Excel vs. CPQ: Optimizing Quotation Processes for Business Growth
Excel spreadsheets are probably the most commonly used method to apply CPQ (Configure, Price, Quote). But Excel is also frequently used to make (complex) price calculations or to arrive at a quotation. Whether they are small (start-up) or large companies, whether they work in the coffee industry, industry or the construction supply industry, we see Excel in almost every type of organization. And although Excel is indeed used as a CPQ solution in many companies, at some point you will encounter a number of disadvantages. Excel has a status quo, while CPQ software strives for progress. CPQ software helps your business grow by optimizing the quoting and ordering process and taking the next steps. In this blog we discuss the advantages and disadvantages of Excel as a CPQ solution and compare them to our CPQ software: Merkato Essentials .
Excel as a CPQ solution
Excel is and will always be a powerful and versatile programme in which you have the freedom to manage your own desired inputs and outputs. With a versatility of options and formulas, it is not surprising that it is the first choice for customised configuration, pricing and quotation calculations. And all in-house without the help of software developers. Although it requires more than average Excel knowledge, the possibilities are vast. The most complex product configuration rules can be implemented using the proprietary worksheet functions within Excel.
However, there is also a significant drawback to using Excel as a CPQ tool. The main one is that there are often only one or a few people who understand the sheets (completely), who know each formula and how they are part of the big picture. That is a potential business risk. Because what if these employee(s) retire, for example? Developments then come to a standstill and the likelihood of not getting accurate information out increases.
In addition, Excel sheets are often a very labour-intensive process where version control is a real problem. Not only is it difficult to constantly keep up with product and price updates, but it is also difficult to ensure that every employee is using the latest version of the Excel. Our view, therefore, is that Excel is a fine CPQ solution for start-up organisations but that moving to specialised CPQ software then ensures that the organisation can grow further. Where all configuration knowledge is secured in one central database.
Excel ideal for start-up companies
Excel is a logical first step to apply CPQ within a start-up. This is because it is a low-cost solution since practically every employee already has a licence (Microsoft 365) to use the programme.
An overview of the advantages of applying CPQ with Excel:
- Knowledgeable and easy to use
- Cost-effective (as part of Microsoft 365)
- Fast results
- In-house with total control
However, there are also drawbacks to Excel for CPQ. By nature, a spreadsheet is designed for sequential logic. This means that the order in which a product is configured or specified is determined by the spreadsheet, not by customer needs and priorities.
An overview of the disadvantages of Excel as a CPQ tool:
- Easily creep in personal errors
- When complex configurations require necessary Excel knowledge (complex, long formulas)
- Labour-intensive
- Possible version problems with (price) updates and use by multiple people or locations
- Very quickly become large and incomprehensible for most employees
- Very confusing (for new employees)
- User interface not flexible and intuitive for users
- Not integratable into website
- Does not integrate with website
Weighing these pros and cons, Excel is an inexpensive alternative for start-ups, but real CPQ software is a logical step for further professionalisation.
The difference with CPQ software
Merkato Essentials’ CPQ software has been in development since 2004 and is currently in its fifth generation. CPQ software is often also described as a product configurator, but is actually much more than that. Although it is an important part. Unlike, for example, a customised product configurator, our software is applicable (and reusable) for practically all products and processes. But CPQ software is also quotation software and a visual sales support that can ideally be used as a guided selling tool. Unlike Excel spreadsheets, you easily link our CPQ software to ERP and CRM systems you already work with.
Whereas Excel requires the necessary knowledge of formulas, our CPQ software uses only knowledge rules and decision tables. These are created by employees who work with your products or services on a daily basis and know what can and cannot be done. Through knowledge rules (configuration and calculation rules) and decision tables, you determine which variations are and are not possible. Prices are easily added or adjusted. All this is done in one central location so that version differences can never occur again. And no IT or programming knowledge is required when setting it up.
Because CPQ software goes beyond mere configuration, price or quotation calculations, it supports your sales team or field service when talking to potential customers. It is even possible to integrate the software online so that your customers (or resellers and dealers) can request quotes themselves without the intervention of your staff. CPQ software is therefore a handy automation tool that can be used to address staff shortages.
CPQ software brings error rate down to 0%
But perhaps the most important point of CPQ software is to reduce the error rate in quotation documents to 0%. Whether the quotation is prepared by an intern, a just-new employee, a dealer or your best sales employee who has been employed for years. Quotations are always correct and your customer will have the feeling that it was prepared by your best account manager. Because all the knowledge your best account manager has is secured in the CPQ software. With many of our customers, we therefore see that the quotation process is shortened from several days to several hours. And all with only 100% producible quotations, eliminating failure costs and making apologies to the customer a thing of the past.
There is no programming knowledge required to use CPQ software only product knowledge. Implementing this knowledge takes only a few weeks, for any type of product. Although the implementation of a configurator is different for each company and may differ by industry, the benefits are the same in any industry, regardless of the application:
- Visual purchasing guidance for customer
- Professional appearance
- Guaranteed correct offers (quotations always producible)
- Always instant insight into all standards and limitations of all products or services
- Complex products are displayed simply and clearly
- Control over the content of the quotation document
- Possibility of online configuration (and sales)
- Turnaround time is significantly shortened (from quotation to production)
- Lower failure costs
- Easy to expand
- Direct insight into costs and delivery times of variations
Are you curious as to whether your company is already ready for a CPQsoftware? Through our simple configurator-checker you will have an answer within minutes! If you are already sure that CPQ software is going to be your next step, please contact us to discuss the possibilities or request your own demo environment to test Merkato Essentials.