A Look Into CPQ vs. QTC

Have you decided that it’s time to swap manual processes for a software solution that will streamline your sales processes, decrease order-related errors and reduce revenue recognition delays? As part of your decision-making processes, are you comparing configure-price-quote (CPQ) to quote-to-cash (QTC) to determine which solution would be best for your company’s needs? If so, look no further as we look at the definitions of CPQ vs QTC that are often used (but misinterpreted).

Defining CPQ vs QTC

What is CPQ?

A suite of applications that provide an integrated set of software applications supporting the configuration, pricing and quote generation activities that accompany a solution and negotiated selling. CPQ application suites are also deployed to support self-service sales environments, including business-to-consumer (B2C) and business-to-business (B2B) sales environments. CPQ systems typically include pricing engines, proposal generators, quoting systems, and rules or constraint engines, and are complemented by approval and authorization workflows.

What is QTC?

An information technology term for the integration and automated management of end-to-end business processes on the sell side. This includes product (or service) configuration, pricing, quote creation and it’s negotiation, contract lifecycle and order management, invoicing, and payment receipt.

As we dive a bit deeper into both of these solutions, the first thing that stands out is that both CPQ and QTC cover a broad scope of complex business processes. What is also evident is that CPQ can be considered a component of QTC. To illustrate, we’ll explore the similarities and differences of CPQ vs QTC.

CPQ vs QTC: Similarities and Differences Explained

Although the terms are often used interchangeably, CPQ and QTC are different solutions. You may be wondering – when one of the processes ends does the other pick up where it left off, or is there an overlap between the two solutions?

CPQ Processes

An integral component of the QTC process, CPQ is often used as an extension of your customer relationship management (CRM) and enterprise resource planning (ERP) systems. Its primary function is to automate a business’ pricing, product, quotation and approval rules, and consists of:

1. Configure: An ideal or the right combination of products and services is created (configured).
2. Price: Discounts, promotions, and bundles are applied to the configured products and services.
3. Quote: An error-free quote is generated.

QTC Processes

Described in a varying number of steps, we’re going to use the eight processes that take you from the opportunity through revenue recognition to renewals. These steps include:

1. Configure: An ideal or the right combination of products and services is created (configured).
2. Price: Discounts, promotions, and bundles are applied to the configured products and services.
3. Quote: An accurate quote is generated.
4. Contract: A contract is created, the terms are negotiated and the contract is executed.
5. Order fulfillment: The order is received, processed and the products/services are delivered to the customer.
6. Billing and invoicing: The bill is finalized and an invoice is sent to the customer.
7. Revenue recognition: Payment is received and revenue is recognized.
8. Renewals: Of significant importance to SaaS organizations, this step manages customer retention and recurring revenue.

As you can see the first three QTC processes are configure-price-quote, making CPQ a subset of QTC. Essentially, QTC adds functionally and business processes to CPQ. This is the first of two key differences.

The second difference is in the level of implementation difficulty. While both require integration with CRM, ERP, as well as other systems; business changes required to implement CPQ are significantly less than for QTC – however, implementing a QTC could have more potential benefits.

Do I Need a CPQ or QTC Solution?

From a CPQ perspective, take a look at your sales processes and ask yourself and your sales teams the following questions:

• Is the sales cycle too long or is it becoming increasingly lengthy?
• Am I losing sales because of manual process delays?
• Are their errors in the quotes provided to prospects and customers?
• Are we trying to build a recurring revenue stream?
• Are all sales quotes manually reviewed and approved?

If you answered yes to some or all of the above questions, a CPQ solution would be beneficial. Before making the final decision there are other questions you need to consider. In addition to the five above, be sure to get answers to:

• Do prospects and customers need to print, sign, scan and return contracts, resulting in delays?
• Are order approvals taking an excessive amount of time?
• Are orders aging in our ERP system?
• Are incorrect or incomplete invoices being sent to customers?
• Are other departments like accounting and fulfillment left out of the loop?
• Is revenue leakage on the rise due to unpaid invoices?
• Are we able to effectively identify expiring contracts or upsell and cross-sell to current customers?

While a CPQ solution helps eliminate sales obstacles that affect your ability to quickly turn prospects into revenue-generating customers, QTC spans the entire sales cycle. It not only reduces sales cycle downtime, but enhances efficiency across all of the QTC processes – improving accuracy and customer satisfaction, while reducing customer churn.

The question remains for CPQ vs QTC, which one is the right choice for your business? Once you have answers to the above questions, you’ll be in a better position to select the right solution. One thing is clear, regardless of your decision the business benefits will be substantial. In fact the Aberdeen Group found that businesses that adopted CPQ achieved:

• Higher proposal volumes (49%)
• Increased number of reps achieving quota (36%)
• Shorter sales cycles (27%) Q
• Improved ability to create complex, accurate sales quotes in real time (21%)
• Higher conversion rates (17%)

Gain Total Financial Control

In today’s dynamic business environment, you need to strike a balance between speed, accuracy, and innovation when considering CPQ vs. QTC. By automating these tasks and business processes you’re able to streamline the entire billing cycle, reducing manual errors and minimizing revenue leakage. All of which gives you the freedom to innovate and gain a competitive advantage.

BillingPlatform provides a robust cloud-based solution that enables you to easily automate quote-to-cash processes. With our unmatched agility, you’re able to run your business with greater efficiency, accuracy and control to speed sales cycles, create better buying experiences, and close more deals faster to rise above the competition. Reach out to our experts for more information.