Monster Spreadsheet Pitfalls: Why Replace Excel with CPQ?

Lurking in your sales quoting process is the monster spreadsheet. It’s big, cumbersome and sometimes unruly. You’re team has been using this manual system to create quotes for so long now that [...]

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Lurking in your sales quoting process is the monster spreadsheet. It’s big, cumbersome and sometimes unruly. You’re team has been using this manual system to create quotes for so long now that it’s hard to imagine doing it another way.

The Excel whiz that created your quoting spreadsheet system probably thinks it’s like a hand-built Ferrari engine. He is proud of it, but it’s admittedly complex. Of course this provides some job security because he is likely the only one who can maintain the monster. Your sales people may also be comfortable – very few people like change – even though the manual configure, price and quote process is time-draining and error-prone.

Maintaining the status quo, because your team is used to it, is not always what’s best for your business. Despite being the industry standard for spreadsheets, Excel has clear drawbacks when it comes to creating sales quotes. There are some things Excel simply can’t do for sales users.

1.Setting rules. Adding new rules can be a cumbersome process. The formulas and tables can be very confusing for someone who is not updating the spreadsheets daily. So, generally, a sales department relies on an Excel guru to administer the quoting system and maintain the rules. In many organizations it takes days and lots of testing to get new rules working correctly and to make sure the rest of the rules still work too.

2.Quote approval. A big pain point for many organizations is getting the quotes out the door. Because sales users need to gather information from disparate pricing sheets and input them into the quoting spreadsheets, the organization spends more time on quote approval. Did the rep use the latest pricing sheet? Did the rep correctly select the right combination of options and service plans? Is this a special price request that needs additional approvals? Manual quoting requires manual verification of accuracy and approvals that slow the process.

3.Scalability. As businesses grow, their product and service offerings grow with them. Thus, their quoting spreadsheets keep growing and growing. For complex products and recurring services, manual quoting eventually becomes impossible to sustain while delivering accurate quotes to prospects.

4.Maintenance. Relying on one Excel whiz to maintain your configure, price and quote spreadsheets is a disaster waiting to happen. If the whiz is unavailable or on vacation, then peers will likely struggle and may be unable to figure out the calculations or unlock the spreadsheet to make updates. There is also the risk that your organization may not be able to access your spreadsheets on shared network drives because they were accidentally deleted, not backed up, or the network drive was unavailable.

5.Real-time data. Another downside of the cumbersome, manual quoting process is that you can’t see your sales funnel. Sales managers have little or no visibility into the history of quotes that reps or channel partners send to prospects or what’s in the pipeline. Without some intense custom reporting and an individual dedicated to generating these reports on a regular schedule, you’ll be hard pressed to link your quotes with an opportunity, so you can see value of your deals today.

We understand that sales organizations and administrators can view their Excel system as a security blanket of sorts. But it’s this false sense of security that slows down your quoting process and puts deals at risk. Cloud-based CPQ software can liberate your sales team from the spreadsheet monster, so you can maximize the value of every sale, quickly.

Learn more about what you can do with automated CPQ solutions and how to capture more revenue faster.

Semiconductors – Get Your Billions Back

Congratulations to the semiconductor industry for a record sales year! The Semiconductor Industry Association recently announced that worldwide semiconductor sales for 2013 reached $305.6 [...]

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Congratulations to the semiconductor industry for a record sales year! The Semiconductor Industry Association recently announced that worldwide semiconductor sales for 2013 reached $305.6 billion, the industry’s highest-ever annual total.

 

Before we relish the success of last year, semiconductor companies must ask themselves two questions:  How can we continue to improve sales (revenue)? And how can we keep more of what we’ve sold (margin)?

Studies show that for every $1B in sales, semiconductor and component companies lose as much as $50M annually to lost opportunities, poor volume and price compliance, channel over payments and other forms of price erosion. That means that these companies are potentially leaving up to $15 billion on the table each year.

McKinsey stated that the use of transactional pricing along with value based pricing can help drive revenue increases 2% to 7% for semiconductor companies. They describe transactional pricing as focusing on minimizing the leakage of revenue. This revenue leakage is caused by ineffective processes that are eroding average selling prices in the opportunity to contract process.

If you’ve read our recent #RevNews, you already know that price erosion is costing chip makers an average of 2.3% in gross margin. But there are other significant impacts to the bottom line as well:

•  9% loss because of unmet volume commitments

•  10% lower win rates due to lengthy deal cycles

•  10% overpayment due to errors in reconciling channel incentives

The issues causing this leakage are primarily inconsistent global pricing, poor price concession controls, channel incentives overpayment and unmet contractual volume commitments which are the result of inefficient and silo processes that do not provide visibility and control.

We live in a world where every penny counts. Companies spend enormous amounts of time and money trying to control manufacturing costs and increase their bottom line, only to negate that effort by unnecessary leakage like improperly discounting prices or overpaying channels.

In the next part of this blog, I will continue our discussion on revenue leakage and elaborate on the issues that are causing it. If there’s a particular area of revenue leakage that you would like to hear more about, please let me know in the comments.

You can also learn more about revenue leakage in our upcoming webinar. You’ll hear how semiconductor companies like Microchip and On Semiconductor have reduced revenue leakage in their sales cycles. Register here.