How Much Is Your CPQ Costing You?

How Much Is Your CPQ Costing You?

When almost all CSPs (96%) experience problems with configure price quote tools, it’s easy to resort to a “Well, no CPQ is perfect” frame of mind.

The truth is, you’re settling.

In a recent survey by Appledore, 85% of respondents said their existing CPQ systems meet fewer than three-quarters of their requirements. 60% said their CPQ systems meet fewer than half of their requirements.

Think about the RFPs you’ve put out for compliance or security tools. Would you even entertain a vendor that only meets 50% of your requirements?

For a tool that has a direct impact on your revenue, that wide of a gap is unacceptable. And the cost of letting it slide will show up in missed bids, eroded margins, and sinking retention.

Learn just how much your “good enough” CPQ is impacting your business growth and profitability, and why investing in the right solution needs to be a business-level priority. (Then, use our CPQ ROI calculator to estimate exactly how much more revenue your business could bring in with a CPQ built for telco.)

Most CPQs Are Failing Telcos (and It’s Only Going to Get Worse)

RevOps leaders know they need some kind of CPQ. Indeed, 74% say their CPQ platform plays a crucial role in supporting their strategic goals. But it’s clear by now that standing up just any CPQ doesn’t cut it.

As TelcoTitans points out, CPQ systems came on the telco radar around 15 years ago. Since then, many operators have implemented two, even three, CPQ systems, and none of them have panned out. 

A tool that was supposed to make life easier for CSPs has launched them into a world of pain. Instead of enjoying speed and precision in quoting, they got guessing games that compounded into tens of millions of dollars in lost revenue.

After feeling the impact of multiple failed implementations, it would be reasonable to assume that no CPQ is up for the task of telco complexity. But this is a solvable issue: the root cause of the failure is structural. The real issue at hand is that the foundations of too many telcos’ CPQs are generic, and that has held them back. Many standard applications are useful for consumer or SME uses, but not up to the job for enterprise.

It’s something we hear over and over in conversations with prospects: There’s a belief that enterprise pricing and quoting is an impossible problem, because of that earlier experience.

As a result, many operators have settled for an inadequate generic CPQ, or fallen back on manual processes. What they may not realize is the issues they’re living with are only going to get worse as telcos cater to the B2B enterprise. Today, over a quarter (28%) of CSPs’ enterprise revenues come from products beyond connectivity, and 61% of the largest deals have multiple beyond-connectivity elements.

If that trajectory continues, it means more products get sold, and more services get sold. That also means more SKUs (and bundles of SKUs) to configure, more partner dependencies to coordinate, more pricing variables and discounts to govern, and more regulatory hoops to jump through. If generic CPQs were costing CSPs before the B2B era, then the looming surge in growth and complexity is a neon warning sign to fix it, and fix it fast.

The Real Business Costs of the Wrong CPQ

If the downstream effects of a generic CPQ system still feel far away, then you’re likely hearing any number of reasonable defenses:

“We just stabilized. Don’t make us relive implementation.”

“Too many departments have to sign off. It isn’t worth the pain.”

“The business case is fuzzy. This feels like a nice-to-have.”

“Needing an enterprise-grade solution would be a great problem to have, but we're not there yet. We can revisit if an RFP forces the issue.” 

Before making the case to invest in yet another CPQ system, it’s critical to understand how your existing solution already harms telco revenue, margin, and growth. A CPQ that wasn’t designed for telco complexity costs CSPs the most in three key areas:

Revenue you never realize

Revenue leakage

It may not feel like you’re losing money because it’s not all draining all at once, and you don’t have the tools to see it. A large Australian operator, for example, didn’t realize they had AUD $30 million (USD $20 million) in unbilled services until they underwent an audit. Changes during fulfillment were never reflected in commercial terms—and therefore were never invoiced.

Stories like that aren’t uncommon. According to new research from Omdia, average revenue leakage is at 9% ($40 billion globally) of enterprise revenues, and 45% of CSPs report even higher percentages due to CPQ issues.

That’s because generic CPQs are built for one-time, point-in-time deals, which B2B telco deals are not. Customers might want to add a managed security service three months in. Your rep may have given a six-month promo to close the deal, after which, new pricing should kick in.

Yet nearly half (48%) of CSPs say their current CPQ can’t handle in-flight order changes well. If those adjustments aren’t recorded and pushed downstream to billing, no one is going to manually catch every one, and the money you’re owed slips through the cracks. Asking for it back once you catch your mistake certainly won’t increase customer trust (more on that next).

Lost deals

Over half of CSPs take over three days to return a quote, and a third say they frequently miss bid deadlines. Every delay in the quote-to-cash cycle is an opening for a competitor to swoop in.

And slowness isn’t even the only factor contributing to lost deals.

48% of CSPs flag qualification inaccuracies as a top issue with their current CPQ system, especially when dealing with complex, multi-site orders (a given with B2B customers). A fast quote that gets feasibility wrong falls apart, undoing weeks of work to earn a prospect’s confidence.

Margin you can’t protect

Limited visibility

Over a quarter of surveyed CSPs cited lack of visibility into margins in real time as a problem.

If you don’t know how certain products are performing, where customers have a gap in coverage or are hitting capacity limits, and which contract terms are working against you, you can’t:

• Decide where to invest R&D money

• Identify upsell/cross-sell opportunities

• Add safeguards to your sales process

• Renegotiate accounts bleeding margin

Every quarter without that line of sight puts your company further behind.

Growth you can’t scale

Customer churn

According to Omdia’s survey, 75% of CSPs don’t feel their CPQ captures all client needs during the ordering process. Which means most enterprise deals are going into fulfillment with something missing.

Months later, when the customer’s procurement team reviews invoices line by line, something doesn’t add up. Or worse, a product isn’t available when someone tries to use it. Enterprise customers are spending significant budget on these contracts, and they expect every line item to be invoiced for and delivered exactly as promised.

They also expect intuitive upgrades and renewals. Over three-quarters of CSPs rate self-service as important—after all, it’s what they get from other cloud providers. Keep missing on either front (what they bought or how they bought it), and they’ll eventually walk.

Operational drag

The ideal quoting system serves as a single source of truth for every product and service you sell. But most CSPs work with multiple catalogs from multiple vendors, each with its own restrictions, making catalog-driven ordering nearly impossible.

That won’t stop sales from selling the way they want to, though. They can (and will) sell what your CPQ can’t quote, and it’ll come back to bite you later.

Almost half of CSPs say their approval processes are problematic, and 84% say their CPQ can’t keep up with compliance needs. Every deal that circumvents the catalog triggers a round of manual work and risks introducing regulatory and contractual errors that can lead to penalties or back-billing disputes.

Doing Nothing Is An Expensive Decision

A CPQ imagined around someone else’s pricing model might be “good enough” as an add-on, but that’s all it was ever meant to be. 

You can’t grow your business on the back of a band-aid. Specialized CPQ engines are fully equipped to support telco operations in the long run, unlike generic, one-size-fits-all tools.

If your CPQ still pushes non-standard deals into Excel and Word, you are paying twice: once in deal desk effort, and again in post-close clean-up across billing and provisioning. The longer you wait to act, the more the costs of an inadequate CPQ add up—and the further away the B2B opportunity drifts.

Want to quantify what the upside of moving to a more sophisticated CPQ could look like for your business? Use our CPQ ROI calculator to get a concrete read on potential savings and dive into our buyer’s guide to know exactly what to ask in a vendor evaluation to get the CPQ you need.

Build Your Case for a Telco-Specific CPQ System

Treat CPQ modernization as an ROI initiative. Use CSG Quote & Order to reduce cost-to-serve by keeping complex quotes in-system, containing exceptions, tightening approval cycle time, and improving quote and order accuracy before billing and provisioning get pulled into rework.

Success story: With CSG, after unifying 26 national operations into one CPQ platform, a top 10 global operator configured 80% of complex use cases in the first week, translating to €200M+ in projected annual OpEx savings.

Omdia just released new research on the business impact of the wrong CPQ for telcos. Join us for a webinar with Camille Mendler, Research Director for Telco B2B at Omdia, where we’ll share the most compelling findings and discuss real customer examples of what “good” looks like in practice.