MarketScope for Configure, Price and Quote Application Suites

2 May 2013 ID:G00232603
Analyst(s): Praveen Sengar

VIEW SUMMARY

The CPQ market has moved beyond supporting traditional sales configuration to support self-service, e-commerce, contact center and partner channels. Sales leaders should know the key CPQ application vendors, including best-of-breed and enterprise application suite vendors, and what they now offer.

What You Need to Know

Configure, price and quote (CPQ) application suites provide an integrated set of software applications supporting the configuration, pricing and quote generation activities that accompany solutions and negotiated selling. CPQ application suites also are deployed to support self-service sales environments, including business-to-consumer (B2C) and B2B sales environments. CPQ systems typically include pricing engines, proposal generators, quoting systems, and rules or constraint engines, and are complemented by approval and authorization workflows (see "Configure, Price and Quote Tools Help Redefine the Sales Experience").

Configuration tools help salespeople assemble the appropriate product variations and combinations for qualifying opportunities and conducting needs assessment exercises, enabling salespeople to substantially reduce cycle times in responding to prospects' requests. These tools provide help to reduce quote errors, reduce rework and identify the appropriate product combination. Pricing engines and quoting systems aid salespeople by ensuring that they arrive at suitable pricing for specific product mixes or bundles, and that the details concerning initial estimates, confidence quotes and final quotes are represented accurately (see "How to Analyze Your Sales Processes on Efficiency Versus Effectiveness").

This MarketScope provides an overview of notable best-of-breed and larger-enterprise CPQ application suite vendors that offer solutions around their flagship sales configuration products.

Enterprises should include the following parameters when assessing vendors:

  • The vendors' experience with different industry product configuration requirements, and the vendors' ability to support different manufacturing and distribution styles that vary in complexity, including assemble to order (ATO), ship to order (STO) and engineer to order (ETO)
  • The depth and breadth of the accompanying pricing and quoting capabilities, and tighter integration with other sales effectiveness processes, such as proposal and contract management
  • Integration capabilities with CRM and ERP vendors
  • The vendors' ability to support multiple sales practices and channels, such as direct, field sales, partners, indirect or telesales, customer service and consumer self-service
  • System usability of the vendors' entire suite for different end-user organization roles, for example, business administrators, sales professionals, partners and consumers
  • The scalability and performance of the entire suite in supporting diverse workloads from different user populations
  • The suitability of the delivery models provided for on-premises, hosted or software as a service (SaaS) deployments
  • The vendors' viability and capacity to service Fortune 2000 enterprises across different geographies

MarketScope

This MarketScope analyzes CPQ software application providers that are marketing to sales buying centers and related supporting organizations, and met our inclusion criteria. This research helps decision makers reassess and expand on their incumbent sales configuration installations, and/or to pursue net-new investments in automating sales configuration and adjacent processes. Competing CPQ application suites are evolving from the long-standing sales configuration software market to address the increasing demand for solutions that imbue meaningful improvements to lead-to-quote, lead-to-order-capture and related selling processes via automation.

Sales configuration applications, pricing engines and quoting systems have been available in the market for more than 15 years as stand-alone technologies; however, a comprehensive suite of prepackaged, integrated modules has only recently emerged, usually built around the vendor's flagship configuration offering. This trend was driven by organizations looking at the integrated sales process from lead or opportunity to order, and intending to move beyond sales efficiency objectives, such as cycle times and error reductions, to more-strategic sales effectiveness objectives, such as overall deal profitability and order size. Companies are beginning to recognize CPQ systems as potentially providing competitive differentiators, helping them to mass-personalize their offerings for the B2B and B2C markets, and shifting the power of choice to customers.

The key trends that will impact the market in 2013 and beyond are:

  • Process View: Organizations are moving beyond configuration only to an integrated process view of lead-to-contract and opportunity-to-order processes, and are looking at the broader integrated capabilities of CPQ vendors.
  • Integration: This now refers to integration capabilities of products with sales opportunity management vendors on the CRM side to provide a native interface for sales teams, with CPQ capabilities embedded with the sales application. Stronger integration with back-office systems to get product and pricing data, as well sync data, along with other channels, such as partners, are being monitored closely by customers.
  • Multiple Channels: Of the CPQ applications sold in 2012, 50% were used to enable Web or e-commerce and partner channels, based on the data we collected for this MarketScope.
  • Nexus: The nexus of technologies, particularly mobile, big data and cloud, are finding strong traction in the CPQ market:
    • Mobile: This remains high on the sales agenda as a key requirement in most CPQ RFPs. Our clients are looking at the ability to support mobile devices, such as iPad and tablets, apart from offline capabilities in some markets.
    • Analytics: This is catching up fast in importance in the CPQ market, and organizations are looking at deeper analytics capabilities beyond the standard reporting and analytics capabilities, such as cycle times and the number of quotes generated, most vendors provide.
    • SaaS: CPQ vendors are moving to subscription-based models, with few adopting multitenant SaaS models. Of the 16 major vendors currently in the market, 12 offer multiple deployment options to customers.
    • Social: Not much work has been done on social, with organizations trying to identify the use cases best suited to their business needs. Most organizations focus on internal collaboration integrated with the sales process.
  • Adoption: CPQ is finding adoption across industries. Traditionally, CPQ suite demand has been led by manufacturing; however, the high-tech (hardware and software) and communications industries (equipment and services) have become increasingly prominent in adopting CPQ. In 2012, manufacturing and high tech contributed to 65% of the total demand for CPQ solutions, although the share of vertical industries, such as telecommunications, life sciences and healthcare, has increased.
  • Upgrades: Organizations are also consolidating and upgrading their CPQ systems, and are looking at global expansion, which is changing their product and pricing management requirements.
  • Professional Services: The average implementation time has decreased from 12 to 18 months to nine to 12 months. Yet, customers still report issues with professional services, and with the ability to find resources with expertise in their industry.
  • Mergers and Acquisitions: Functional gaps remain in complementary areas, such as price optimization, contract management, content management, and costing and estimation tools, for which CPQ vendors integrate with third-party tools. There will be more mergers and acquisitions in the market, with vendors moving horizontally in the sales effectiveness layer.
  • Focus on Usability: In most cases, projects are more manageable in terms of scale and complexity (number of users, SKUs, rules, etc.); however, more work needs to be done on usability. The modeling environment has improved, with lots of best practices around modeling different selling scenarios packed in startup templates. Vendors not only provide graphical interfaces with the modeling environment, but also improve the administrative functionality to manage the models. Yet, vendors still lack versioning capabilities and customized interfaces, which require more work for most vendors.
  • Scalability and Performance: Organizations will focus on high availability and performance for various delivery models (on-premises, hosted and SaaS) supporting diverse processing requirements across different sales channels, for example, self-service for e-commerce and partner channels.
  • Business Momentum: The adoption of CPQ application suites is growing at a healthy rate, with worldwide revenue estimated at approximately $300 million in 2012, and expected to grow 20% to 25% in 2013. These estimates include licenses, subscription fees, professional service fees, and maintenance and support revenue generated by software vendors. They exclude sales of product configuration systems for ERP, manufacturing and fulfillment processes.

This MarketScope analyzes the recent performance of 16 vendors competing in the CPQ market that satisfied our predefined criteria for coverage. The report rates each vendor based on our evaluation criteria and rating definitions.

Market/Market Segment Description

CPQ application suites provide an integrated software feature set that supports configuration, pricing and quote/proposal generation activities. These suites improve the guidance, governance and efficiencies of selling unique combinations of products and/or services for different sales situations, while reducing nonsales work and sales cycle times, as well as improving overall sales effectiveness. The applications are designed to be deployed directly to salespeople, and for usage by indirect channels (partners) and customers in self-service environments, typically for needs assessments, guided selling, and solution and negotiated sales processes. Sales configuration applications represent the foundation of such suites, delivering the core functionality that supports the mechanics of identifying, assembling and presenting products, options, product bundles and variations. CPQ application suites should include pricing engines and quoting modules as standard offerings, integrated with base sales configuration functionality, ideally with the same code base, development environment and administrative tools.

Inclusion and Exclusion Criteria

To be included in this MarketScope, a provider must:

  • Offer a stand-alone sales configuration application that is sold as a distinct, single product with a proven two-year track record of delivering production sales configuration systems to multiple clients.
  • Deploy the sales configuration application for direct use by salespeople, partners or customers in a self-service environment in at least 50% of live production clients on the last two major releases of its software.
  • Gain a minimum five net-new clients for the vendor's sales configuration software in the last calendar year, from January to December 2012, and five referenceable customers that have gone through at least one version upgrade of the application in the past calendar year.
  • Provide a pricing engine and quoting module as standard, integrated offerings available with the sales configuration application.
  • Have at least 10% of live production clients utilizing both a pricing engine and a quotation module with the standard sales configuration application in support of sales channels.
  • Demonstrate active market participation in CPQ deals/opportunities, including, but not exclusively, inbound customer inquiries to Gartner by prospects and existing clients, and visible efforts to market and sell CPQ application suites.
  • Possess a sales presence, and demonstrate visible sales traction in multiple vertical industries and geographies (such as North America, EMEA or Asia/Pacific [APAC]).
  • Retain a sufficient cash position to fund at least one year of business operations at the current burn rate.
  • Retain sufficient professional services or partnerships to fulfill customer demand during the next 12 months.

Rating for Overall Market/Market Segment

Overall Market Rating: Positive

Several factors contribute to the overall Positive rating in this report, because Gartner expects this area to continue to grow and develop over the next several years.

The underlying value propositions of CPQ tools are compelling to enterprises that want help transforming their selling experience; as a result, CPQ tools will see continued investment. CPQ tools form a key technology pillar that helps organizations' sales processes become efficient and effective. These tools help organizations differentiate their selling approaches, and help them improve the overall customer experience.

This market is growing at a strong rate, with 300-plus deals closed in 2012, including midsize to large deal sizes. The average deal size of CPQ software in the small-to-midmarket range is $250,000 to $300,000. CPQ application suite vendors are estimated to have collectively generated approximately $300 million in revenue worldwide in 2012.

Although the North American and European markets dominate in terms of revenue, APAC and EMEA are emerging as fast-growth markets.

Vendor consolidations and acquisitions are validating the dynamic nature of the CPQ market. CallidusCloud took notice of the opportunity in the marketplace, and bought its way in by acquiring Webcom. IBM's acquisition of DemandTec confirms that the growing CPQ industry also is becoming broader in scope. The DemandTec deal will help IBM offer deeper price analytics and contract management as part of its CPQ offering in the long run. We also expect more mergers and acquisitions to further consolidate the market, and that vendors will become increasingly interested in providing deeper capabilities, especially in areas such as price optimization.

However, there are three main challenges in CPQ market (see Table 1 and Figure 1):

  • Organizations still give more weight to sales configuration and to improving sales efficiency, which are the primary drivers for CPQ initiatives. Some 80% of CPQ projects are driven by sales efficiency and sales productivity objectives, while only 20% are driven by effectiveness objectives.
  • Among the 16 products we evaluated for this MarketScope, only eight have revenue of more than $10 million, with multiple smaller vendors vulnerable to economic instability. Also, most vendors covered in this research have business limited to few geographies.
  • There is an overall dearth of skill sets in the market, and there is difficulty in finding resources with industry domain expertise and CPQ product understanding.

Evaluation Criteria

Table 1. Evaluation Criteria

Evaluation Criteria

Comment

Weighting

Overall Viability (Business Unit, Financial, Strategy, Organization)

Viability encompasses an assessment of a vendor's financial health, stability and competitive position in the CPQ application suite market. This criterion evaluates the availability of resources in an organization or a specific business unit to continue to satisfactorily invest in, market and support products for this market.

Standard

Customer Experience

The customer experience criterion encompasses a review of the vendor's programs, support organizations and business practices for ensuring that client requirements and expectations are satisfied, and that the business benefits are successfully extracted from CPQ application suite investments. Specifically, this includes an assessment of customer satisfaction with technical, implementation and account support from a vendor and/or partners. A key metric is successful live production deployments, substantiated by quality references.

High

Product/Service

This criterion assesses the breadth and sophistication of the solutions offered by a vendor to compete in the CPQ application suite market. This review focuses on the richness of the core sales configuration application functionality, and assesses progress in delivering complementary functionality for pricing, quoting and proposals. For sales configuration, an emphasis is placed on support for three broad manufacturing styles: STO, ATO and ETO. Vendors are evaluated for how they address concerns with integration, improving system flexibility and usability, scalability and performance. This criterion also takes into account services packaged with software solutions, as well as any supporting product partnerships.

High

Offering (Product) Strategy

This criterion assesses a vendor's vision for product development and delivery during the next three to five years. This includes an evaluation of a vendor's product road map in effectively recognizing and responding to corporate buying center requirements for automating CPQ processes for sales, partner networks and e-commerce sites. This criterion appraises the validity of development strategies in delivering complete CPQ applications suites, and in achieving competitive differentiation.

High

Geographic Strategy

This criterion evaluates the vendor's strategy to invest resources, develop partnerships, and tailor and market its products to meet the specific needs of geographies outside its home or native markets. This criterion emphasizes progress with strategies for selling to and servicing clients in North America and Western Europe directly or through partners, because they represent bellwether markets.

Standard

Source: Gartner (May 2013)

Figure 1. MarketScope for Configure, Price and Quote Application Suites
Figure 1.MarketScope for Configure, Price and Quote Application Suites

Source: Gartner (May 2013)

Vendor Product/Service Analysis

BigMachines

BigMachines continues to grow in terms of revenue in the CPQ market, with its broader industry focus and product capabilities. BigMachines receives a Positive rating for its high market visibility, and for the relative size and growth of its client base.

BigMachines has 354 employees as of December 2012, with 62 supporting R&D, 86 professional service consultants and 64 salespeople.

BigMachines offers three different enterprise editions that bundle modules together based on customer requirements. Professional Edition is the most basic edition, and includes parts search, list pricing, configuration, discounting, approvals and document engine modules. Enterprise Edition includes all the modules of Professional Edition, as well as e-commerce and channel sales modules, except for product extensibility and integration features and service. Ultimate Edition includes all the modules included in Enterprise Edition, as well as advanced guided selling capabilities and premium service/support. BigMachines also offers BigMachines Express, a CPQ solution built natively on the Force.com platform designed for the small or midsize (SMB) market. BigMachines Express allows users to configure their orders, price them correctly and send out professional proposals within the salesforce.com SFA solution.

BigMachines leverages third-party vendors to offer capabilities such as price optimization, analytics and reporting, and two-dimensional (2D) and 3D visualization of the configured product. It offers model and rule representation in a tree structure for administrative users to visualize how rules and attributes interact. Sales content management, workflow and contract functionalities are native within the product.

BigMachines offers configuration and quoting functionality in an offline mode on laptops, with the changes being synchronized when the user is back online. However, BigMachines is focusing on tablet support, and most of its mobile development will be for tablet solutions.

BigMachines released two versions of the CPQ solution, 12.1 and 12.2, in 2012, and its road map is focused on improving the implementation of and maintenance efforts for its modules in order to help customers increase productivity, accelerate time to value and expedite adoption of the CPQ solution.

BigMachines has multiple customers integrated with salesforce.com, and provides a package built on Force.com that allows integration with salesforce.com. BigMachines also has developed integration packages with Oracle CRM On Demand, Oracle Fusion CRM, SAP Sales OnDemand, and Microsoft Dynamics CRM. Integration with SAP Business Suite and Oracle E-Business Suite (EBS) are done through prebuilt connectors from IBM (Cast Iron) and Software AG (webMethods). BigMachines provides integration with KBMax that has prebuilt integrations for Autodesk and SolidWorks. Integration with other applications is done through Web services, or through batch data uploads/downloads.

Strengths

  • BigMachines continues to grow, indicating that it achieved 18% growth in overall revenue year over year in 2012, and that it has reached approximately $59 million in revenue. Also in 2012, there was 35% growth in subscription revenue.
  • BigMachines' CPQ products cater to broader vertical industry needs, which in 2012 predominantly included high tech, discrete manufacturing, life sciences, healthcare and telecommunications. BigMachines provides functional breadth for ATO and configure to order (CTO) processes of varying complexity.
  • The company has a healthy partner ecosystem and established relationships with multiple partners, such as Accenture, PwC, Deloitte, Capgemini, Ernst & Young, Adroit Consulting, Mahindra Satyam, Tata Consultancy Services (TCS), Wipro and Sonoma Partners.

Cautions

  • BigMachines must continue its efforts to improve its professional services and customer support, with client references and Gartner clients expressing concerns over the need for product enhancements to meet project objectives, resulting in cost overruns and delayed implementations. BigMachines' clients need more professional resources to be available, as well as better project planning and more documentation when developing the UI.
  • BigMachines should continue expanding and improving its consulting partnerships and quality assurance processes to accommodate the growth in clients and in their customer-specific requirements with enough technical support knowledgeable in the company's products.
  • BigMachines should develop stronger integration capabilities for product and pricing management within the CPQ system; some of our clients found it challenging to sync data with back-office systems.

Rating: Positive

CallidusCloud

CallidusCloud receives a Promising rating because of its strategy to deliver CPQ applications via a SaaS model, its breadth of functionality and its cost-competitiveness. Midsize and larger divisions of discrete manufacturing and high tech companies interested in SaaS-based CPQ offerings should consider CallidusCloud. Recently, the company started expanding into other industries, and has acquired clients in telecom.

CallidusCloud CPQ has a pricing execution engine, proposal generation and quoting functionality built into the same software with the core configuration engine. Four primary bundles are available to customers:

  • QuickQuote for catalogs, quoting, proposals, order management, approvals and basic pricing functionality
  • Full CPQ, including the configurator with the components provided with QuickQuote
  • WorkFlow for enhanced collaboration and deal room functionality for building quotes
  • CPQ Offline

CallidusCloud CPQ, Quick Quote and Full CPQ are Microsoft .NET applications delivered through a multitenant SaaS model. WorkFlow is a Java application, while CPQ Offline comes with Cassini Web Server and Microsoft SQL Server Express, with matching UI and functionality. Subscriptions are priced on a per-user, per-month basis, while updates and new features are released quarterly.

CallidusCloud offers all major CPQ components, but leverages third-party software for more advanced price optimization, 2D and 3D visualization, and reporting and analytics capabilities.

The integration road map of CPQ products is focused on integration with other components of the CallidusCloud portfolio, including Incentive Compensation Management, LeadFormix, Enablement, SPM and mobile learning solutions. The company's near-term CPQ product road map is focused on mobile and analytics, and includes a responsive UI that will adapt to the screen sizes of tablets and smartphones, and gamification, expected in the summer 2013 release. The winter 2013 road map includes more-advanced price optimization analytics.

CallidusCloud comes with standard integration with salesforce.com, Oracle On Demand, Microsoft Dynamics and NetSuite. CallidusCloud participates in salesforce.com's AppExchange program, as well as salesforce.com's independent software vendor (ISV) reseller program, is an Oracle On Demand-certified partner and participates in Oracle's ISV program.

Strengths

  • CallidusCloud differentiates on domain expertise in discrete manufacturing, high tech and ability to extend into newer vertical industries, such as telecom and insurance.
  • The company has experienced good growth, acquiring 40 new clients and increasing revenue by almost 80% year over year in 2012.
  • CallidusCloud offers a broad suite of sales effectiveness and sales performance management products, thus providing an attractive value proposition to clients.

Cautions

  • Customers gave CallidusCloud low scores on certain capabilities, such as analytics, reporting and mobility, as well as on management of upgrades.
  • The company currently has only a limited amount of its business delivered through partners, and needs to continue developing implementation partners in order to expand globally and better serve its international customers.
  • Due to the number of acquisitions by CallidusCloud over the past three years, additional back-end support may be needed to build out the full suite of CPQ offerings into the enterprise, and clients should take additional integration costs and time into consideration as they evaluate the full suite.

Rating: Promising

Cameleon Software

Cameleon Software migrated to a SaaS model and has deployed the majority of its new clients on the SaaS model since 2011. Cameleon receives a rating of Promising for its focus on guided selling to improve sales effectiveness, broad functionality and intuitive UIs, technical abilities in configuring complex combinations of products and services, competitive position in EMEA and efforts to target business service markets.

Cameleon has 86 employees as of December 2012, with 24 supporting R&D, seven providing customer service and support, 31 professional service consultants and 11 salespeople.

The company rewrote its application suite in 2008, and has since released an on-premises and a parallel SaaS version. Five modules are available: Cameleon CPQ version 8 (CPQ bundle), Cameleon Product Configurator version 8 (with a service-oriented architecture [SOA] configuration component), Cameleon Product Catalog version 8 (with an SOA electronic catalog component), Cameleon Mobile Configurator (Apple iOS application), Cameleon Designer version 8 (with an application to manage product and pricing models).

CPQ can be deployed on disconnected mode and offers the capability to synchronize product catalogs and configuration models when users are remotely connected. A hybrid application combining HTML5 and native Apple iOS and Android containers will be available in 2Q13.

Cameleon enables customers to natively compute prices, depending on their choice of configuration or any other pricing criteria. However, customers will need to integrate with a third party for price optimization capabilities. The CPQ products lack graphical visualization of rules, as well as 2D/3D capabilities, which are part of Cameleon's 2013 road map. The analytics and reporting capabilities are delivered through the Jasper reporting template and need deeper analytics capabilities. Contract management capabilities are delivered through integration with DocuSign.

Cameleon focuses on salesforce.com, and signed a new strategic partnership in 2012 for integration with Cameleon's CPQ offering developed on Force.com.

Strengths

  • Cameleon Software is a public and profitable company that made a successful transition to the cloud and was able to manage the disruptions to the business, sustaining $13.5 million in revenue in 2012, and adding 18 net-new clients.
  • The company's strengths in consumer-oriented service industries include telecommunications, insurance, healthcare, distribution and financial services.
  • Cameleon provides out-of-the-box integration with CSC GraphTalk A.I.A., IFS Applications (ERP), Cegedim Activ, Infor LN, Infor XA, Microsoft Dynamics (ERP and CRM), QAD Enterprise Resource Planning Solution (ERP), Selligent (CRM), salesforce.com and SAP (ERP).
  • Cameleon provides good functional breadth for ATO industries, and is relatively strong in industries where products and services are bundled together.

Cautions

  • Cameleon Software has limited geographical coverage and is focused on expanding into the North American market, with 23% of its business coming from that region. Cameleon has no revenue outside North America and Europe, although it serves some global customers in APAC and Latin America.
  • Cameleon is focusing on the salesforce.com ecosystem, but customer references and Gartner clients have mentioned that Cameleon still needs to improve its professional service team to better handle the salesforce.com platform.
  • As Cameleon expands into different vertical industries, its professional services need to scale to meet emerging customer requirements. Customers gave lower overall satisfaction scores to Cameleon Software, as compared with other competitors.

Rating: Promising

Cincom Systems

Cincom Systems continues to grow in the CPQ market, expanding into new vertical industries and go-to-market partnerships. Cincom receives a Promising rating for its product capabilities, support of ATO and ETO manufacturing operations, and professional service capabilities. Cincom is predominantly used in industries such as specialty vehicles, industrial machinery and electronic components, and has just started moving into vertical industries such as construction, telecom, utilities and insurance.

Cincom has 111 employees dedicated to its CPQ offerings as of December 2012, with 17 supporting R&D, three providing customer service and support, 33 professional service consultants and 15 salespeople.

Cincom's CPQ offering is marketed under the Acquire brand, and comprises four primary components:

  • Sales and Product Configurator delivers sales configuration, product catalog, pricing, quoting and proposal generation functionality, as well as partner channel engagement, available as Acquire Express, Cincom Acquire for salesforce.com, Cincom Acquire for Microsoft Dynamics CRM and Cincom Acquire Portal for Microsoft Dynamics CRM version 2.
  • Cincom Socrates provides a business rule environment for product experts and power users to develop guided selling and configuration rules in Web or Microsoft Windows environments.
  • Cincom Guru provides a business rule and development environment that is integrated with Microsoft Visual Studio and supports the construction of composite applications for guided selling and product configuration.
  • Acquire Enterprise Sales Portal (ESP) supports collaborative selling capabilities for ETO content (for example, blueprints) requiring integration with Microsoft Office and SharePoint Server.

Cincom provides an offline desktop client at present; however, it only supports Internet Explorer and needs synchronization with the back end. Through Cincom Data Services, integrations have been developed between Cincom CPQ and salesforce.com, Microsoft Dynamics CRM, SAP CRM and Variant Configuration, and the SolidWorks connector for Cincom Acquire Document Generator Engine.

Cincom's 2013 road map is focused on enhanced security and role-based privileges for single sign-on, enhanced SAP integration (data loads, pricing and order simulation), as well as advanced discounting, an optimized UI for quote creation and maintenance, and additional language support.

On the business rule management side, the company's 2013 road map is focused on a new application builder toolset for easy application deployment, a new runtime API for easier integration, a new Web application framework to support responsive design (Bootstrap) and an enhanced security model for developer tools.

Strengths

  • Cincom Systems' products can support different types of manufacturing requirements, including ATO and ETO, and have built-in capabilities that include a declarative graphical rule interface, product and pricing management capabilities, contract management and document management.
  • Cincom CPQ can be deployed on-premises, hosted or made available via a SaaS arrangement where the infrastructure and application are shared, although database instances are provisioned to clients.
  • Cincom launched a new SaaS offering based on the Azure platform in August 2012.
  • Cincom now has broader geographic coverage, with 16 offices across the globe, although Cincom CPQ business predominantly comes from the U.S. and Western Europe, and there are only a few customers in APAC, including Japan.

Cautions

  • Cincom Systems has to continue investing in market visibility and positioning, with approximately 10% of the company's total revenue coming from its CPQ offerings.
  • Cincom has a limited vertical industry focus, predominantly doing business in high-tech hardware manufacturing and discrete manufacturing.
  • Customers found Cincom's consultants extremely helpful and skillful, but expect better support on project cost estimation, integration with other systems, such as SAP, and ongoing customization.

Rating: Promising

Configit

Configit continues to acquire customers in the SAP installed base. The company receives a rating of Promising for its technical strengths in modeling ATO and ETO requirements, as well as for its strategy targeting SAP's Variant Configuration installation and deeper integration into engineering systems. Configit launched a new product, Configit Automotive Configuration Engine (Configit Ace), in 2012 targeted at the automotive industry, and gained traction with automotive players.

Configit has 60 employees dedicated to its CPQ business as of December 2012, with 31 supporting R&D, three providing customer service and support, 11 professional service consultants and six salespeople.

Configit's product line consists of four primary components:

  • Product Modeler is for offline modeling of product configuration rules and runtime environments for developing and validating configuration rules, constraints and models.
  • Configit Server is for consolidating quotes, product data, prices and rules.
  • Configit Quote is for delivering offline configuration, quoting and pricing functionality on PCs, as well as 2D visualization.
  • Configit Ace is the configuration engine for the automotive industry, and provides configuration data at each step of the product life cycle, from planning, pricing and marketing to manufacturing.

The Configit Server components have been tailored for deployment with SAP Variant Configuration, and are respectively marketed as Configit Quote for SAP and Configit Server for SAP. Configit offers all standard capabilities, such as graphical visualization of rules, and offline capabilities through desktop clients, but lacks contract management, content management and deeper analytics capabilities. Configit also launched Configit Quote Touch, an SAP-certified mobile application for touch-enabled Windows tablets (Windows 7 and 8).

Configit offers out-of-the-box integrations with SAP CRM, Microsoft Dynamics CRM and salesforce.com to be made available during 2013. Configit Server can be hosted, but most clients deploy a licensed, on-premises model. Configit will be cloud-ready by 3Q13, and will start offering Configit Quote on an alternative model.

Strengths

  • Configit indicated good growth in its overall business, and that it achieved 25% growth in overall revenue year over year in 2012. The company is estimated to have generated approximately $20 million in CPQ revenue, and to have won about 12 net-new clients in 2012.
  • Configit has been doing business predominantly in discrete manufacturing, including automotive, industrial manufacturing, high technology, packaging and plastics, as well as life sciences and consumer products.
  • Configit positions its CPQ offering as the front end of choice for SAP clients that rely on Variant Configuration for generating production configurations and bills of material (BOMs), and is one of the few CPQ vendors participating in SAP's EcoHub partner program. Configit ACE provides the master record of all configuration data in an enterprise.
  • Overall customer satisfaction is high for Configit, especially in terms of product implementation and support.

Cautions

  • Configit needs to be deployed on endpoints and to sync with servers as required, and is in the process of launching a Web application in 2013. However, the company has done custom integration with some cloud CRM vendors, such as salesforce.com, as well as other CRM and ERP systems.
  • Configit has a limited sales presence outside Europe and North America. More than 90% of its business comes from these regions.
  • Most of Configit's business comes from manufacturing, and the company needs to broaden its vertical coverage to further grow its business.
  • Some references and Gartner clients have found that Configit needs to improve its product customization and documentation, integration with third-party systems and implementation time frames.

Rating: Promising

Configure One

Configure One continues to grow in the CPQ market, slowly broadening its vertical industry coverage and expanding into new geographies. Configure One receives a Promising rating for its product capabilities, support of ATO and ETO manufacturing operations, and professional service capabilities.

Configure One has 32 employees dedicated to its CPQ offerings as of December 2012, with nine supporting R&D, 15 professional service consultants and six salespeople.

Configure One offers broad CPQ functionality with its flagship product line, Concept Enterprise Product Configurator, an application composed of these key modules: Concept Core, Concept E-Catalog, Concept To Scale for generating drawings, Concept BOM, Concept Pricing, Concept Quote, Concept Communication for sales collaboration, Concept Tabulated, Concept Workgroups, Concept 3D Viewer, Concept Publisher, Concept Website, Concept Compass for offline laptop access, Concept Connect for integration, and Concept Integration for salesforce.com, Microsoft Dynamics and NetSuite CRM.

With regard to feature sets, Configure One offers a broad functional footprint, but lacks functionality for pricing analytics and contract management. Concept Enterprise Product Configurator offers good visualization capabilities, generating BOMs and manufacturing routing report features to support manufacturing clients. Version 10.0, released in June 2012, includes system configuration capabilities, attribute-based option selection, XML Localization Interchange File Format (XLIFF) support for localization and improved application logging. Configure One will release its next version of CPQ offerings in late 2013 or 2014.

All Configure One functionality is available in on-premises, managed hosting and SaaS models; however, most deployments have been on-premises or hosted.

Standard integrations have been established with CRM and ERP vendors such as IFS, Microsoft Dynamics CRM, NetSuite CRM, NetSuite ERP, NetSuite's SuiteCommerce for e-commerce, salesforce.com, SAP and Synchrono. Configure One also has integrated with computer-aided design (CAD) systems, with standard integrations available for Creo Elements/Pro, Dassault Systemes' SolidWorks and Autodesk Inventor.

Strengths

  • Configure One can support modeling requirements for different manufacturing styles, including ATO, ETO and STO.
  • During 2011 and 2012, Configure One acquired 65 new clients, with 64% growth in overall revenue. The vendor is estimated to have generated approximately $8 million in revenue in 2012.
  • Prospects and clients have characterized Configure One as a good team to work with, and a lot of positive feedback was provided by clients on project management, professional services and support.

Cautions

  • Configure One's geographic coverage, from sales and support perspectives, is limited to North America, which contributes more than 75% of Configure One's business, and Europe. Configure One has an office in the U.K. that is expanding.
  • The company has been doing business predominantly in the discrete manufacturing vertical industry, particularly in construction, electrical equipment, power equipment and truck manufacturing. Manufacturing contributes approximately 90% of Configure One's business, and the company has started going into other vertical industries, such as high tech, life sciences and healthcare.
  • Customers have cited that customization has been required for complex quoting, and to interface a custom front end with Configure One's enterprise configurator, as well as concerns about the cost of software enhancements.
  • Configure One needs to aggressively develop implementation and reseller partners to expand globally, and to better serve international customers.

Rating: Promising

FPX

FPX has posted consistent growth with its CPQ applications since acquiring Firepond in 2009, and is a wholly owned subsidiary of Acclaim Financial Group. FPX receives a Promising rating, because of its experience in the sales configuration space and breadth of functionality.

The vendor indicated that it achieved 15% growth in overall revenue year over year in 2012, and is estimated to have generated approximately $12 to $13 million in revenue.

FPX has 88 employees dedicated to its CPQ offerings as of December 2012, including 34 developers, 28 professional service consultants, 10 salespeople and a client account management team.

The FPX CPQ offerings consist of two main products the vendor is actively selling:

  • CPQ OnDemand: The configuration application and embedded pricing engine, quoting module and associated workflow functionality
  • Product Data Manager: The administrative environment for managing product information, associated sales content, and configuration and pricing rules and calculations

The CPaaS Web Services API provides access to configuration and pricing data and the configuration engine functionality.

FPX offers contract management, content management and an offline line desktop client as native capabilities in its CPQ products. In 2012, FPX made a quoting mobile application available that can run on tablets, and released an application that is integrated with forthcoming Salesforce Touch multiplatform capabilities (HTML5 and Cascading Style Sheets [CSS]) in 2012. FPX also provides Product Data Manager (PDM) to integrate with back-end systems, such as SAP and Infor. However, FPX does not offer pricing optimization capabilities, but leverages salesforce.com and its partners for reporting and analytics.

Strengths

  • FPX's CPQ products support ATO and ETO manufacturing approaches and focus on the manufacturing, including transportation and high technology (software and hardware), vertical industry. FPX also is pursuing opportunities in financial services, life sciences and healthcare.
  • Strong integrations have been established with salesforce.com, and FPX prefers leveraging salesforce.com for managing its integration with back-office systems.
  • Customers gave positive feedback on FPX's professional services capabilities, as well as the combination of its configuration engine, quoting and proposal generation capabilities.

Cautions

  • FPX needs to work on market visibility, continue demonstrating that it has addressed its viability concerns and enhance its standard product capabilities.
  • Some reference customers and Gartner clients had difficulty customizing CPQ products, which took more time than expected. Customers also expect reporting, analytics and versioning capabilities to be available natively within FPX offerings.
  • FPX has four sales and support offices across the regions it serves, but approximately 80% of its revenue comes from the U.S., with APAC, including Japan, and Europe, contributing approximately 10% each.

Rating: Promising

IBM-Sterling CPQ

IBM-Sterling CPQ garners a Positive rating due to its viability, customers in diverse vertical industries and ability to support different selling approaches, including e-commerce and partner channels, and improved integration with other IBM Smarter Commerce assets, which can be leveraged to provide a broader solution offering.

IBM-Sterling CPQ is part of IBM's Smarter Commerce portfolio, and provides B2B functionality that enables users to configure products and/or services online. IBM-Sterling CPQ is already certified for IBM WebSphere Application Server and the IBM DB2 database, and includes embedded analytics from Cognos. IBM's experience in service sectors such as publishing, media, entertainment and telecommunications (communications service providers [CSPs]) for complex, dynamic configuration is being utilized across other vertical industries, such as retail, manufacturing and life sciences, to offer new services or a bundled product and service experience. IBM-Sterling CPQ supports sales teams (direct and indirect partners/distributors) and self-service guided selling channels.

IBM-Sterling CPQ encompasses three major modules that are licensed as a bundled solution:

  • IBM Sterling Configurator provides core configuration engine functionality with modeling and administrative features that allow business users to maintain product relationships.
  • IBM Sterling Pricing provides pricing and discounting engine functionality and pricing administration tools that integrate with Sterling Configurator. Sterling Pricing centrally manages pricing data and the implementation and enforcement of pricing policies.
  • IBM Sterling Quotes provides quoting functionality, proposal generation and associated workflow management to automate and manage the negotiation process.

IBM-Sterling CPQ provides Sterling Business Center, a Web-based business user administration tool. IBM-Sterling CPQ version 9.2 was released in June 2012, and includes Business Center enhancements to further support organizational management, native support for product entitlements and localization support for model creation, allowing testing and rendering across geographies. Version 9.2 provides multiple quote approval capabilities, with the ability to submit quotes for approval by line item, and to delegate quote approver responsibility.

In future releases, IBM plans to enhance:

  • The visual modeler user experience with Sterling Configurator
  • Catalog-driven modeling by relating new products to the configurator models automatically

Other development plans include the ability to utilize Emptoris contract management capabilities, advanced configurator model testing, multiple price types to support products/services with recurring and nonrecurring charges, modifications, deletions and renewals for existing products and services.

IBM recently acquired Worklight, a mobile application development solution, and will leverage this to help clients accelerate the deployment of mobile solutions across mobile devices.

IBM-Sterling CPQ has standard integration with salesforce.com, and received AppExchange certification in June 2012. IBM Sterling Call Center has out-of-the-box support for CPQ management. The application provides internationalization tools that enable multilanguage, multicurrency and related localization tools to adapt to local requirements. IBM also provides other business process management (BPM) solutions for integration to CRM and ERP.

Strengths

  • IBM-Sterling CPQ has a global presence; coverage, from sales and support perspectives, is strong globally.
  • IBM-Sterling CPQ leverages other IBM assets for ordering, content management and analytics, and there are plans to integrate other assets, such as Emptoris for advanced contract management.
  • IBM can support customers across multiple industries, including those requiring ATO, ETO or CTO. IBM's target vertical industries for CPQ are manufacturing (industrial), communications (including media and entertainment), life sciences and retail, with a focus on supporting requirements for STO and ATO processes, particularly with managing product bundles.

Cautions

  • The vendor has concentrated on selling into markets in North America and EMEA, with the majority of customers in these two regions.
  • IBM launched Sterling CPQ in the cloud in November 2011, and has only two customers using CPQ in the cloud.
  • IBM does not offer offline mobile capabilities, and customers have to custom develop CPQ extensions to offline mobile.

Rating: Positive

Intelliquip

Intelliquip is a privately held company that specializes in fluid-handling equipment, such as pumps, compressors, valves, actuators, blowers, fans, heat exchangers, filters, mixers and supporting equipment, including couplings, seals, motors and turbines. Intelliquip gets a Promising rating for successfully supporting different types of manufacturing requirements, such as, ATO, CTO and ETO, and for its strengths in pump, blower and compressor selections, combined with its configuration engine to support the complex engineering requirements of this equipment.

Intelliquip has 20 employees dedicated to its CPQ offerings as of December 2012, with two resources dedicated to R&D, three in customer service and support, four professional service consultants and two salespeople.

The flagship product line, Intelligent Front-End (IFE), consists of three main components:

  • Intelliquip Selector is for needs assessments exercises, to search items based on conditions-of-service requirements in an iterative manner employing user-defined criteria, and to model modifications of parameters to establish new performance characteristics.
  • Intelliquip Configurator provides configuration and pricing functionality based on a core configuration engine embedded from FPX to assemble and validate final selections of equipment and options.
  • Intelliquip Quote Manager is for generating quotes and proposals for negotiated project-based sales, enabling frequent modifications to ETO solutions and deal parameters, tracing disposition within sales cycles and delivering guidelines for satisfying predefined pricing goals.

Intelliquip Selector can be subscribed to as a stand-alone module. Intelliquip offers standard CPQ capabilities, as well as integrated project pricing, content management and an optional Business Intelligence Module for deeper analytics and data visualization through integration with a third-party tool. Intelliquip does not offer contract management capabilities or an offline desktop or mobile client, but provides connected mobile and tablet applications that support product selection, configuration and quoting.

Strengths

  • Intelliquip successfully migrated to a SaaS CPQ offering, and approximately 50% of its customer base runs on the SaaS model.
  • Intelliquip has strong domain expertise in pump and compressor selection, and provides capabilities for two types of product knowledge builders that underpin the Selector and Configuration modules, respectively termed Selector Knowledge Builder and Configurator Knowledge Builder.
  • References and Gartner clients view Intelliquip favorably for its domain expertise in equipment for fluids and gases, and for the functional breadth of its product offerings. References also highlighted the ability to scale, and expertise in codification of product characteristics.

Cautions

  • Intelliquip offerings do not include an offline module for disconnected usage modes.
  • Intelliquip uses FPX's engine for configuration capabilities. Although the relationship has been strong between the two vendors and FPX has improved its viability, the partnership could be subject to change.
  • Intelliquip's presence is limited to North America and Western Europe, which contribute approximately 85% of Intelliquip's revenue. The company has just started expanding in APAC, particularly India and China, where it is acquiring resources and customers.
  • Because all projects are delivered directly by Intelliquip, the company needs to develop a partner ecosystem to scale its business.

Rating: Promising

Oracle EBS CPQ

Oracle EBS CPQ has been sold majorly within the Oracle EBS installed base, and offers broad CPQ functionality. Oracle EBS CPQ receives a Positive rating because of its large client base, its global footprint, and the functional breadth and strength of its offerings.

Gartner estimates that Oracle has accumulated approximately 1,000 client organizations using the core configuration module, with almost all using quoting, order management or both.

The Oracle EBS CPQ configuration is integrated with back-office EBS assets, and leverages these to provide broader capabilities, such as contract management and order management. Oracle has adopted a modular approach to providing feature sets, based on three key applications:

  • Oracle EBS Configurator for configuration engine functionality, as well as developing and administering models (core capabilities are based on Oracle's past acquisition of Concentra)
  • Oracle EBS Advanced Pricing for pricing engine capabilities
  • Oracle EBS Quoting for quote generation and management functionality

The current version of these products is R12.1, and some new capabilities include product information management user-defined attributes in rules, model migration, model maintenance for enhanced instance management and integration with Oracle AutoVue for 2D and 3D visualization. Oracle supports wireless and offline access for laptops and tablet clients.

Enhancements planned for configuration in version 12.2 and beyond include improved copy instances, performance improvements (purge model data, parallel publications and pricing display in Oracle Configurator), enhanced integration with Oracle Quoting (UI layout and additional validation checks) and iPad certification. Enhancements planned for Oracle Quoting in particular include enhanced approvals and enhanced search capabilities (using Endeca). Enhancements planned for Advanced Pricing include a pricing audit trail, a time stamp on start/end dates, the ability to add new products to multiple price lists at once, the ability to delete unused modifiers, a better price list/modifier search and a new spreadsheet upload/download feature. Future enhancements planned for order management include customer-driven enhancements to usability and back-end performance fine-tuning, enabling customers to scale to even higher volumes.

The products are typically deployed on-premises, although a hosted option is available for the Configurator, Quoting and Advance Pricing modules. Oracle emphasizes integration with back-office EBS applications, as well as integration with other application product lines through Oracle Application Integration Architecture (AIA) and Process Integration Packs (PIPs), which are based on Java and BPEL.

Strengths

  • Oracle EBS CPQ offers a good breadth of CPQ functionality, and Configurator supports different types of manufacturing requirements, including ATO, CTO and ETO, although Oracle has more clients in ATO and CTO industries, compared with ETO.
  • Oracle EBS CPQ has customers across a wide range of industries, including industrial manufacturing, high technology, government, professional services, automotive and telecom.
  • The company's geographic coverage, from sales and support perspectives, is strong globally, with a direct presence across geographies.

Cautions

  • As the Fusion initiatives progress, Oracle needs to define clear positioning and road maps for the three products Oracle offers in the CPQ space, including Siebel CPQ, EBS CPQ and Fusion CPQ.
  • The references we surveyed liked the product capabilities, such as product modeling, the ability to reduce product introduction time and tighter integration with the back office, but gave average scores on overall satisfaction.
  • Gartner clients and Oracle's reference customers raised some concerns over tighter integration between CRM and Oracle EBS CPQ, user experience, versioning capabilities and integration between modules, upgrades and maintenance.

Rating: Positive

Oracle Siebel CPQ

Oracle Siebel CPQ, packaged and marketed under the branding of Oracle's Siebel CRM Customer Order Management (COM), has been sold predominantly within the Oracle Siebel CRM installed base supporting direct, Web-based and indirect sales. Oracle Siebel CPQ receives a Positive rating, because of its broader product capabilities, global presence, viability and continued momentum in securing wins in the market.

Gartner estimates that Oracle has accumulated more than 800 client organizations using the Siebel Sales CPQ application.

This offering includes a number of modules, such as Siebel Dynamic Catalog, Siebel Product Configurator, Siebel Dynamic Pricer, Siebel Quote & Order Capture, Siebel Promotion Groups Siebel Contracts, Siebel Proposals and Presentations.

Oracle Siebel CPQ leverages other offerings, such as Oracle Product Hub and ATG Web Commerce, to meet different customer go-to-market and industry requirements. Oracle Siebel CPQ provides extensive functionality, such as product attributes and classification, eligibility and compatibility business rules, constraint rule support, seeded configurator UI themes, upsell/cross-sell messaging and product selection, promotions and external rule validation.

Recent enhancements have focused on improving usability for employee- and partner-facing channels, and extending Siebel to online commerce through the integration with ATG Web Commerce. An offline client for disconnected usage modes also is available for Oracle Siebel CPQ. With the advent of Open UI in the 8.1.1.9 Innovation Pack December 2012 release, Oracle Siebel CPQ can run on any browser that meets World Wide Web Consortium standards.

The Oracle Siebel CPQ road map for 2013 and beyond continues with investments in ATG Web Commerce, including advanced runtime scenarios, new and modern order capture UIs for desktop and mobile that leverage the Open UI, and industry-specific CPQ processes for communications and utilities.

These applications are overwhelmingly deployed on-premises, although a few clients have tried hosted options delivered through Siebel hosting partners, such as CRMantra. Oracle AIA is increasingly being used by clients to deploy PIPs to accomplish out-of-the-box process flow integrations between Oracle Siebel CPQ, EBS and other industry solutions.

Strengths

  • Oracle Siebel CPQ offers broad sales capabilities by leveraging other required modules, such as Siebel SFA, Contracts and Service, within the broader Siebel CRM portfolio. Oracle Siebel CPQ offers Web services enablement to support multichannel and cross-channel commerce.
  • Oracle Siebel CPQ supports customers across industries with concept-to-market and lead-to-order requirements, such as telecommunication, utilities, high tech, financial services and professional services, and has maintained a strong business momentum for the Siebel CPQ product, especially in these industries.
  • Siebel offers strong globalization capabilities, with language packs that enable users to select approximately 22 different languages as defaults for UIs.
  • Approximately 85% of Siebel's client base have migrated to version 8.1 and above to reduce support costs and acquire better functionality, as well as to make way for easier upgrades to Fusion CPQ in the longer run.

Cautions

  • As the Fusion initiatives progress, Oracle needs to define clear upgrade road maps for Siebel customers, and to reassure its clients of the company's product commitments and further development of Oracle Siebel CPQ.
  • Due to the complexity of order capture processes, there is a higher dependence on consulting resources in CPQ implementations, compared with other projects across the industry.
  • Customer references and Gartner clients cite limited documentation in several areas of the application, especially integration among different Oracle products. Although Siebel supports relatively large installations — several thousand users and similar numbers of configuration sessions a day — references and Gartner clients have raised concerns over platform performance.
  • Some Oracle reference customers mentioned that product enhancements took longer, and that they would like to see more-aggressive investment in Siebel Configurator than they've witnessed during last two years.

Rating: Positive

SAP IPC

SAP Internet Pricing and Configurator (IPC) receives a Positive rating due to the increasing traction of IPC in the SAP installed base, viability, customers in diverse vertical industries, broader functional capabilities through integration between SAP Business Suite and SAP CRM products, and a strong road map for mobile. Both SAP IPC and Variant Configuration continued to be used in isolation or together, depending on the particular customer requirements.

Gartner estimates that SAP has accumulated more than 2,000 client organizations using SAP Variant Configuration and IPC applications. However, this MarketScope focuses on CPQ solutions that aid sales, partner, e-commerce and self-service channels, and can ideally be used directly by sales personnel or by staff supporting the sales teams.

Hence, this MarketScope focuses on SAP IPC and ancillary software packages under the current branding of SAP Solution Sales Configuration (SSC). Gartner estimates that approximately 30% of SAP Variant Configuration clients use IPC in front-end sales, and choose it because of the established relationships and larger investments in SAP applications.

SAP has offered three configuration solutions to address client requirements:

  • Variant Configuration is for back-office sales configuration in ERP for ATO, CTO, ETO, project-based sales, costing and fulfillment.
  • IPC is for sales front-office configuration in CRM, ERP and Web channels for ATO and CTO, integration with Variant Configuration in ERP for sales back offices, ETO, project-based sales, costing and fulfillment.
  • SSC IS for guided selling and bottom-up systems and solution configuration in CRM, ERP and Web channels, integrated with Variant Configuration in ERP for sales back offices, ETO configuration, project-based sales, costing and fulfillment.

Variant Configuration is required for product configuration involving BOMs, and for integrating with manufacturing and fulfillment processes. Manufacturing clients often use Variant Configuration's Product Modeling Environment to develop models in support of IPC installations when the two products are deployed in tandem. SAP modeling tools provide a graphical model tree containing all the information that is relevant for one product model, a graphical definition of dependencies with the automatic creation of a rule syntax, and graphical visualization of dependencies and class structures. SAP is still prototyping the integration with SAP 3D Visual Enterprise software (based on the acquisition of Right Hemisphere), which will provide a 3D visualization of the configured product during quote/order configuration.

SAP has relied on a partnership with Vendavo for price analytics and optimization capabilities, but offers packaged sales analytics in SAP Sales Analytics for Configurable Products, which leverages SAP Business Information Warehouse (BW) and SAP BusinessObjects Business Intelligence platform 4.0 tools for reporting and analytics. The software delivers support for multiple currencies and languages, with standard country versions available for more than 45 countries across the globe.

SAP also offers other capabilities, such as workflow, sales content management and contract management through SAP products within SAP Business Suite.

SAP has improved the UI and functional capabilities, such as contract management and the sharing of BOMs among third-party suppliers in SAP CRM 7.0, SAP Supply Network Collaboration 7.0 and SAP ERP 6.0. The enhancement packs have provided improvements to SAP's integrated workbench for configuration models with access to all key elements of a product model, including drag-and-drop capabilities to create dependencies and characteristics. A check tool for configuration models is provided so that customers can perform various checks of their models for consistency, integration, performance, knowledgebase and customer-specific checks for naming conventions. Users can leverage configuration information to flexibly define quality management inspections based on the specific configuration of a product for one customer.

SAP recently extended its new Web shopping platform, SAP Web Channel Experience Management, toward B2B support for quotations and product configuration.

SAP SSC enables SAP CRM and SAP ERP Central Component sales processes to support the configuration and definition of complex solutions composed of combinations of hardware, software, technical services, project-based services and financial services. A configuration engine supports bottom-up and top-down approaches in a new Eclipse-based environment.

The road map for SAP includes new mobile applications for sales and configuration, based on SAP's acquisitions of Sybase and Syclo, and on Hana-based accelerated analytics for sales and configuration.

SAP supports on-premises and hosted delivery models. Quotation and pricing functionality are built into IPC, and cannot be deployed as stand-alone modules. Customers do not normally purchase and deploy IPC as a stand-alone offering, independent of a CRM 7.0 installation.

Strengths

  • SAP is a strong competitor, because of its substantial financial and human resources, as well as its global presence. SAP has a strong, credible partner network, as well as a large client base with which to pursue cross-sales.
  • Geographic coverage, from sales and support perspectives, is very strong globally, with revenue distributed across all regions, with North America and Europe being primary, followed by APAC.
  • SAP supports customers across multiple industries, including ATO, ETO and CTO. SAP has customers across multiple vertical industries, including utilities, high tech, industrial machinery and professional services.

Cautions

  • Even though product modeling for IPC and Variant Configuration can be done with one modeling environment, the two are separate configuration engines with functional differences, and integration between them is yet to be streamlined, resulting in migration efforts for customers.
  • References gave SAP below-average scores for product ease of use, and for upgrades and maintenance.
  • The initial learning curve for SAP is longer, with average implementation times for 50% of customer references being greater than 12 months.
  • SAP needs to continue investing in application performance, and to provide more tools to size the system and fine-tune the application.

Rating: Positive

Selectica

Selectica receives a Promising rating because of its product capabilities and integrated contract management capabilities. Selectica has been doing business predominantly in the high-tech and discrete manufacturing vertical industries, and can support ATO, STO and CTO requirements.

Selectica has approximately 92 employees dedicated to CPQ out of 132 total employees as of December 2012, with 45 professional service consultants, 27 supporting R&D and 17 salespeople. Gartner estimates Selectica's revenue from CPQ-related sales to be approximately $7 million in 2012.

Selectica Guided Selling offers six separate modules:

  • Selectica Sales Configurator R10.3 is the primary constraint engine.
  • Selectica Pricer R10.3 provides pricing execution capabilities and the ability to manage pricing scenarios and rules.
  • Selectica Playbook users can use the numerous out-of-the-box operators to construct business rules without custom coding. Out-of-the-box operators are provided for mathematical formulas, role-based/region-based activities, date-related calculations, compatibility, etc. Playbook allows customers to create rule patterns that apply to products across multiple products lines, or to products and services.
  • Selectica Modeling Development Environment R10.3 is an integrated development and testing environment that can model everything the constraint engine can understand.
  • Selectica Guided Selling 2.0 provides capabilities for needs analysis, product cataloging, recommendations, product configuration, pricing, quoting, proposals and contracts with a built-in HTML5 UI.
  • Selectica Contract Lifecycle Management (CLM) 5.4 provides the contract management capabilities.

Selectica offerings are Java-based applications delivered through a hosted model and priced based on a per-user subscription. Selectica continues to support legacy on-premises customers. The company releases updates and new features on a quarterly basis.

Selectica has invested in developing its products to segregate the rules and constraints environment from the front-end presentation, and in providing the business user with administrative control to manage rules without custom coding. Selectica lacks price optimization, 3D visualization and content management capabilities, and relies on third-party products. Selectica offers published APIs and standard integration with Oracle EBS, SAP, NetSuite, Oracle Siebel and salesforce.com. Selectica also offers integration with WebSphere Commerce Server.

Selectica has plans to release the integration of Selectica Guided Selling 2.0 with Selectica CLM and DocuSign by March 2013. Selectica also has plans to improve its ability to support complex internal and external approvals and mobile with an HTML5 UI by March 2013.

Integration with NetSuite opportunities, product master and order management is planned for April 2013, and dashboards for executives covering strategic and operational key performance indicators (KPIs) by June 2013. A native iOS-guided selling application for tablets is planned for release by June 2013.

Strengths

  • Selectica now offers broader product capabilities, including contract management, with domain capabilities in discrete manufacturing, high tech and the ability to support different manufacturing styles, including ATO and STO.
  • Selectica has made multiple improvements in segregating the constraint engine and business rule patterns, in integration with contract management and CRM vendors, and in development to support HTML5.
  • Selectica has moved to a subscription-based, hosted model to offer customers multiple deployment options.

Cautions

  • Selectica's geographic coverage, from sales and support perspectives, is limited to North America and Europe.
  • Customers gave the company low overall satisfaction scores, and Selectica needs to address the product development, maintenance and support concerns of its customers.
  • The company also needs to invest in its own professional service capabilities, while developing strategic alliances with third-party consultancy service providers.

Rating: Promising

Sofon

Sofon receives a Promising rating, because of its breadth of functionality, good product management capabilities built into the product and focus beyond manufacturing vertical industries. Sofon focuses on discrete manufacturing, construction, life sciences and healthcare equipment manufacturers and telecom. Sofon recently started expanding into the North American market.

Sofon has approximately 40 employees dedicated to its CPQ offerings as of December 2012, with 15 professional service consultants, seven supporting product development and R&D, and eight salespeople. Gartner estimates Sofon revenue at approximately $7 million in 2012.

Sofon offers eight major modules:

  • Sofon Studio is the management module for all information used in Sofon Proposal Organizer and Sofon Web Sales Configurator. Sofon Studio is an object-oriented, graphical modeling environment.
  • Sofon Proposal Organizer is the end-user application for field sales, internal sales, engineering, channels and end customers. Sofon Proposal Organizer provides functionality to support CPQ requirements, as well as needs analysis, deal qualification, customer qualification, project configuration, RFP support and approval flows. These functions can occur online, offline and via the Internet.
  • Sofon Web Sales Configurator has two deployment methods: as a stand-alone Web application, or as a Web service to be called inside third-party applications, such as ERP and CRM.
  • Sofon Approval Portal supports the commercial, technical, legal and financial approval process based on exceptions occurring in draft quotations, orders or contracts. Sofon Approval Portal supports the approval process for mobile users.
  • Sofon Sales Organizer helps manage and monitor the overall sales and quotation process. Sofon Sales Organizer provides management information on opportunities, quotations and the installed base of configured products sold to clients.
  • Enterprise Product and Lifecycle Manager (EPAL) helps manage product data in larger international organizations, and is a browser-based product data entry module for product managers designed to define product features and constraints. EPAL offers the capability to manage a multinational hierarchy of product features and constraints on a global product management level, whereby country-based sales organizations can define product features on the local product management level, or at the channel level.
  • Sofon Connect is the integration framework that ensures integration between Sofon Guided Selling and other software, such as ERP, CRM, CAD and product life cycle management (PLM), using XML.
  • Sofon has connectors for ERP systems, such as SAP ERP (NetWeaver PI-certified), Infor LN, Microsoft Dynamics NAV, Microsoft Dynamics AX and QAD. Sofon also has connectors for CRM systems, such as SAP CRM, salesforce.com (Apex-certified) and Microsoft Dynamics CRM.

Sofon's CPQ offerings are Microsoft .NET applications delivered through an on-premises licensed model or a hosted model. Pricing is based on traditional licensing models or monthly subscriptions on a per-user basis with annual updates in every September. Sofon lacks functionality for price optimization, reporting and analytics. The company offers language support that includes English, German, French, Italian, Spanish, Japanese, Dutch, Czech and Slovak for the application UI. Document output can be in any language.

Version 2012 for all CPQ products was released in September 2012, with four new modules — Concept Designer, 3D Layout Designer, Web Sales Organizer and Web Proposal Organizer via a SaaS delivery model. Concept Designer enables the graphical configuration of solutions, while Sofon's configurator engine validates the objects positioned in the diagram. 3D Layout Designer enables end users to position products in a 3D space. Users get a 3D presentation of a space in which they can position products and obstacles.

Web Proposal Organizer and Web Sales Organizer can be offered on a SaaS model as of September 2012, and include sales qualification, needs analysis, opportunity assessment, proposal generation and version management, sales configuration, product configuration, visualization, calculation and pricing, contract generation and management, order management, BOMs and routing generation, approval workflows, service contracts and inquiries.

Sofon comes with standard integration with SAP ERP and CRM (NetWeaver PI-certified), Infor LN, Microsoft Dynamics NAV, Microsoft Dynamics AX, QAD, IFS, Oracle EBS, salesforce.com (Apex-certified) and Microsoft Dynamics CRM.

Strengths

  • The strength of its product management capabilities helps Sofon differentiate itself from other players in the industry beyond core CPQ capabilities.
  • The company has domain expertise in vertical industries like healthcare equipment manufacturing and discrete manufacturing.
  • Sofon received high overall satisfaction scores, and customers rated it high on modeling capabilities, product and pricing management capabilities, and implementation and integration services.

Cautions

  • Geographic coverage is limited to Europe, with more than 90% of Sofon's business coming from there; however, the company is expanding into the North American market.
  • Sofon has limited business done through partners, with approximately 90% done directly, and needs to develop its implementation and reseller partners to expand globally.

Rating: Promising

Tacton Systems

Tacton Systems is a privately held company based in Sweden. Tacton gets a Promising rating for successfully delivering configuration solutions for industrial equipment manufacturers, life sciences and high technology equipment, and can support ATO and ETO requirements.

Tacton has 99 employees dedicated to its CPQ offerings as of December 2012, with 15 resources dedicated to R&D, two in customer service and support, 64 professional service consultants and eight salespeople.

The flagship CPQ software suite is Tacton Configurator, which comprises three products specific to configuration functions, as well as a quoting application that can be employed online or offline as a front end to the configuration engine:

  • Tacton Configurator Server (TCserver) provides the core constraint-based configuration engine, which includes support for the execution of pricing rules and calculations, as well as standard APIs for integrating with other applications.
  • Tacton Configurator Studio (TCstudio) provides a graphical modeling and maintenance environment for defining and managing rules on products, components, relationships, dependencies, pricing rules and calculations. TactonWorks Studio and TactonWorks Server provide design automation tools that help generate 3D CAD models, 2D drawings and 3D visualization.
  • Tacton Configurator Site Application (TCsite) provides a Web-based quoting tool that integrates with Tacton Configurator Server.
  • Tacton Configurator Site Offline (TCsite Offline) provides a version of Tacton Configurator Site for disconnected use on laptop PCs.

Tacton offers core configuration capabilities, but requires customization for workflow, margin compliance, contract management and analytics. Tacton provides integration with third-party software for 2D and 3D visualization. The company provides a template for quoting and sales content management. Tacton offers a full CPQ solution on offline mode with synchronization capabilities. It does not publish a long-term product road map.

Strengths

  • Tacton Systems has domain expertise in the equipment manufacturing industry and the ability to support complex manufacturing requirements, including ETO.
  • The usability of the modeling environment, ease of modeling, managing product configuration rules, ease of deployment and overall ease of use received overall positive feedback from Tacton references.
  • Tacton has a partnership-led model and an established partnership with ecosystem vendors, such as Dassault Systemes.

Cautions

  • Tacton does not offer a SaaS solution, and provides licensed on-premises or hosted rental models to customers.
  • The company offers English as the standard language, and customers need to make translations to other languages using built-in translation tables.
  • Tacton's presence is limited to Western Europe, North America and Japan.
  • The company had a go-to-market partnership with IBM WebSphere Commerce that lost momentum after IBM's acquisition of Sterling Commerce.

Rating: Promising

TDCI

TDCI receives a Promising rating for its product capabilities, support for ATO and ETO manufacturing operations, domain expertise in industrial equipment, building products and high technology, and the growth of its client base.

TDCI has approximately 100 employees dedicated to its CPQ offerings as of December 2012. Gartner estimates TDCI's revenue from CPQ-related sales to have been approximately $20 million in 2012.

TDCI has been doing business predominantly in the industrial equipment, construction, building materials, furniture and high-tech vertical industries, and has yet to expand into others, such as life sciences and healthcare.

TDCI's flagship offering for CPQ is BuyDesign, and encompasses these key modules:

  • BuyDesign Configurator provides the configuration engine to manage rules and constraints, and to generate pricing, engineering and manufacturing information.
  • BuyDesign Studio provides a graphical modeling and test environment.
  • BuyDesign Flex2D provides a native tool that generates 2D images and drawings, leveraging Autodesk Inventor and Dassault Systemes SolidWorks for the design environment.
  • BuyDesign Flex3D generates 3D models of configurations, leveraging the underlying capabilities of Dassault Systemes SolidWorks and PTC Pro/Engineer.
  • BuyDesign FlexDocs generates proposals, sales content, and warranty and installation documentation.
  • BuyDesign FlexRender is an engine for the dynamic generation of photo-realistic images for configured products within the context of the scene in which the product will be used, for example, home, office or other lifelike scenes, with selected product options.
  • BuyDesign Build-Your-Own supports self-service, online visualization environments that enable users to review combinations or variations of products.
  • BuyDesign Channel Sales supports needs assessments, quoting, bidding or proposal processes for online and offline usage modes for direct and indirect sales forces.
  • BuyDesign Storefront supports e-commerce storefronts for self-service buying cycles.

TDCI offers all major components, but lacks functionality for price optimization, contract management and workflow. TDCI does not provide margin compliance capabilities, and leverages Microsoft SQL Server for reporting service. BuyDesign Channel Sales and BuyDesign Configurator both work in disconnected mode on laptops or notebooks with the ability to synchronize orders and knowledge. TDCI currently offers on-premises license and hosted options.

For future releases, TDCI is focusing on administrative user control, change management, ease of modeling ETO workflows, a collaborative or social model definition, a hybrid configuration, a common catalog hub, analytics and promotion management.

Standard integrations have been established with CRM and ERP vendors such as Microsoft Dynamics, Infor and Oracle. TDCI has also integrated with CAD systems, with standard integrations available with Dassault Systemes SolidWorks, Autodesk Inventor and PTC Pro/Engineer. TDCI is also working on developing integration with salesforce.com.

Strengths

  • TDCI offers core CPQ product capabilities, with domain capabilities in the industrial equipment, building and constructing industries, and the ability to support different manufacturing styles, including ATO, ETO and STO.
  • TDCI has experienced good growth in revenue, acquiring approximately 50 clients and obtaining 38% growth in CPQ revenue year over year in 2012.
  • TDCI has been proactive in developing integrations with third-party products in the ecosystem, as well leveraging its Microsoft and Infor relationships to expand its go-to-market channel.

Cautions

  • TDCI's geographic coverage, from sales and support perspectives, is limited to North America, which contributes more than 85% of the company's business, followed by Japan and Europe, respectively.
  • Customers expect further improvements in integration with other third-party systems, as well as better management of upgrades.
  • TDCI needs to aggressively develop its implementation and reseller partners to expand globally, and to better serve its international customers. Approximately 40% of the company's business comes from services offered by TDCI.

Rating: Promising

Strategic Planning Assumption

By 2015, the comprehensive, integrated automation of CPQ processes will help companies grow sales by 10%.

Note 1
Product-Based Sales Configuration

ATO products are configurable offerings made up of standard components. They are configured based on customer needs and intercomponent attribute relationships (such as compatibility). Computers and telecommunications equipment fall into this classification. ATO configurators model products in terms of attributes whose values may be data-driven or formulaic. Formulas can represent simple weight calculations or product resource use (for example, equipment power consumption). ATO configuration engines dynamically create BOMs for order fulfillment.

ETO products are configurable offerings that consist of standard and custom-engineered components. They have the same features as ATO products, but involve some level of engineering analysis to be configured. Commercial aircraft, power generation equipment and heat exchangers fit into this classification. ETO configurators can model engineering processes, create complex BOMs, generate engineering drawings and CAD information, and resolve unpredictable spatial constraints.

STO products have little variability, other than a predetermined set of attributes, such as color and size. Some office equipment, household appliances and TVs fall into this classification. The role of a configurator is to match customer needs with the product attributes that best serve those needs. In many cases, this problem is solved by using a simple parametric search engine or relational-database technology.

Note 2
Non-Product-Based Sales Configuration

Pricing configuration enables selling channels to deploy customized trade promotions and implement complex pricing and discounting strategies. It can provide a competitive advantage through the quick deployment of up-to-date pricing policies, based on product, sales territory and customer information.

Finance configuration enables selling channels to calculate financial justifications (for example, ROI or life cycle costs), provide lease-versus-buy analyses and generate customized financing plans.

Vendors Added or Dropped

Sofon was added to this MarketScope.

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.

Gartner MarketScope Defined

Gartner's MarketScope provides specific guidance for users who are deploying, or have deployed, products or services. A Gartner MarketScope rating does not imply that the vendor meets all, few or none of the evaluation criteria. The Gartner MarketScope evaluation is based on a weighted evaluation of a vendor's products in comparison with the evaluation criteria. Consider Gartner's criteria as they apply to your specific requirements. Contact Gartner to discuss how this evaluation may affect your specific needs.

In the below table, the various ratings are defined:

MarketScope Rating Framework

Strong Positive
Is viewed as a provider of strategic products, services or solutions:

  • Customers: Continue with planned investments.
  • Potential customers: Consider this vendor a strong choice for strategic investments.

Positive
Demonstrates strength in specific areas, but execution in one or more areas may still be developing or inconsistent with other areas of performance:

  • Customers: Continue planned investments.
  • Potential customers: Consider this vendor a viable choice for strategic or tactical investments, while planning for known limitations.

Promising
Shows potential in specific areas; however, execution is inconsistent:

  • Customers: Consider the short- and long-term impact of possible changes in status.
  • Potential customers: Plan for and be aware of issues and opportunities related to the evolution and maturity of this vendor.

Caution
Faces challenges in one or more areas.

  • Customers: Understand challenges in relevant areas, and develop contingency plans based on risk tolerance and possible business impact.
  • Potential customers: Account for the vendor's challenges as part of due diligence.

Strong Negative
Has difficulty responding to problems in multiple areas.

  • Customers: Execute risk mitigation plans and contingency options.
  • Potential customers: Consider this vendor only for tactical investment with short-term, rapid payback.