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CPQ software helps Hitachi Data Systems reduce pricing complexity

Faced with products and services that were growing in number and complexity, Hitachi Data Systems implemented CPQ software from FPX and improved its pricing and proposal process.

As its order-to-sales process became more complex, Hitachi Data Systems Corp., as many other companies have, turned to configure price quote (CPQ) software to help manage and automate the process.

Hitachi Data Systems, a leading manufacturer and distributor of high-performance storage systems, found that its growing catalog of products and services outstripped the ability of its legacy CPQ software to handle the new demands, according to Debbie Pinkston, Hitachi Data Systems' vice president of business operations for global sales.

"We sell storage, servers, network devices, as well as a lot of software, and they're all co-mingled, so the [CPQ software solution] would have to include everything," Pinkston said. "We have quite complex configurations that we have to put together, and we need the back-end engine to be very robust because we need users to be able to make simple selections on their interface, and then have the system add all of the appropriate components to fit what they're trying to do."

The old CPQ software can't keep up with the changes

Hitachi Data Systems' existing configurator system from Comergent didn't have the ability to keep up with the new complexity, and Pinkston explained that a CPQ change was desperately needed. The old system used more than 30 price books to manage pricing around the world, and it required too much manual effort to produce quotes and for customers to get the correct pricing.

Pinkston said it could take anywhere from 30 to 55 days to complete the order-to-sales process, with the lengthy process leading to revenue loss and order errors.

The CPQ software market is fairly crowded with vendors, so Hitachi initially sent requests for proposals to 11 vendors, eventually narrowing the list to three finalists -- FPX LLC, BigMachines (an Oracle company) and CallidusCloud. From there, Hitachi had engineers from each finalist work for a week on a particularly complex configuration to see how they approached the problem and how they worked with the Hitachi configuration team, with FPX emerging as the strongest candidate.

"We actually didn't think FPX was going to be in the running because they're a small company, but BigMachines never could get what was then our flagship product configured," Pinkston said.

After choosing the FPX CPQ software, Hitachi began the process of getting all of the various product and service configurations into the system. This eventually took almost two years to complete because of the complexity; for example, one system alone might have eight storage devices, up to 128 blade computers, within which many networking devices were nested.

"We have a product structure -- hardware, software, services -- and different rules for each of them," Pinkston said. "Most of our hardware is priced one way, and the services are either a standard percent discount from list or they might be percent of net also. So it's a lot of complex pricing, but we set up each code with attributes that FPX can read and then determine how they're going to set up the price for that."

Eliminating manual effort speeds process, reduces errors

Hitachi was able to eliminate more than 30 pricing books, and now relies on just two master books in FPX, one for North America and one for EMEA. The productivity gain from this alone has been huge Pinkston said, because any pricing changes made in the two price books cascade down to the country levels automatically.

Reducing hours and hours of manual effort has resulted in much faster response times and better flexibility in the proposal process. Customers often want to see a quote in various term lengths (36, 48 or 64 months, for example), which, in the old system, meant manually changing each configuration in the system.

"Now, with the FPX UI screen, you can just go in and it pulls up all the configurations without having to go back into the configurator and modify the term or the service level," Pinkston said. "You push a button and it redoes everything, so that saves tons of time. That's very cool because it's so common and it's not hard to do, but it's just tedious. Now, you can just do it on one screen and give your customer those different versions so they can easily see it on the proposal."

Remember that old order-to-sales process that took 30 to 55 days to complete? Using the FPX CPQ software tool, Hitachi got that down to a mere one or two days.

Hitachi runs FPX as a software-as-a-service application, Pinkston said. The front-end UI is accessed through Salesforce and it connects to Oracle on the back end.

FPX company size a concern

The main concern with FPX as a CPQ software vendor is the company's size, according to Pinkston. They must compete against vendors that have much deeper pockets and resources, like Salesforce, Oracle and IBM.

"They've been able to do a lot for us, but I've had to hammer them [into] getting more service people because our business is always changing and [has had major changes in methodologies that needed to be taken care of]," she said. "They've always been able to accommodate us, but we'd like them to be faster."

However, Pinkston noted that company size can be a double-edged sword, as the larger companies may not have the same responsiveness or level of attention.

"We've had a lot of problems with Oracle ongoing, and they've said 'We just don't do that,' so you work around what their standards are," she said. "So there's give and take, and you get to have more influence, so we hope they grow and prosper, as we feel like we get a lot out of the tool."

Versatility, not size, is what sets FPX apart as a CPQ software vendor, according to Dave Batt, FPX CEO.

"We're not tied to one platform -- SAP, Salesforce, IBM or Microsoft -- and we're platform-independent because our clients are," Batt said. "They may run Salesforce in the front office and SAP in the back office. They may not run one CRM [customer relationship management], but have 16 different orgs from one vendor and two from another vendor, and have Oracle run the back office, or Microsoft Dynamics or Infor."

FPX is poised to take advantage of new market requirements for CPQ software, Batt said.

"CPQ is starting to hit its stride as a business framework," he said. "This was not the case three or four years ago. But now you've got global leaders in their fields that are looking at setting up CPQ as an enterprise standard, and a lot of this is being driven not by the IT, but by fueling their digital transformation strategy."

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