Choosing the right pricing and estimating tool is critical for businesses aiming to streamline operations, increase profitability, and maintain competitiveness. With numerous options available, identifying the most effective tool can be challenging. Here are straightforward ways to ensure you select the best pricing and estimating tool for your needs.
1. Understand the Scope and Requirements
There is lots of value in doing online and vendor research into best-practices and 'the art of the possible' but if you don't know what your business needs you will be led down many blind alleys by vendors, or worse you will end up purchasing a tool which is not a fit for your needs. Unlike calendar apps (where there is widespread knowledge of the desired feature-set) pricing and estimating tools can vary significantly from company to company, for CRM-add on configure, price and quotation (CPQ) tools for repetitive manufacturers, to more project-management and resource plan-based tools sometimes referred to as "Service CPQ tools". Spend some time with your business process owner, subject matter experts and actual end users’ discussion and compiling a short list of 35-75 requirements, then classify as demand/wish or priority/weight, to guide you in your journey. Requirements broadly fit into two or three categories of functionality/fit, usability/training/support, and technical considerations such as integration to existing systems, data and security.
Targeting 35-75 requirements in total for your CPQ tool ensures requirements are at the right level of detail, but also strive to ensure you state each as a requirement, not as a 'desired solution'. A requirement such as 'password required at sign-in which is automatically shared with my other corporate apps' is at the right level of detail, whereas a broad-brush 'must have security built-in' or too detailed 'I want the password field to be at least 13 characters and not permit peoples names' are both badly worded requirements. (The latter might be at the right level for a password wallet tool but not for a CPQ tool).
2. Become an Expert in this Field
You have probably been assigned this task as a side-bar responsibility and maybe didn't even know what CRM and CPQ stood for at the start. Or you are an expert in the pricing and estimating business process at your company, but you have no idea how other companies do this, or of the wider context in which you fit, such as customer interaction, pricing strategies and demand integration to your production system. Either way, before you do a formula RFP or selection invest time in becoming an expert. This starts with online research (yes, you are really being paid to watch videos online!), includes in-depth discussions and consulting with the end users and process owners, but also involves talking to vendors. Try to talk to three completely different vendors who come from a slightly different perspective rather than three direct competitors. This might mean reaching out to vendors who normally sell to company much larger or much smaller than your own, so that you can learn from the sophistication that larger companies need vs. efficiency and low-cost that smaller companies demand, respectively.
3. Limit the Scope of the RFP and Emphasize the Importance of Demonstrations
It is often tempting to write a 75-page RPF and then get back 150-page responses from each vendor. This is fine for a $25M business transformation engagement lasting ten years but the RFP for a software tool should be 5-10 pages max, and that includes strict instructions to all vendors on the format, content and length of the response.
Think hard about the cost drivers and elements of cost, and make sure nothing is left out, so you don't have gotcha's just before or after signing the contract. For example, is user training custom tailored to consider your company's screen layouts and policies, or do end user attendees off-the-shelf classes? Who is responsible for extracting legacy data from your current systems, cleaning it up and uploading it, you or the vendor? What about the integration or interfaces to your current systems (more of which is explained below)?
Conversely, don't under-estimate the power of demonstrations or hands-on trials, proof of concepts or self-evaluations. Despite the glossy proposals, reports and PowerPoint decks produced before and during the implementation, your end users will be left with a software tool they have to use, so that is the most important thing. Spend time scripting your demonstrations carefully, so that vendors follow your agenda within reason, while giving vendors some latitude to show best practices and/or use their similar but not identical demo data. Have your subject matter experts take notes during the demonstrations, but don't score. Meet afterwards as a group and go back through the demonstration video recording, scoring as a group rather than getting a rushed set of opinions and memories during the live event. There is a reason why juries deliberate court cases (though you can't expect you to reach unanimous agreement on every score) instead of just having the jurors write down the guilty/innocent consensus in real-time during the trial and use the average of their scores.
Finally, a word on hands-on trials. These are superior to demonstrations in that the smoke and mirrors and sleight of hand which vendors sometimes do in a demo won't influence things in a hands-on trial, but be aware that your busy team members often make time to attend a demonstration but then completely fail to spend time doing the hands-on trial afterwards, or they do but they get stuck on the first screen and they are too embarrassed (or busy) to ask for help on something which a quick word might have resolved.
4. Consider Implementation, Customization, Reporting, Output, Integration, Data Ownership and System Landscape
In the rush to examine the tools features and usability it is easy to forget about some of the critical 'fringe' cost drivers such as the tool's implementation process, customization options and features both during and after the implementation, reporting and output for quotation submittals or management reviews, integration to existing systems such as your CRM or ERP toolsets and which system owns each data object (e.g. customers, suppliers, employees, product or services, bills of material, routings or labor standards, labor resource groups, cost rates, billing or pricing rates, purchasing history, production history, prior projects). Also consider how the tool will be deployed. Is it cloud-based in which case how will it integrate with your single sign-on and current master data and transaction history (CRM/ERP) systems? Is it self-hosted or on-premise? What environments are provided (e.g. DEV, QA and PROD) and how are changes to the vendor's code, your configuration and your data, deployed throughout the landscape.
For example, on reporting it is very easy to wonder at the lovely reports the vendor shows in the demo but then forget to ask if you can customize these reports or incorporate data from the vendor's tool into your existing corporate reporting and dashboard tools such as PowerBI, Tableau, Qlikview or SAP Analytics Cloud. Advanced analytics and reporting capabilities are essential for an effective pricing and estimating tool. These features enable you to analyze pricing trends, identify patterns, and make data-driven decisions. Automated reporting features can allow you to create detailed, customizable reports for stakeholders, saving time and ensuring accuracy, as well as the potential for predictive analytics to help you forecast future costs and pricing scenarios, enhancing your strategic planning. When reviewing a tool, examine the types of analytics and reports it can generate. Look for features like real-time data analysis, customizable reporting formats, and the ability to export reports in various formats (e.g., PDF, Excel).
5. Consider Integration Capabilities Carefully
Pricing and estimating tools should seamlessly integrate with your existing systems, such as ERP (Enterprise Resource Planning), CRM (Customer Relationship Management), and project management software. This integration is crucial for several reasons:
Data Consistency: Integration ensures that data flows smoothly between systems, reducing the risk of errors and inconsistencies. Double-entry of the same data, or even manual data transfers using flat files, leads to inefficiency, data input errors and confusing all around.
Efficiency: Automated data transfer between systems saves time and reduces manual entry, allowing your team to focus on higher-value tasks. This must be balanced against the cost of the integration whether in the form of a transaction-based fee, separate licensing or maintenance/support costs, and/or customizing interfaces during the implementation.
Breaking down Silos: Integrated tools provide a comprehensive view of your business operations, enabling more seamless business processes that jump across tools and better informed decision-making. For example, what is the trigger for a new price quotation? Does the customer solicit this online, is it from the CRM, or is it informal (phone/email)? If you have a quotation which is accepted by the client how does this get converted into a contract and sales order? Are the line items transferred into your ERP system? If it is a project-based quotation then what about the project structures - WBS, tasks, labor resources, materials and other costs? What about change orders and changes in the output or forecast during delivery?
When evaluating a tool, check if it supports integration with your current software stack. Look for features like API access, pre-built connectors, and robust documentation to facilitate smooth integration.
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