We have just returned from an exhilarating week in San Francisco for Dreamforce 18, the largest technology event in the world and this year attracting over 170,000 people from Salesforce’s client, investor, research and partner network. The most pertinent discussions revolved around the latest artificial intelligence solutions and how they are further disrupting customer experience. The conference also provided the opportunity for major deals and investments to be announced, including the sale of Equiteq’s M&A advisory client and Salesforce Platinum partner, System Partners, to DXC Technology.
At this year’s conference, Equiteq and Quote-to-Cash experts, Simplus, announced the release of The Configure-Price-Quote (CPQ) Industry Guide 2018, the most comprehensive publicly available study of the CPQ industry and investment within the space. The guide provides exclusive industry perspectives on the CPQ trends currently transforming customer experience for businesses and driving investment in solutions providers.
CPQ software tools are a crucial component of creating tailored sales experiences for businesses across industries. Advances in cloud computing and machine learning are driving the ability to automate the purchase / transaction / sale process, particularly for subscription-based sales models. There is a significant and rising return on investment from advanced CPQ tools, which empower businesses to:
- Increase productivity of sales teams and back office functions by automating much of the sale process
- Optimize quotes and discounting to improve profit margins
- Increase revenue from guiding sales to opportunities for cross-selling complementary products and services
- Create efficient, accurate and tailored sales processes that improve the sales experience, thus enhancing the seller’s brand, improving their conversion ratio and generating more opportunities for repeat business
- Streamline processes, while also ensuring sales teams are meeting company compliance policies and regulatory requirements
The Gartner Magic Quadrant for Configure, Price and Quote Application Suites 2018 provided a comprehensive evaluation of the products of 11 CPQ software vendors. The CPQ Industry Guide 2018 analyzes the following vendors that were highlighted as Leaders: Salesforce, Apttus and Oracle. The guide also provides a review of CallidusCloud, a Visionary acquired by SAP in the beginning of 2018.
Investments in CPQ solutions businesses
Source: Equiteq Analysis (September 2018)
Note: Each node represents a company that received private investment in the CPQ solutions space and is colored according to the country of its headquarters. The node’s size represents its relevance to CPQ from analysis of its business description using Natural Language Processing technology, powered by Quid. Founding Year is the year the respective company receiving investment was founded.
Private investments (of private capital, excluding mergers and acquisitions) in businesses offering CPQ software solutions have increased in the last 10 years. Investments outside the United States have also become more common.
Furthermore, as the market has matured, more sizable M&A transactions involving established CPQ software businesses have occurred. The report details a variety of deals in the space, including:
- Thoma Bravo’s acquisition of Apttus announced in September 2018
- SAP’s acquisition of Callidus Software completed in April 2018
- Salesforce’s acquisition of SteelBrick completed in February 2016
- Oracle’s acquisition of BigMachines completed in November 2013
Purchases of new CPQ tools typically form part of a broader customer-focused digital transformation process. Consulting firms with expertise in advising clients on assessing and implementing the latest customer experience solutions have therefore benefited from the growth in adoption of new CPQ products. The report looks at the various consulting acquisitions that have occurred in the consolidating knowledge-intensive services market. This includes Cognizant’s recent acquisition of Advanced Technology Group (ATG) and those by the major consolidator Simplus.
As we approach the end of 2018, the emerging CPQ trends identified and discussed in the report include:
- The rising demand for solutions using the latest artificial intelligence technologies
- The development of new self-service options
- Low-touch or no-touch fulfilment and invoicing processes
- Multi-cloud approaches to new solutions
CPQ remains one of the most exciting developments transforming customer experience. Expected growth rates for the CPQ industry are significant, presenting opportunities for value creation among:
- Software and consulting firms considering the addition of new relevant skills via hiring initiatives, acquisition or partnership to meet untapped client demand
- Companies considering investment in the latest CPQ solutions to enable operational efficiencies and enhance the client sales experience
- Investment firms considering deployment of capital in new solution providers offering opportunities for stellar investment returns
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