In 2010, Communications, Media, and Entertainment (CME) businesses are becoming more confident in their revenue potential with most companies feeling the recession is behind them or nearly halfway over. To prepare for spending growth, many CME businesses plan to increase their focus on sales strategies with a keen focus on improving customer collaboration as a top priority.
However, improving customer collaboration, especially in business-to- business (B2B) selling and order scenarios, is difficult to achieve due to product portfolio and selling/ordering process complexity. Within the CME marketplace, companies are offering customers a rich array of options including products and services via multiple channels. This is good news for customers, who demand freedom of choice and ease of use. But it makes selling and order management a complex task for CME companies, which are looking to optimise these processes to increase sales performance.
1. IBM Software Telecommunications
Protecting margins and
creating value
Strategies for simplifying and optimising B2B selling
and ordering processes in communications, media
and entertainment
Executive summary
In 2010, Communications, Media, and Entertainment (CME)
businesses are becoming more confident in their revenue potential with
most companies feeling the recession is behind them or nearly halfway
over. To prepare for spending growth, many CME businesses plan to
increase their focus on sales strategies with a keen focus on improving
customer collaboration as a top priority.
However, improving customer collaboration, especially in business-to-
business (B2B) selling and order scenarios, is difficult to achieve due to
product portfolio and selling/ordering process complexity. Within the
CME marketplace, companies are offering customers a rich array of
options including products and services via multiple channels. This is
good news for customers, who demand freedom of choice and ease of
use. But it makes selling and order management a complex task for
CME companies, which are looking to optimise these processes to
increase sales performance.
Key findings
Too often, the CME sales staff is facing an overly manual and complex
B2B sales environment that inhibits a salesperson’s ability to close deals
or drive high-value sales. For example, it is common to find pricing
information used to generate a quote to be out-of-date, leading to
misquotes and erroneous orders. Aggravating and alienating customers is
a real possibility, with accompanying risk to your company’s reputation.
To overcome these challenges, CME companies are committing
resources this year to simplifying the complex selling and ordering
processes. A recent IBM Sterling survey revealed that CME companies
are placing more emphasis on how they interact with and sell to their
customers, especially in B2B markets.
The configure, price, quote (CPQ) process presents the most
productive opportunity for improvement. Tools can be used within the
CPQ process to ensure a solution is located and the order is configured
accurately to prevent downstream errors in fulfillment or provisioning.
Tools can also deliver the automation needed to make the sales and
ordering process more responsive, efficient, and accurate.
Contents:
1 Executive summary
2 The CME business climate
3 The opportunity-to-cash business
processes
3 Configure, price, quote processes ripe
for improvement
5 CPQ process improvements at work
6 Five key capabilities for a configure,
price, and quote solution
7 The human side of process
improvement
7 Conclusion
2. Several leading CME companies have achieved major
improvements in their CPQ process by embracing five key
configure, price, quote process improvements that have led to
reductions in order-processing times, increases in revenue,
and increased customer responsiveness.
When evaluating CPQ solutions, look for five key
solution capabilities:
Interoperability•
Usability•
Maintainability•
Performance•
Multi-channel support•
To eliminate the number-one user adoption issue, make
sure the CPQ solution yields greater direct benefit to the
salesperson than the amount of time necessary to master
its use. Also, ensure the system improves order accuracy.
Sales management must demonstrate a solid commitment to
the project, or salespeople can be expected to resist.
The CME business climate
As the recession ends, companies need to improve their sales
processes, including reducing complexity, in order to be more
responsive to customer needs while also eliminating the
manual process points that create opportunities for margin
drain. Within today’s CME space, companies are facing
increasing complexity as well as greater competition. This
calls for greater focus on optimising and transforming the
sales process, especially in the area of configuring, pricing, and
quoting/ordering solutions. (For the purposes of this white
paper, the term “CME” will include telecommunications and
cable service providers; media companies involved in complex
sales like advertising sales; and software and IT providers
selling complex offerings like managed services.)
In communications, for example, a sales representative may
approach a potential client with a variety of communication
services across voice, video, data, and managed service
categories. In addition, the rep may also offer services from
third-party providers and partners to create an overall
solution. During the pre-order process, the rep will gather
customer location-specific requirements and then map those
requirements to an appropriate set of products and services.
With appropriate products and services selected, the
representative will then find the appropriate price point for
service using factors such as customer history (spend and
length of relationship), usage volume, term commitments,
and many other factors.
By contrast, in advertising a representative will need to gather
information about the customer’s product and target market
and link it back to specific advertising products. Not only will
the configuration need to include the development of the
advertising message, but also the media and geographies where
the message will be delivered. Multiple parameters may go into
figuring the price of an ad, including placement, time, color,
size, geographic region, and customisation. Preparing an
accurate, timely quote is highly complex in these environments.
To overcome these challenges, CME companies are placing
greater emphasis on simplifying their complex selling and
ordering processes. Constant fluctuations in the breadth and
type of product offerings, pricing changes, and reduced sales
forces make managing an already complex sales process even
more difficult. Failure to uniformly manage products and
pricing can lead to misquotes that alienate customers and
potentially damage your company’s reputation.
In early 2010, IBM Sterling initiated a survey with the
objective of better understanding the current climate of the
IT decision maker in CME companies as well as
understanding needs and priorities relating to improving sales
process performance to enable revenue and margin growth.
We surveyed 313 IT decision makers in US CME
companies and 100 UK CME companies. The survey results
demonstrated that CME companies are placing greater focus
on how they interact with and sell to their customers, especially
in B2B markets. The survey found that 80 percent of these
companies in the United States and 61 percent in the United
Kingdom feel the recession is over or nearly halfway over.
However, any potential growth in revenue appears to be
dependent on investment. The majority of respondents
(over 70 percent) said they will invest in better serving
their customer base by expanding into new sales channels,
improving responsiveness of the sales process, and
preparing for growth in customer spending. For example,
in the U.S., when asked for top priorities for software
investment, 91 percent of respondents indicated that better
collaboration with customers, including sales and customer
service, is a top priority.
IBM Software Telecommunications
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3. In Figure 1, below, we see process domains such as solution
management, which refers to the solution discovery and
configuration processes needed to find the right solution for
your business customers. Further, channel sales management
represents enabling sales and ordering through multiple sales
channels including direct sales and indirect sales.
This paper will evaluate how today’s CME businesses can
extend their CPQ processes, focusing on solution
configuration and channel management, as these areas are the
source of the greatest complexity.
Configure, price, quote processes ripe
for improvement
The complexity of the CPQ process makes it difficult for
CME companies to increase the value of the sale, reduce the
cost of that sale, and ultimately increase the margin of each
sale. As a whole, the industry is burdened by a richly varied
product and service portfolio – for example, a communications
portfolio of multi-location voice, data, and managed services
complemented by managed support services. An order will
typically involve many different variables and parameters,
including product dependencies, locations, order volume,
historical spend, and customer contract length.
Traditionally, CME companies’ sales and order handling
processes are highly manual, leaving considerable room for
error in finding and pricing solutions for customers. In many
cases, companies will use solution configuration or order-
entry solutions that are not directly integrated with the
product/pricing catalog or supporting systems (such as
inventory management).
The opportunity-to-cash business
processes
Three distinct business processes in the B2B opportunity-to-
cash lifecycle can be improved to drive better sales results:
Sales account management
These are the processes and systems that provide the
functionality for media companies to manage a sale: account
activity planning, building account plans, stakeholder and
influencer mapping, identification of key buying criteria,
territory management, lead tracking and forecasting, and
general relationship management.
Configure, price, quote (CPQ)
These are the necessary workflows and capabilities enabling
solution discovery, solution configuration, pricing, quoting,
and contract generation to complete a sale and related order
management that provides the solution that meets the
customer’s needs.
Business intelligence and analytics
Analytics is a critical piece of the complex selling and order
management puzzle, as executives need to access insights
related to pipeline turnover and revenue generation to enable
better decision making.
The Telemanagement Forum’s Telecom Applications Map
(TAM) provides a useful visual depiction of this sales process
(see Figure 1). TAM is a working guide to help companies and
their suppliers use a common reference map and language to
navigate a complex systems landscape that is typically found in
today’s CME businesses.
TelecommunicationsIBM Software
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Figure 1: Telemanagement forum telecom applications map release 3.2
Campaign
Analytics
Product
Support
Job Aids
Funnel and Lead
Management
Contract
Management
Solution
Management
Corporate Sales
Workflow Management
Sales Aids
Market/Sales Domain
Customer/
Prospect Data
Aquistion
Mass Market
Sales Workflow
Management
Customer
Sales Portals
Internal
Sales Portals
Indirect
Sales Portals
Mass Market
Sales Reporting
and Tracking
Offer
Management
Sales
Negotiation
Campaign Management
Mass Market Sales Management
Corporate Sales
Management
Compensation Results
Recording
Compensation and Results
Affiliates
Virtual Network
Operators
Dealers
Retail Outlets
Telesales
Direct Sales
Force
Channel Sales
Management
Sales Portals
Campaign
Design
Campaign
Execution and
Refinement
Campaign
Performance
Tracking
Lead
Generation
4. TelecommunicationsIBM Software
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It is quite common that orders are not automatically validated
for correct product configuration and pricing. Generally it is
up to the salesperson or consultant to perform this validation.
This manual validation, without systematic managed
constraints or validations, can lead to a high number of
mis-configured orders and order rejections. These manual
processes lead to decreased margins (consider a company that
needs to provide credits for each order error). They also
create high levels of revenue leakage (consider incorrectly
priced orders where the price is significantly below list and
creates low or no margin). Further, without automation,
salespeople tend to miss opportunities for cross-sells and
up-sells, which reduces revenue potential.
And as a CME company’s product and service portfolios
become deeper and broader, the more complex the sales
processes become. Making incompatible choices or not
making all the required choices can lead to order errors and
delays. For example, we know of one company that asked
seven of its sales people to develop a quote for an £80,000
order. Only three priced the quote correctly, and all the orders
had some type of error. Why? Because the sales system did
not ensure the users were guided to making the right choices
and decisions.
Many CME companies are facing CPQ process issues that
inhibit revenue and margin growth. Here are the top three
sub-processes needing improvement:
1. The solution configuration process
It is quite common to find that solution discovery and
configuration rely on disconnected tools as well as time-
consuming and error-prone manual order entry. Without
needed validations, there can be a high number of order
rejections and lost deals.
2. In the channel support area
It is typical to find that the disconnected sales system
environment and overly complex CPQ process limit a
company’s ability to expand into new sales channels, such as
partner sales or self-service.
3. In the product and pricing support area
It is common to find the lack of a centralised product and
pricing catalog solution that communicates and enforces
pricing rules across all sales channels. This can lead to issues
such as sales reps using old price and product information,
resulting in costly inaccurate quotes to customers and
partners.
Today’s CME businesses are facing real-life CPQ issues that
call for solutions to reduce process complexity and deliver the
automation needed to make the sales and ordering process
more responsive, efficient, and accurate.
Figure 2: B2B selling and ordering configure, price, quote flow
What do you offer?
I want to place
an order.
I want to change
my service.
What is the price?
Recommend Configure
Price
and Quote
Change
Management
Gather
Find
Recommend
Present
Price
Compare
Discount
Quote
Qualify
Configure
Validate
Submit
Access
Inquire
Present
Modify
5. TelecommunicationsIBM Software
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CPQ process improvements at work
Several companies in the CME space have transformed and
optimised their CPQ process to achieve improved revenue
and margins. Some highlights include:
A multibillion-dollar worldwide telecom equipment•
provider implemented a world-class CPQ solution to
enable a guided selling environment that eliminated most
manual ordering steps in their process. The result was a 66
percent reduction in quote-processing times.
A multi-national software and IT services provider•
implemented a CPQ solution in its partner sales channel
environment. The system enabled its partners to serve
themselves, end-to-end, with ordering data storage
services and other IT support plans. The result was a
500 percent increase in revenue generated through the
self-service channel.
A US telecommunications company implemented a•
new order configuration solution to guide customers on
making real-time changes to their network services based
on the latest data available. The solution will enable this
provider to be significantly more responsive to changing
customer requirements.
All of the companies in the cases listed have embraced one or
more of five changes to their B2B opportunity-to-cash
lifecycle. These changes include:
1. Ensuring process integration across all key processes in the
opportunity-to-cash lifecycle, including seamless
integration between customer and opportunity
management systems and processes and CPQ systems
and processes.
Today, many companies are implementing new sales force
automation (SFA) and customer relationship management
(CRM) solutions such as Salesforce.com to manage key
opportunity-side processes. But Salesforce.com does not
supply capabilities such as solution configuration to handle
selling and ordering complex products and services found in
the CME market. Thus, the transactional sales functions,
such as solution discovery and configuration, are managed
by separate systems. A key requirement is for CME
companies to find SFA/CRM and CPQ solutions that
support open integration and end-to-end integrated
process modelling to deliver a seamless ordering
experience for users.
2. Implementing solution discovery and configuration
solutions to enable guided recommendations and
configuration to improve responsiveness to customer
requirements, as well as reduced order errors and delays.
A guided selling and order configuration solution
orchestrates the complete CPQ process to ensure users
make accurate choices and that orders are priced accurately
and fully validated before submission to downstream
systems. With a proper configurator, you define how the
order behaves when certain choices or decisions are made.
The ideal order configuration solution can make a
highly complex configure-to-order scenario into
something simple.
The best configuration solutions act as a bridge from a
company’s back-office systems, rules, and data, to its
front-end order-entry processes to provide a common
ordering process and logic communication and enforcement
layer across all ordering channels. Thus, the solution
becomes an integral part of the opportunity-to-cash process
to ensure prices are quoted and orders placed accurately.
3. Using advanced quote-management solutions to apply the
proper business rules to negotiated pricing based on the
context of the order – who is the customer, what is the
value of the deal – in order to eliminate rogue pricing while
accelerating the quote-processing time.
Today’s sales processes must ensure that the proper
validations are applied to avoid rogue pricing and
discounting, which can cause margin drain. However, the
quote-approval process cannot be too constricting or
onerous, which would inhibit sales effectiveness. To address
this issue, many companies are turning to quote-
management solutions that can dynamically generate a
quote approval workflow and rules based on the context of
the order.
6. TelecommunicationsIBM Software
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4. Moving to offer-management solutions that enable more
effective management, communication, and enforcement of
pricing policies across different channels. This process
needs to include partners, to help substantially eliminate
pricing errors due to misinformation as well as improve
time to market with new products, pricing, and promotions.
Many CME companies are embracing an operational
environment where all sales channels interact with a single
sales, ordering, and service logic and data layer that provides
consistent communication and enforcement of all product,
pricing, and ordering rules and processes across all
channels. The result is more effective management,
communication, and enforcement of rules and policies
across different channels and geographies, substantially
eliminating inconsistencies that materially impact
profitability and customer satisfaction.
5. Focusing greater attention on post-sales support, enabling
customers to have greater flexibility in how they manage
their installed or delivered products and services (including
managing configuration changes and processing renewal).
CME companies are also embracing solutions that can
facilitate the configuration of upgrades to as-installed
products or as-subscribed services in the field. This function
enables an organisation to take a client’s product and/or
service bundle as it was built, subscribed to, or delivered,
and perform a configuration of an upgrade to that installed/
sold product and/or service.
Five key capabilities for a configure,
price, and quote solution
When evaluating selling and ordering solutions in the CPQ
area, look for these five key capabilities:
1. Interoperability. A CPQ solution should be designed for
integration and interoperability with your existing front-
and back-office systems. The best solution employs open-
standards-based integration architecture for connection with
any business system or rules set. Further, look for a vendor
with significant experience in integrating with ERP systems
(such as SAP) and SFA systems (such as Saleforce.com).
This will help you move a disconnected sales system into a
seamlessly connected sales system environment more quickly
than other solutions.
2. Usability. Your CPQ solution should provide the highest
degree of flexibility in defining and presenting order
configuration for the most complex products and product
combinations. Ideally, you will select a solution that employs a
constraint-based order configuration process where the user
decides which selections to make in whatever order he or she
chooses. This is called “user-guided behavior.” With such
technology, users can answer questions in any order and the
solution will maintain all compatible relationships. This allows
users to follow their own configuration path and still end up
with a valid configuration, regardless of how complex the
constraints are.
3. Maintainability. This needs to be addressed from the
perspective of multiple roles. From an IT perspective, you
should strive to find a solution that can be configured to meet
changing business needs. For example, it is ideal to support
multiple user communities through one order-configuration
system. But each community may have different user
requirements for things like order workflow. A solution that
provides configurable, profile-driven business processes and
user interface flows will make it much easier for IT to support
multiple user communities efficiently and effectively. From an
end-user perspective, you will need to give business users the
access and control to manage business processes and data on
their own. This directly improves time to market. For
example, in the areas of pricing management, it is important
to give end users such tools as intuitive, thin-client price lists
and mass update functions that facilitate quick updates on
many price list items.
4. Performance. Scalability and performance are often
overlooked. The best-fit solution is one that has proven it can
handle large numbers of concurrent users processing end-to-
end order configurations, not just simple order changes, with
sub-second response times for configuration actions. Look for
modern technology, such as the use of a multi-threaded
stateless server environment that can support thousands of
users or configuration models (constraints) that are compiled
with all constraint logic executed (as needed) in memory. This
type of environment can scale to support the largest user and
order volumes.
7. TelecommunicationsIBM Software
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5. Multi-channel support. Your business depends on you
having optimal reach to sell through not only your own sales
force but through an extended sales force provided by your
partners. Key in this endeavor is finding a CPQ solution that
not only enables you to support multiple channels (like call
centers, field sales, and e-commerce) but also multiple
storefronts where you can support your sales partners with a
partner-specific sales experience. You will need to support
partner-branded products, pricing, and order workflow. The
ideal CPQ solution will enable you to configure, launch, and
manage multiple sales partner storefronts via a single product
catalogue and single order-configuration engine.
The human side of process improvement
It is difficult to achieve change in selling processes. Sales
representatives tend to resist any change they view as more of
an imposition than an aid. As several decades of failed SFA
projects attest, lack of adoption can wreck your return on
investment in a hurry.
These best practices can help you avoid low adoption rates:
Ensure that the direct benefit to the salesperson outweighs
the time it takes to learn the system. The biggest pressure on
sales organisations and sales reps today is to sell, sell, sell –
anything not directly related to advancing a sale is deemed
irrelevant. Sales reps have previously viewed transactional
sales tools as of great informational benefit to management
but at the cost of individual salespeople spending more time
doing data entry. With that as background, to ensure new
systems can be adopted, you will need to minimise the
incremental time needed for salespeople to get up and
running with the system. This is the biggest area that impacts
adoption. Make sure that the benefits to the salesperson –
in his or her pocket – are clearly articulated and genuine.
Improve the accuracy of the ordering and proposal process.
If your sales and order management system cannot boost
accuracy and reduce lead times, it will sap the energy and
motivation of the salespeople. If you can help reduce the
proposal turnaround time, for example, from three days to
three hours, that has real meaning for salespeople and will go
a long way toward easing adoption.
Secure commitment from sales management. There are
many constituencies around sales and order management
processes – for example executive management, IT, and sales
management. If the CEO or CIO has discussed the need
for a new system but the chief sales officer does not
appear to wholeheartedly support the project, that lack
of commitment will drift down into the sales teams.
The salespeople are likely to be wary about the changes
themselves, and lack of strong sponsorship by sales
management could prove fatal to adoption.
Conclusion
The CME vertical has one of the most complex environments
for successful sales. Products and services come in a wide array
of configurations and pricing, offers regularly change, and
government and industry regulations must be considered on
many deals. So, while companies are constantly increasing
product offerings in an effort to be more responsive to
customer needs, they may internally be struggling to manage
the sale and configuration of these products.
For this reason, CME companies are focusing on improving
complex sales and order management processes. Automating
these traditionally manual processes can yield significant
benefits if you choose a comprehensive solution that features
multi-channel support and usability, among other important
considerations. Usability is particularly important, as sales
personnel will resist learning to use the system if they perceive
that the time spent learning to use it will outweigh its benefits.