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Experts Explore the Convergence of ERP, CRM and CPQ

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Cheryl Smith



4 min

There are a lot of acronyms floating around in business today, especially when technology is involved. And to make matters worse, new products and approaches seem to crop up every day, bringing with them an alphabet soup of new systems and strategies. It can be difficult to keep up.

An important convergence of three of these disciplines is underway that provides profitable benefits to enterprise operations at the junction of Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), and Configure-Price-Quote (CPQ). To cash in will require an understanding of the acronyms and systems involved and a clear perception of the operational impact and return on investment.

Navigating Convergence

I asked Frank Sohn and Kevin Geraghty to discuss convergence on a recent episode of The Xait Factor Podcast. These two experts have years of experience developing information systems and innovating in ways that make a difference to organizational performance. Frank is the President and CEO of Novus CPQ Consulting, a Configure-Price-Quote industry analysis and advisory firm. Kevin is Managing Director and Head of CPQ Practice at Xait and a top innovator in systems and sales enablement.

I started my interview by asking Kevin to help us understand the difference and similarities between ERP, CRM, and CPQ. “Enterprise Resource Planning, or ERP, is often referred to as the back office or the administrative part of a business,” said Kevin. “The CRM side, which people may be more familiar with, is Customer Relationship Management and is often used on the front end of the business for sales and marketing. And then once a customer places an order this very often goes into ERP or Enterprise Resource Planning software to manage activities like sales order processing, procurement, invoicing and cost management.”

Kevin explained that CPQ sits in the middle of that and acts as a conduit between these two often very different systems.” Imagine a bow tie. On the left-hand side you have the ERP software fanning out from the center. And on the opposite side, you have CRM software fanning out towards customers and prospects. And in the middle, the piece that joins it all together, is Configure-Price-Quote.”

Understanding the Acronyms

Frank helped us understand more about the functionality of CPQ and the impact it has on CRM and ERP systems...and vice versa. “As Kevin said, Configure-Price-Quote is the glue that binds it all together. So, if you have a configurable product, what combinations are possible? What combinations should you actually sell? What makes the most sense? All this information could be contained in a CPQ solution and help you align your proposal or quote to a customer's wishes. So, what they want to buy with, how do I build this product that the customer wants to buy?”

Is CPQ the Missing Ingredient?

It's one thing to sell a product to make a deal, but then it's another to actually fulfill it. Frank explained how CPQ helps refine the proposed sale, improves the likelihood of closing the sale, and how sales executives should frame their strategies with respect to the convergence of ERP, CRM, and CPQ.

“I consider CPQ the most important piece,” says Frank. “It helps you to configure the right product. It helps you to find the right price for these products. And it helps you to present it in a way that the customer will actually have a good understanding of what products they want to buy. In addition to that, more and more capabilities are added to it all the time. So CPQ plays a vital role in between CRMs and the ERP, or you use the CPQ solution without having to go forward with ERP or CRM solution in place.”

Agility and Flexibility are Key

What should we look for in a good CPQ solution that will integrate with existing ERP and CRM systems? “The key things are agility and flexibility,” says Frank. “A lot of companies who have a project in place to install a new CRM or ERP system find that it takes time. Often, large system integrators are involved. These projects can take years until they are finally implemented. That's too long. Make sure you can have a CPQ solution in place that you can use right away.”

Kevin agrees and stresses the ability to address the unknown. “A good CPQ solution needs to bend and bow with unforeseen changes in a nimble way so that you do not have to have a big project to change something. This is especially important in a merger or acquisition scenario when you are trying to meld together two businesses that may have very different processes and requirements.”

The convergence of ERP, CRM, and CPQ represents an opportunity for organizations to bridge the information gap between products, customers, and sales. Companies that become adept at leveraging the confluence of these systems and strategies will be the ones that come out on top by becoming more agile, frictionless, and competitive. You can gain an edge by adopting best practices that move the needle in terms of sales enablement, customer experience, and organizational performance. 

Listen to this Podcast episode here: The Xait Factor episode 9 is out!

Securing buy in and budget

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Cheryl Smith

Cheryl Smith is our Senior Content Writer. She has additionally been writing and managing proposals since 1998. Shipley trained, she has helped establish proposal centers and advised on capture strategy, coached orals teams and lead marketing, communications and knowledge management programs. Cheryl is a graduate of The George Washington University with degrees in Theatre, Communications and Literature. When she’s not sharing her passion for work, she loves drawing, writing, cooking and exploring the Virginia woodlands with her husband, their dog Chase and the fuzzy guests they host for Rover.

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