CPQ for MedTech
Author: Peter Zimmermann, Customer Success Europe, Model N
Have you ever sat in a medical examination and wondered about the machine being used (X-ray, ultrasound, scan, you name it)? That piece of machinery has come a long way through a very global supply chain, starting out with configuration, Pricing and Quoting (CPQ), a process that has many quirks when used for Medtech.
- Let’s start with Configuration – Aside from the probes that go on you and into you, as well as the knobs and dials the examiner uses, these devices create data and lots of it: Images, recordings, vital health statistics, etc. Behind the machines are computer servers with their own software to store, analyze, secure, and grant access to data. So we need to configure the machine’s options, the server options and dimensions, the software options, software compatibility (hardware, operating systems, versions, patches), and the installed location specific parameters. In short, it is a long list so configurations for MedTech can get complicated quickly. Three things to watch out for: Ease of Use, Ease of maintenance, and high performance are critical for any configuration engine being used.
- Next, we get to Pricing – Through taxes and medical insurance contributions you’ve paid for part of that machine. Governments, Health Authorities and GPO’s have been merciless in demanding better prices and manufacturers are having to be very inventive with their pricing schemes. That machine and the servers behind it may have been purchased outright (capital), rented, paid on a usage basis, and more and more on an outcome basis. The various components of hardware, software, and services that go into pricing can go deep with a lot of different costed elements. The seller needs to take all of the costed elements into account to ensure a fair price with a reasonable revenue and margin. Functional depth in the pricing and margin calculations are critically important to watch out for.
- The poor seller has to use all of this information to get quotes out rapidly and accurately to their customers. Given the potential configuration and pricing complexities, that is no small task. The quoting process needs to be easy, hide supply chain complexities, provide margin analysis, and rapid approval chains to compete. Have you provided your seller with version 278 of a highly sophisticated and highly-complex spreadsheet to do their work? When is the next version due? Can they even keep up? Given the complexity and rapid change, central quoting functionality with strong mobility support is needed to keep up.
We will explore different aspects of configuration capabilities, pricing designs and quoting processes in future blog entries.
Want more information about how Model N can help? I invite you to read the ebook “Six Key Buyer Trends Reshaping MedTech Selling and Pricing” written by Christopher Provines, CEO Value Vantage Partners and Model N.