products are brought to life in a configurator. Our tip is therefore: “just try it out!”
Our offer: Experienced experts from encoway to help you implement a “proof of concept” and show you how your products perform in a powerful CPQ software solution.
To do this, we will work together with you on three key tasks:
- Data and configuration model
Creation of a data base for the configurator based on sections of your product portfolio; Getting to know modelling and data maintenance
- The process of configuration and quote generation
Trying out the performance of standard product-configuration and quote-generation functions; matching functional “fit” with your own requirements
- Designing of quotation documents
Creating exemplary quote documents in your company’s corporate design; learning about the simple maintenance of quotation templates.
To enable you to carry this out, we will provide a lab environment at encoway, in which you and your colleagues can contribute to the practical implementation of the tasks.
As a result, you will receive an insight into the methodological concepts and technical details of a real CPQ project. You will get a very specific idea of how a CPQ solution can look for your business.
We believe that trying things out in this way will help you to think through the preparation and implementation of your individual CPQ project.