In the previous blog, we learnt about the pioneers who defined the category, coined the term CPQ and were the thought leaders of the middle office platform as we know it today. In this blog, we will discuss the course charted by the key contenders from growth to maturity, market consolidation, and future opportunities.
Aftermath of Mergers and Acquisitions on key contenders
As business goes through its lifecycle stages in the initial stages the valuation may be built around the story, but at some point, the newer Niche players /challengers tend to win audience with more compelling stories. Getting into the maturity stage a company such as Apttus, must eventually show more with OKRs such as earnings per dollar, citations in analysts charts and quadrants. Since 2019, Salesforce CPQ has steadily climbed the charts as represented by the analysts.
Like any organization in an industry. the differentiating factors on the battlecard become weak after a while when competitors adopt the same capabilities and options on their roadmap. Additionally, some strategies may not payoff or be difficult to change because of the organization’s culture.
Cathedral and Bazaar Approach to ecosystem
Apttus had a cathedral approach to building an ecosystem for professionals to acquire skills through instructor-led courses and certifications. They ensured strict quality control by offering courses exclusively from their platform. This made possessing those skills a niche that only a few could possess.
Salesforce, on the other hand, took the Bazaar approach to developing its ecosystem by investing heavily in Developer experience and nurturing its ecosystem. They also enabled partners with reasonably priced certifications, exhaustive free pithy feature documentation along with advanced course material, and trial developer sandboxes with licenses provisioned for learning and development. Additionally, they had better partner success management.
All roads converge
Many product managers changed companies during these tumultuous years, benefitting Steelbrick, now Salesforce CPQ.
According to reports, even after investing in Azure, Apttus’ major revenue stream still came from Salesforce. Therefore, they shifted their focus back to the Salesforce native roadmap and released features and fixes to increase stability in recent years. Apttus tried to improve their branding by buying Conga and rechristening Apttus as Conga CPQ.
To understand why Apttus tried to break free from Salesforce but had to eventually refocus, we must understand the risks of the Platform play. Leveraging platforms lets us leapfrog with increased speed, due to the large ecosystem and reduced initial marketing and sales effort, but it comes with inherent risks. When Amazon, Walmart or Costco decides to enter a new product category, they encounter less moats around your business, they have the data available with them from merchants and customers who use their platform as a gateway. After analyzing customer behavior and preferences, including their search history and preferred attributes, it is highly probable that Amazon can more accurately position, package and price a product. All incumbents who made their early business gains by quickly increased market cap using the platforms to build such desirable products capabilities with ground up research potentially risk losing their early mover advantage, by a hastened progression into Middle Ages in a platform play. As we can see with amazons own branded products taking over the previous best sellers or Costco’s own brand undercutting erstwhile bestseller, with reasonable quality at everyday lowest price.
When Salesforce decides to enter a market, either by acquisition or otherwise, the incumbents should have a plan A/B in place to mitigate any potential risks. This strategy could either involve reinventing the market, disrupting it with technology, repositioning or repackaging to remain competitive.
Challenges and Opportunities Ahead
All gaps have not been closed yet. There are complex areas of collaborative quoting and protecting visibility of pricing and discounting between collaborators who are working on a quote for same customer. There are gaps in helping to strategize about positioning finding, ideal customer profiles (ICP) and right packaging. There are gaps in transitioning from older sunset packages and products to newer product and package introduction considering price protection and contractual commitments while doing these transformations.
There are traditional challenges in maintaining the configuration and pricing over time, especially when migrating existing customers. These challenges range from sunsetting and new product introduction to transformational change across product lines. Moreover, moving existing customers from capability-based packaging and pricing to consumption-based models can be a complex process.
And in future we are going to see further innovation on an off platform and more ecosystems play with external configurators, pricing plugins and other snap-in for performance or targeting any other niche. That Niche can be unique to the industry such as custom configurators or compliments the shortcomings of the platform such as inability to provision resources cheaply to handle higher computational loads for large carts, complex bundles, cross family subsidies or cross asset base subsidies or real time requirements in discount guidance.
Read the other blogs in the series: Part 1 Advent of CPQ , Part 2 The Evolution of CPQ on Salesforce and Beyond , Part 4 The Evolution of CPQ on Salesforce and Beyond.
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