In this two-part blog series, Zilliant Regional Sales Director Mick Naughton is back to share the pros and cons behind the timing of pricing and sales software investment decisions, based on his experience from both sides of B2B. Read Part 2 here.
Confession time: I tend to suffer from analysis paralysis. The world is filled with so many variables and my A.D.D.-addled brain does its best to try to incorporate every single one of them into the decision-making algorithm. For example, I have giant spiral binders of data and analyst reports dedicated to a recent car purchase. In the end I bought the Jeep Grand Cherokee...mostly, because I just liked it. But I could back up that decision with a lot of information! This trait certainly has its upsides and downsides. It has made me a reasonably sound critical thinker. It allows me to consider outside-the-box solutions. I think it made me a good pricing director. Complex problems should be considered carefully, and nothing can be quite as complex as B2B pricing.
“With enough reflection, even the most straightforward problem can be turned into an unsolvable conundrum” - Anonymous
I’ve had the opportunity now to see this process in action at several large B2B organizations when it comes to making a decision about investing in enterprise software. In my case specifically, the pricing/sales optimization and management functional area. It’s a big move and requires a lot of different parts of the company to be involved. In the end there seems to be a common set of questions that determine whether a company actually pulls the trigger. These aren’t criteria on how to pick one software vendor over another. That’s a topic for another blog (spoiler alert: the answer is always Zilliant...**wink**). These are the big obstacles that usually prevent an organization from doing anything at all. It’s not right versus wrong. Each has their own merit and reasoning. But I’ve seen companies take very different approaches to each of these areas and make very different decisions.
When to Start a Pricing or Sales Project?
When considering the pros and cons of starting a pricing project, in the context of doing it before, after or during each of these cases, one fundamental question to ask is, “How broken is our current process?” Once a company is willing to look under the hood of their existing technology, they often start to see issues that might be larger than the original problem they were solving for. If the current pricing processes are in bad enough shape, a fix can often fund the investment of other systems and cause a re-prioritization of which technology to invest in first!
Case No. 1 – Pricing Before Other Technology Projects (ERP, CRM, CPQ, MarTech, eCommerce, etc)?
Many stalwart business professionals have the 1000-yard stare associated with having been through an ERP system transformation. “It changes you, man!” Any large-scale enterprise system upgrade often opens and then sometimes temporarily shuts the door to investing in pricing/sales technology. When a decision has been made to invest in another key enterprise application that usually causes the organization to take a long, hard look at several business processes. Pricing is generally a core component of any business's DNA and is always part of the discussion, particularly in the B2B space. Once the door is opened to making a change, looking at technology to improve systems to manage and optimize pricing is a natural move.
Once a general pricing health check has been done there are usually a few pluses and minuses to think about when considering whether to start a pricing project before or after other enterprise changes.
Reduce potentially unnecessary configuration
Often times, particularly with a pricing project that integrates with other backend systems (like an ERP) there is usually custom logic configuration work that needs to be done to allow the new system to generate similar in-market prices to match those of the old system. If the company is considering new pricing technology the vendor will usually consult on how those prices are currently being derived and explain how a new pricing technology will be become the system where that pricing logic is done. This allows the backend system to simply exist as the repository of these new prices for accounting purposes and has the potential to reduce redundant configuration work in both an ERP and a price management application.
Cloud-based integrations are now more portable
With the move of most SaaS providers to the cloud versus the traditional on-premise approach, the issues associated with implementing, integrating and customizing an application are much more lightweight and are in the hands of the technology provider. Work can be done outside of a customer’s internal technology stack. Connecting the systems can then take place in a much more portable manner. Connecting, de-connecting and then reconnecting to new technology is generally a much simpler task and requires less sequencing and resources.
Limited IT resources
Even though cloud-based SaaS requires less custom configuration and integration work, you do still need the engagement of IT resources. Depending on the timing, the IT organization’s project load and its technology roadmap, there are only so many IT team members available to help manage another project. A pricing technology investment might just need to wait in line.
Similar to IT resources, there is usually (always) only so much budget to go around! The case can be made that a pricing project typically pays for itself within the first year of implementation, but there are still costs associated with the investment and if those dollars are not in the budget there is not much that can be done about it.
Case No. 2 - Before a Data Cleanup?
This scenario has always felt like a combination of pragmatism and embarrassment. It’s the heart-pounding panic of a good friend wanting to stop by the house unexpected, when you have dog hair on the sofa and empty Chinese food boxes in the family room. Of course, you want to see the friend but, “Oh my gosh this place is a mess!” It’s all understandable and there are a couple of ways to prevent letting a “messy room” keep your company from making a change that can have immediate impact on the bottom line.
Get help! Your data might not be as bad as you think
Often, a problem that you think is embarrassing or unique is something your vendor has seen a hundred times before and will not only not be shocked, but will likely have resources and techniques to help get your data cleaned up and in a state that it can be worked with. Your company likely has plenty of useable data and data sparsity is a common challenge in B2B companies that can be easily addressed.
Analogous to planning a big event at your house like a graduation or birthday party, nothing motivates you to get project work done quite like a deadline! The forcing function of a specific project will often light the fire to take care of a long-neglected issue.
Garbage in/garbage out
Ultimately for a pricing project to be effective you do need a certain amount of reliable data that can be accessed. If your systems are in such a state that you know the data is inaccurate and/or you simply are not capturing the right elements anywhere, then there is no point in trying to derive meaningful insights from it. This again is where engagement and discussion with a reputable vendor is a worthwhile exercise, as they can help make that diagnosis. Additionally, one of the cleanest, most reliable datasets lies in your transactional history, which should be a fundamental data set taken into consideration from a pricing perspective.
Stay tuned for next Tuesday’s blog where Mick will share two additional scenarios: whether to implement pricing and sales software before a company re-organization and before a financial recovery or anticipated ownership change. He’ll also share some consideration around change management – be sure to stay tuned to the Zilliant Blog!
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