CPQ ERP Integration – Is It Worth It?

CPQ ERP Integration – Is It Worth It?
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It’s simple: Without software integration, it’s impossible to provide industry-leading customer
experiences. And in a post-pandemic world, where seamless buyer journeys are paramount, you’ll lose
out to competitors with integrated systems.

Manufacturers of complex, configurable products use CPQ to automate and streamline their
configuration, pricing, and quoting activities. But without CPQ ERP integration, they’re fighting a
losing battle. Data silos, manual rework, and insufficient data visibility erode CPQ gains.

This article makes a case for CPQ ERP integration, explaining why it’s crucial, especially in the
engineer-to-order space.

Read on to find answers to the following questions:

• What is CPQ?
• What is ERP?
• How Does ERP Integration Actually Work?
• Why is CPQ ERP Integration So Crucial?

What is CPQ?

A robust visual CPQ solution like KBMax supercharges and automates the engineer-to-order process
for manufacturers of complex products. It lightens the load on sales and engineering, eliminates errors,
and streamlines production from the shopping cart to the shop floor.

Sounds good, but how does it work?

It all starts with configuration. KBMax has a visual product configurator that lets users configure
products in 3D by interacting with products on-screen. They can change colors, dimensions, parts, and
features, and it’s all drag-and-drop easy.

Visual product configurators can be used by sales reps as internal tools, or – if you embed your
configurator into your website, which we highly recommend – by end customers who visit your
website too.

Advanced product rules built into the CPQ solution force users to select those high-margin options that
work best from an engineering perspective. Meanwhile, pricing rules calculate prices in real-time,
displaying them dynamically on-screen (if the manufacturer wants to.)

Once the configuration stage is complete, KBMax outputs a range of sales, engineering, and
manufacturing files to further accelerate the quote to cash process. These include quotes, estimates,
proposals, CAD files, BOMs, and assembly guidance.

What is ERP?

ERP – Enterprise Resource Planning – is software that automates all the core processes needed to run a
modern business.

For many organizations, the ERP is the engine that keeps the show on the road. It’s the system of
record that pulls information from accounting, supply chain, sales, manufacturing, marketing
departments, and more to produce a single source of truth for the company’s data.

To function effectively, ERP systems have to connect with all back-office and customer-facing
functions. This level of connectivity means integrating your ERP with all other software handling
accounting, finance, CRM, B2B eCommerce, customer support, and, of course, CPQ.

How Does ERP Integration Actually Work?

ERP integration sounds straightforward in theory, but how about in practice?

The truth is: ERP integration can be easy. But it can also be an absolute nightmare. It all depends on
which method you use and how you go about it.

Choose the proper method, and you’ll connect and synchronize your ERP with all your other software
and data sources. Choose the wrong approach, and you’re looking at increased cost, complexity,
customization, and seriously cheesed-off employees (as they say in Britain.)

There are essentially three ways you can attempt to integrate your ERP:

Point-to-Point Integration

Point-to-point is the most straightforward type of integration. It’s essentially a quick connection made
between two or more endpoints (for example, CPQ and ERP, CPQ and CRM, CPQ and CAD.) But
what starts as a simple network can soon degrade into service spaghetti – an architecture that’s hard to
manage and even harder to change. Not good.

Enterprise Service Bus (ESB)

In computer-speak, a bus is a communication system that transfers data between components. With an
ESB architecture, you integrate your various systems by putting a bus between them. Each application
talks to the bus.

This degree of separation decouples systems from each other, which lets them operate independently.
You can make changes to one piece of software without risking the stability of others. And you can
plug in new solutions quickly and easily.

Integration Platform as a Service (iPaaS)

You’ve heard of SaaS – software as a service. iPaaS is a similar concept. It’s a platform for building
and deploying integration flows that connect applications living in the cloud or on-prem.

There’s no middleware involved, so iPaaS is a very flexible way to integrate third-party, partner, and ad
hoc applications. It’s ideal for teams that want to try out different SaaS tools at the drop of a hat and
expect them to work together immediately.

Why is CPQ ERP Integration So Crucial?

CPQ handles all your front-office processes like sales and quotes. ERP manages all your back-office
functions like inventory, production, fulfillment, and invoicing.

To successfully sell an engineer-to-order product, you need data inputs and outputs from both front-
and back-office sides. So, to deliver on CPQ’s promise of end-to-end engineer-to-order automation,
you need ERP integration.

Without CPQ ERP integration, information exchange has to be carried out manually. Unnecessary
human input wastes time and money and introduces human error.

With CPQ ERP integration, sales reps gain instant access to the entire customer lifecycle. They can
check on inventory levels, lead times, and live costs. Meanwhile, your ERP gets the sales information it
needs to perform tasks like managing inventory and invoicing customers.

Here are some additional benefits:

Visual product configurators receive up-to-the-second inventory information. They can promote surplus
products and calculate accurate lead times.

Quote-to-cash bottlenecks are finally unblocked. There’s no need for a back-and-forth between
departments. Everybody has access to a single source of truth with a single workflow for everything.
Automation means lower costs. More work carried out by machines means lower staff costs and fewer
costly mistakes.

Staff can be reassigned to more meaningful work. Let the computers do the menial, repetitive stuff
and let your talented employees focus on strategic, creative tasks. This helps drive up retention.

You can respond to RFQs faster. In competitive industries, you want to be the first to quote. With
CPQ ERP integration, you can quote the most complex products in seconds.

You can ramp new hires more quickly. Automation of complicated, error-prone manual processes
makes it easier for new hires to get up to speed and start delivering value.

Procurement becomes more effective. Never again will you sell a product that you thought was in
stock, or tell a customer that the product they want is unavailable when there’s a pile of it lying in the
warehouse. You get total supply chain visibility and can purchase materials from suppliers just-in-time.

Potential threats are easier to predict. The more data you have at your disposal, the more complete a
picture you have of your business. You can spot dangers on the horizon and identify opportunities
before your rivals.

Data silos are eroded. Data silos lead to redundancy, rework, and inaccuracies. CPQ ERP integration
breaks down silos, enhancing collaboration and increasing operational agility.

The Bottom Line

Is CPQ ERP integration worth it? Yes, it definitely is.

While traditional CPQ solutions were designed purely for sales reps, modern visual CPQ solutions like
KBMax benefit every department. They automate the entire engineer-to-order process, and to do that
effectively, they need continuous access to the valuable data housed within your ERP.