In this fast-moving world, use of Software-as-a-Service (SaaS) and Cloud Computing has grown rapidly owing to its straightforward subscription-based pricing model and relatively quick deployment. Nowhere has that been more evident than in the niche quote-to-order (Q2O) or configure, price & quote (CPQ) market segment. Indeed, BigMachines, FPX (formerly Firepond), Webcom, and Experlogix continue to report notable on-demand software subscription and accounts growth even during these economically depressed days.
Why the Need for SaaS Q2O/CPQ Products?
According to Etilize, a GFK Group’s product data company, the number of offered products to consumers and businesses has skyrocketed lately. Namely, between 2005 and 2008, the number of new high-tech products launches has tripled. These mushrooming physical products also come bundled with sophisticated finely tuned services to address ever more granular market segments and demographics.
On the other hand, the average product lifecycle has decreased quite a bit during the same period. Indeed, between 1995 and 2005, the average usability of manufactured goods has decreased from 4.2 years to 3.1 years. Moreover, mass customization of products has boomed to such degree that, e.g., for the MINI Cooper Clubman model, total possible variations have surpassed 350,000. Customers not only want customized products and services, but some even believe that “self-service is the best service.”
Consequently, marketers face increased costs for new product and service launches with limited ability to react to the constantly shifting market trends. For example, an insurance company requires 2,000 man-days and over one year on average to launch a new offering in a “pedestrian” manual way. A similar situation occurs when a software or hardware vendor offers many possible combinations of modules (some of which are interdependent) bundled with a plethora of licensing options and service & support tiers.
In other words, the times to create and update offerings are unforgivably too long, while product launch maintenance costs are too high. These constraints drive down marketing creativity, in addition to inconsistent marketing toolkits being disseminated through diverse channels.
On the other hand, sales people do not really know how best to match an abundance of offerings with exacting customer needs. Indeed, a telecommunication provider’s product and service offerings entail more than one million combinations of cell phones, calling plans (e.g., unlimited minutes, transferable minutes, roaming options, etc.), and plan options (e.g., family plans, small business plans, etc.).
Product managers are thus often involved in too many quotes and sales cycles, instead of thinking of ways how to improve their company offerings. The lack of institutional product knowledge can cause errors, especially during new product introductions (NPI). Needless to say, long quote-to-cash cycles due to data re-keying and missing information are detrimental in many ways.
Last but not least, customers are increasingly reluctant to interact with (often aggressive and sometimes clueless) sales people. Forrester’s report from March 2010 that cites an 11 percent increase in online purchases in 2009 vs. 2008 in Western Europe is strong evidence of customers’ preference to be self-sufficient.
What About the Traditional Configurators?
Some might rightfully wonder why traditional client-server best-of-breed product configurators (i.e., by Selectica, Trilogy, Cincom Systems, etc.) and configurator modules within enterprise resource planning (ERP) and product lifecycle management (PLM) products could not help with the abovementioned challenges. For one, most of these products were oriented towards engineering departments, and are thus not amenable to less engineering savvy sales folks and customers/consumers.
Rudimentary Web-enablement of these products doesn’t equip users to today’s nimble business-to-consumer (B2C) and business-to-business (B2B) electronic commerce (e-commerce) . Moreover, most configuration solutions lack the product lifecycle management’s “cradle-to-grave” aspect.
Very few vendors deliver a collaborative solution to organize different modeling tasks from product structure to price books, product data management (PDM)/product information management (PIM), translations into international languages, multimedia marketing collateral creation, etc. In addition, heavy programming is often necessary to manage product variants and/or pricing complexity, which in turn results in lengthy new product launch cycles. This is especially true for large organizations with developed and diverse channels and/or higher product complexity.
Last but not least, since current modeling tools are made for IT people rather than for business teams, customers’ self-sufficiency on product models maintenance is limited. In other words, the software vendor is often required for further (costly) enhancements or updates. For more information about the market needs and landscape of Q2O solutions, see TEC’s 2007 article entitled “The Complexities of Quote-to-order and Possible Solutions.”
Enter Cameleon Software
The other day I reconnected with a vendor that has recently changed its name. Namely, Cameleon Software is what until last year used to be Access Commerce, a Europe-born software vendor whose products empower organizations to accelerate new configurable product and service offering launches and increase sales across their diverse channels.
The company was established in 1987 and has been a public company listed on the Euronext Exchange since 1999. Headquartered in Chicago, Illinois, United States (US), the company today has a global presence, with 130 active corporate customers and end-users in 70 countries. Cameleon Software customers are global enterprises and some industry-leading corporations worldwide.
I met with Access Commerce a few years ago, when the company was penetrating the North American market, in part via alliances with QAD and MAPICS (now Infor). The partnership with QAD has meanwhile fallen by the wayside after QAD delivered its own configurator module a few years back, although the agreement with Infor for Infor ERP XA is still intact.
Today, Cameleon Software is a global and recognized player with a proven track record of success: its annual revenues exceed US$10 million and its products process millions of configurations, quotes, and orders every day. The vendor has also garnered a large systems integrator (SI) community that includes Logica, Accenture, Capgemini, CSC, and other players.
As for consulting firms, Cameleon partners with BearingPoint and other regional firms. Generally speaking, Cameleon is platform agnostic and integrates with many ERP, customer relationship management (CRM), PLM, and e-commerce solutions. For example, the vendor claims many joint customers with salesforce.com (a key partner for Cameleon that will join the upcoming Dreamforce conference as a Gold Sponsor this year), SAP, and Selligent.
Reconciling Sales, Marketing, and Channels
As explained earlier, a traditional “product configurator” primarily delivers value to sales teams. But the “next generation” of product configurators must empower organizations to increase sales across all channels and marketing teams to accelerate the launch of new products and/or services. Cameleon Software has thus added a product offerings design aspect to its traditional sales configuration software prowess. In other words:
More importantly, Cameleon provides a solution that bridges the gap between both populations, resulting in tangible business benefits in both cost reduction and revenue increase. In addition, Cameleon focuses on “business users” within non-IT savvy sales and marketing teams in the following range of market segments: Manufacturing, Telecom, Insurance, High-Tech, Life Sciences, Media, etc. The vendor is also able to address the functional needs and business requirements of both large multinational companies and smaller businesses.
Helping the Design Phase
During the Design phase, Cameleon provides help to product managers and the marketing team in their quest to reduce the time needed to create and update product offerings. To that end, Cameleon offers a single collaborative repository for products, prices, and channel data where authorized users can create re-usable product modules and variants, and allocate tasks to different contributors according to their profiles and assignments. In addition, entire sales processes can be executed through customizable AJAX-based user interfaces (UI’s) that can be generated “on the fly.”
A single repository (i.e., a single version of the truth) with role-based access levels, which is accessible no matter where users are, bolsters marketing effectiveness. Product marketers can use rich media objects (e.g., pictures, videos, pdf files, etc.) and make the translation process simpler in such an environment.
Products and services can be modeled as hierarchies. The nested configuration capability addresses problems considering multiple occurrences of the same product or service in a bundled offering (e.g., a subscription plan for each member of a family or a group of people). Users can navigate through these hierarchies in any fashion, as the system automatically remembers the choices made by the user. In addition, Cameleon propagates constraints on users as they continue to navigate through the hierarchy and make further choices.
Constraints are used to project a possible choice of product features as to prevent invalid combinations, while rules are used to deduce other possible product choices from the selections made by the users. Even the most complex rules and constraints allow any business logic to be expressed via a matrix and to be written in either the proprietary Cameleon script or in Java. The system constantly manages the constraints and rules consistency in the background to improve the customer experience by preventing invalid combinations in real-time.
Even a Business User Can Do It
Business users in product marketing departments can work within a collaborative and graphical environment, and use drag-and-drop features to create relationships between the products (and detect any inconsistencies). They can maintain pricing grids in a matrix form via importing from (and later exporting to) Microsoft Excel and illustrate a configuration process with a “tree representation” in few clicks.
Moreover, an easy to adapt product catalog supports many product and service offering structures to accommodate components, product bundles, and packages, with no limitation in the number of hierarchic levels. In fact, if necessary, one can, say, add a level between a bundle and a package, as well as other pricing criteria.
Sales processes can be created independently from the product structure, whereby users can quickly create a prototype of a new offering (if necessary, they can copy existing offerings to create similar new ones). Cameleon allows versioning of product models by distributing new model/product releases with an appropriate packaged content depending on the different channels, understandable and easily usable by business users.
All the business rules regarding pricing, promotion etc. are kept separate from the product hierarchy itself. This separation enables easy modifications in response to competitive feedback from the field. Again, ordinary business users can accomplish all of these tasks without resorting to pesky programming.
Part 2 of this blog post series will continue with Cameleon’s role in the sales department and in the channel, as well as with recent events at the company. The article will conclude with an analysis whether the Q2O/CPQ market is sustainable on its own in the long run.
Your views, comments, opinions, etc., about Cameleon and about the Q2O/CPG software category per se are welcome in the meantime. We would also be interested in hearing about your experiences with these software solutions (if you are an existing user) or your general interest in evaluating these solutions as prospective customers in TEC’s upcoming Q2O Evaluation Center.
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