23 Aug Role of the renewals process in a CPQ implementation
by Erich Rusch and Erik Mead
An initial implementation of CPQ is a critical, high-pressure undertaking. But it’s the natural next step for converging with your CRM, ERP, and other integral business management platforms, and it’s no question why: there are countless benefits CPQ can bring to your revenue growth, sales productivity, and client satisfaction. CPQ is the dream solution for driving sales with increased accuracy and velocity.
But how does a first-time CPQ implementation work for renewals-reliant businesses? When your company is in the business of subscriptions and repeat buyers, CPQ is still an important, viable option and should be made a top priority—but you have to do it right. By carefully weighing the elements at play in a CPQ implementation with renewals, Simplus can help you determine during what phase renewals should be built into your CPQ solution.
Elements to consider
For clients reliant on a subscription-based business, there are several elements to consider before defining the scope and timing of how renewals will be built into the end solution. Every CPQ implementation needs to take into account the business’s initial sales, amendments, expansion sales, and renewals.
Typically, initial sales and new products are considered the foundational elements. These are the items that need to be considered first when rolling out CPQ. This base will set the proper, strong foundation for renewals to be built on. However, in some cases, the business’s sales process is so dependent on renewals it raises questions about whether or not renewals should also be considered part of the phase-one foundation. But, before assuming it’s necessary for renewals to be implemented early in the process, it’s important to understand the two options and the risks undertaken by choosing to build renewals in phase one. If your business allows you to implement renewals and amendments post phase one, it may be preferable to lower your risks.
Building the renewals process later
Generally, Simplus and many others recommend renewals be built in a later phase of CPQ implementation. This reduces the amount of risk and problems occurring later in the implementation by building a solid foundation. It can also allow you to fast track phase-one implementation.
For example, building out robust renewals depends on having accurate data and a solidified install base. By building the renewals portion later on, you ensure there is time to properly format and set up that install base, so it doesn’t affect other systems and outputs. Most companies undergoing a CPQ implementation often start with data that is disparate, siloed, incomplete, or just flat-out erroneous. This means most companies would do well to save renewals for phase two rather than in the initial phase so a strong foundation of accurate data can be established. The high reliance on data in an initial CPQ implementation requires a dedicated data team in the first phase, and trying to build out a renewals process at the same time—without solidified data—can be detrimental to the overall success of the implementation and its sustainability.
Building the renewals process early
However, depending on the specifics of your business’s situation, the timing of building out renewals in a CPQ solution can move up earlier. But there are some key questions to ask to determine if you should take this route: How often do renewals come up after the first sale? What percentage of your core business is net new versus renewal? How short is the product lifecycle? Are your renewals short lifecycle or do they have a long horizon?
By weighing questions like these and more, you can decide if it actually makes sense to consider rolling out renewals in phase one. For example, if renewals are over 75 percent of your business model, or if you have a high frequency of post-sales amendments, perhaps it makes more sense and will serve your needs better to build out renewals early on. However, even with these conditions making early renewals more viable, the risks of disparate data haunting your implementation later on are still very real. If your business is one of the rare few who can go into the process with pristine data, you’ll be much more likely to avoid those data risks.
Everything considered, building out renewals at a later phase of the implementation can lower your risk and save your business the headaches of incorrect data creeping into your new platform. However, with the right qualifications and preparations, we know there are circumstances that may demand other routes. If your business relies on renewals for the bulk of your business, you will almost have to implement in phase one. However, if you can afford to wait, you should.
Simplus is the expert on helping clients identify and navigate these circumstances to mitigate risks while still getting a quick time-to-value solution that is workable and maintainable. Let’s talk about what your business and CPQ opportunities look like today.
Erich Rusch is Director of CPQ Presales Solutions at Simplus. Co-founder and CSO of CirrusOne until joining Simplus, Erich has years of experience in the CPQ space and has an unparalleled expertise in cloud solutions.
Erik Mead is an account executive for the Oracle practice at Simplus. A leader at CirrusOne before joining Simplus, Erik brings a mix of technical and business perspective to lead-to-cash conversations centered around CPQ.