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Tec vendor note apttus

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Apttus CPQ

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Tec vendor note apttus

  1. 1. VENDOR NOTE . UPDATE ON APTTUS: A LEADER IN CPQ AND QUOTE-TO-CASH By P.J. Jakovljevic, TEC Principal Analyst www.technologyevaluation.com Technology Evaluation Centers
  2. 2. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 2 Update on Apttus: A Leader in CPQ and Quote-to-cash Apttus is a cloud software company that has risen fairly quickly from relative obscurity to being a prominent fixture at salesforce.com’s major events—the Dreamforce mega conferences and Salesforce1 world city tours. Needless to say, the company has also grown and expanded its operations and functional scope in just a few years. Apttus is based in San Mateo, California, with additional offices in London, UK; Bozeman, Montana; and Ahmedabad, India. In 2014 it added about 350 people to its headcount, now nearing 550 worldwide, as well as 95 new client logos to its install base of over 300 corporations. It is not surprising that its name is derived from Latin words meaning “capable” and “speed.” Speed and agility (responsiveness) in sales, service, and marketing (and entire business, if you will) are indeed the new business imperative. Apttus was founded in 2006, and its first solution was cloud contract lifecycle management (CLM) software, in part owing to its founder’s involvement with “old school” contract management software vendors Nextance and iMANY. The company was started on its founder, chairman, and CEO Kirk Krappe’s credit card, quickly ringing up an outstanding balance of $70,000. But in the first quarter of the company’s existence it closed five deals. The last one was a million dollar deal and the company was off to the races. Apttus is a software and product company that was born in the cloud, multi-tenant on day one. This is a big deal, because with configure, price, quote (CPQ) software (which the vendor will tackle along the way) one can dig a hole with customizations and total cost of ownership (TCO) spiraling out of control. This situation has dearly cost customers of other “cloud perhaps” CPQ vendors who came on board in the late 2000s and couldn’t upgrade, and were then faced with either a costly re-write or switch to another provider. Apttus raised no capital until September 2013, salesforce.com being one of the three investors. To date, every dollar spent by Apttus has been generated as revenue by the company, while the capital raised is still in the bank. In 2007, Apttus was interested in building a CPQ application, but salesforce.com’s product management team announced that they were adding quoting capabilities to Sales Cloud, so Apttus didn’t do anything at that time. A year later, however, salesforce.com’s release turned out to be very rudimentary and Apttus started building its CPQ solution, which launched in 2009—later to market than others, but quickly catching up (see Figure 1).
  3. 3. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 3 Figure 1. Apttus’ Genesis The reason to build everything on Force.com (and later on the Salesforce1 platform) was largely predicated on Apttus staffers’ past frustrations at Oracle, Apple, Clarify, Nextance, and other old school enterprise software places where building, delivering, and maintaining software was a nightmare. Neehar Giri, President and Chief Solutions Architect (i.e., Apttus’ technical brains), built a contract management app over the summer of 2006 on Force.com, and realized that the platform was really well built for third-party developers. In addition, Apttus could build a company without outside capital because it could leverage salesforce.com’s global cloud-based infrastructure, and only had to pay salesforce.com when a new customer came on board. So the cloud model worked for delivery, and the business model was clearly effective and capital efficient. Over the years, having 500,000 users in 50 countries, with customers like GE Aviation, GE Power & Water, GE Healthcare, HP, DSV, Global Foundry, Motorola, Phillips 66, Bobcat, Spark New Zealand (previously New Zealand Telecom), Verizon, AT&T, Telenor Group, Covidien, McKesson, American Express, Delta Airlines, etc., speaks to the strategic value of this decision eight years ago. Figures below depict Apttus major clients by vertical industries (Figure 2), as well as the top 10 reasons why these customers have chosen the vendor (Figure 3).
  4. 4. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 4 Figure 2. Apttus Major Customers Figure 3. Why Apttus Contract Management Stronghold Given that Apttus and salesforce.com seem to be joined at the hip, salesforce.com is also a prominent Apttus CLM reference customer after deploying it in the late 2000s. Here’s a webinar regarding the solution deployment and its use by salesforce.com.
  5. 5. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 5 Considering Apttus’ origins in CLM, it is only logical that the majority of its 300 customers (about 60 percent) use that solution. Users can conveniently redline contracts and collaborate in Salesforce Chatter directly from Microsoft Word (see Figure 4). They can also update contracts quickly with pre-approved language from their legal playbook. Nifty dashboards help them analyze contract workloads, cycle times, contract value, and more for all agreements (see Figure 5). Additionally, Apttus’ patent pending (12 patents) X-Author technology enables Microsoft Office to be a user interface (UI) with full interaction and control between salesforce.com and Microsoft Office. Figure 4. Apttus CLM Figure 5. Apttus CLM Analytics
  6. 6. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 6 Apttus Quote-to-cash Portfolio During the last several years, Apttus has surrounded its original CLM solution to become a Quote-to-Cash (QTC) software company that can cater to the vital business process between the buyer’s interest in a purchase and the realization of revenue. Cloud re-platforming of the IT infrastructure is creating opportunities for salesforce.com and Apttus. A modern CIO mindset is that SAP, Oracle, and other enterprise resource planning (ERP) products are Systems of Record, whereas salesforce.com and Apttus are Systems of Engagement. As Figure 6 (below) depicts, in addition to the aforementioned CLM and X-Author, the QTC applications include CPQ, Renewals, and Revenue Management. The system supports complex renewals, including add-ons, co-terminations, swap outs, and end of life (EOL) situations. The enforcement of increase clauses during renewals can result in addition of significant revenue. There is a recommendation engine for up-sell, cross-sell, and renewals. Advanced deal management provides insight into impact of potential changes allowing for increased control and deal value. Figure 6. Apttus QTC Portfolio There is a support for complex pricing structures and deal ratings for global sales organizations, with multiple price lists based on customers, channel, regions, etc. The system supports a multi-dimensional pricing matrix and multiple price types including one-time, recurring, usage-based, services, contract-pricing, etc. Also supported are pricing tiers, ramps, pricing adjustments, pro-ration/co-termination charges, over-rides, quote re-pricing, and more, including approvals for products or pricing. Apttus has also been doing price guidance/prescriptive pricing based on historical data and/or rules via machine learning.
  7. 7. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 7 Figure 7 (below) shows X-Author for Excel, which makes it fast, easy, and safe to use Excel to update QTC information, including pricing. Apttus considers X-Author a competitive advantage because Excel and Word users can use it as an alternate UI for their CPQ or QTC processes. They can update multiple objects in Office apps while observing all the security controls and rules defined in salesforce.com. Moreover, X-Author currently offers the offline mode with replication capabilities, given that the Salesforce1 mobile platform is not there yet. Competitive CPQ Offering In a matter of just a few years, Apttus has developed complex CPQ capabilities that include product catalogs, groups, hierarchies, entitlements, nested configurations (product bundles and sub-bundles), solution selling (products and services bundles), and guided selling at any levels with intelligent constraints to reduce sales errors and customer confusion. There is an attribute-based search capability and asset-based ordering for existing customers. The system provides application programming interfaces (APIs) for “headless configuration” and custom UI to enable the automatic configuration of customizable products that are based on a promotion definition. Headless configuration can work with or without the UI. When you don't have a UI, you are using the APIs to validate the configuration. This is especially useful when a quote has been sitting for months and the customer is ready to finally sign the purchase order (or there are changes to existing in-flight orders). This capability also allows non-quoting apps such as back office systems to recheck orders via a UI. It also helps in doing batch validation or individual validation of inflight orders or quotes. You can use APIs to run through the options to confirm that what you quoted, say, six months ago, is still valid or not. In addition, a stateless engine allows companies to scale very efficiently since the session can be set to any server and processed (Google and Facebook are stateless engines and scale very well). If a session fails or hardware fails, a user can pick up and proceed seamlessly once it is back. If it is not stateless then one won't be able to do hot failover switching (to prevent downtime) easily, which is needed today for 24/7 operations for global companies. For its part, declarative programming makes it easy to specify the constraints and rules, especially the complex ones for large companies with lots of products and rules. It makes it easy to create a "truth table" or a set of valid solutions amongst millions of options with support for inclusion, exclusion, compatibility, resource- based constraints or rules, etc. These constraints and rules can fire in any direction, as opposed to a procedural way to write lots of “if-then-else” statements. If you have a constraint engine then you are modeling, executing, and maintaining in a very efficient fashion. In Apttus’ case, there is no proprietary
  8. 8. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 8 language—everything is click, drop down, and select. Companies need data- driven modeling with clean separation between customer data, rules, configuration engine, and UI to achieve this. Many CPQ vendors never got there and thus their upgrades were very difficult, and scalability and system performance at the end of each quarter (when sales orders would typically flood) was very difficult. Last but not least, as Figure 8 displays, there are rich visualization capabilities via integration with leading computer aided design (CAD) and product lifecycle management (PLM) systems to render 2D and 3D visualizations, as well as schematics/blueprints for more engineered products. There are integrations with SAP, Oracle’s Agile PLM, Dassault Enovia, PTC Windchill, Arena PLM, SolidWorks, AutoCAD, and more. Figure 8. CAD Viewer Integration As many other CPQ vendors do, Apttus too has some joint customers with SAP. Thus, Apttus can import product models built in SAP Variant Configurator (SAP VC) into Apttus. The product models actually map well given that the rules in SAP VC can be convoluted. SAP VC is good for managing the fulfillment of ordered products and managing the manufacturing bill of materials (MBOM). However, it does not have the flexibility to support bundles, pricing structures, and other creative ways of packaging the same products in different ways. It was designed for product companies and does not work well for services-based companies such as telecom, financial services, or subscription business models. It is also not a customer-friendly or sales-friendly configurator. SAP has built its own Internet Pricing & Configurator (IPC) as its front-end configurator. Still, SAP VC customers don’t make changes often because it is not easy, and they are also struggling with stock-keeping unit (SKU) proliferation. Those customers want Apttus to pull the product or pricing master from SAP and then use the flexibility in Apttus’ solution selling (bundles of bundles or nested
  9. 9. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 9 models) and comprehensive pricing capabilities for products and services, selling through partners, etc. They thus consider Apttus their new “front office” for its speed, flexibility, and being customer centric. Strong CPQ Attracts salesforce.com As Well Not surprisingly, salesforce.com selected Apttus for corporate-wide CPQ needs in 2013. Previously, salesforce.com had a heavily customized CPQ tool (Comergent by IBM) that was neither efficient nor fully executed in the cloud. The vendor needed a solution that could adapt to continuing company acquisitions and rapid growth, given that the former CPQ solution prevented 5,000 or so reps from effectively selling new products and company growth. Apttus was selected not only for already being the CLM solution at salesforce.com and for being 100 percent native on the Salesforce1 Platform, but also for a proven success with complex and large product catalogs, the ability to maintain and manage the entire QTC process (including constant and rapid changes) without requiring proprietary coding and developer involvement, comprehensive functionality and advanced usability, and being multichannel for both direct and online sales. In addition, increased collaboration from Salesforce Chatter and Microsoft Office is enabled by Apttus X-Author for Chatter. At the recent Dreamforce 2014 conference, there was a QTC Session with Apttus CMO Kamal Ahluwalia and Meredith Schmidt, SVP of Revenue Operations at salesforce.com, entitled “5 Ways Salesforce Closes Complex Deals, Anytime— Anywhere.” Those five ways that Apttus helps salesforce.com close deals are as follows: 1. Automate the QTC process 2. Add Deal Guidance to help sales people 3. Add E-Commerce to help customers and partners self-serve and find and configure the right products online 4. Mobility: Explore data, uncover new insights, and take action instantly from any device (see Figure 9) 5. Machine Learning: Data-driven dynamic guidance for deals up-selling/cross- selling Some competitors might point to the fact that Apttus CPQ is not yet live at salesforce.com after a lengthy project, but Apttus claims that its solution is ready—it is just that salesforce.com has postponed the go-live date due to fiscal year end consideration. Also, some competitors claim that Apttus is complex because the solution has some custom objects. But Apttus has a complete data model for a full QTC process, which requires objects that salesforce.com doesn’t yet have in its standard objects library. Apttus does the complete automation of this process and can provide the right level of detail/insight for executives or operational teams on any device.Figure 9. Apttus Mobility
  10. 10. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 10 Apttus is also built for Manufacturing, Healthcare/Life Sciences, Telecom & Media, and Financial Services verticals, and there are plenty of use cases for these large global customers that are not yet supported by salesforce.com, for which Apttus had to add its own objects. In addition, salesforce.com has traditionally not been focused on transactional systems such as e-commerce platforms, where it lags behind Oracle ATG, SAP Hybris, IBM WebSphere Commerce, NetSuite Venda, Epicor ShopVisible, etc. That is changing now with its platform becoming more and more capable of handling e-commerce use cases both in terms of volume and pricing for a large number of users. Salesforce.com has let its partners lead the investment here and Apttus is glad about the traction it is getting with its e- commerce solution. It now has a complete multi-channel selling solution (including e-commerce and partner commerce) for global companies (see video). Of the aforementioned competitive e-commerce platforms, only IBM can handle configurable products (Oracle is likely still integrating BigMachines with ATG). Click-to-chat (Online Agent) and co-browsing capabilities are already available on the Salesforce Platform, and used in Service Cloud. So far, Apttus has gained e- commerce customers who want to sell across multiple channels, and sell complex products—so catalog-based selling is not enough. More and more CIOs are moving their infrastructure into the cloud, whereby on-premises (or hosted at best) e-commerce solutions like ATG are not preferred. Some of the merchandising capabilities for consumer goods are still likely to be better with ATG or Demandware, but Apttus e-commerce is quite competitive where complexity and configuration matter. Expanded Quote-to-cash Analytics Many future enhancements at Apttus will be about analytics, making everything increasingly data driven to make the full QTC environment dynamic and responsive to customers and markets. There will be more key performance indicators (KPIs) and dashboards on performance/trends/risk with quotes, products, pricing, contracts, rebates, and revenue management. In fact, at Dreamforce 2014, Apttus announced they have joined the Salesforce Analytics Cloud (a.k.a. Salesforce Wave) ecosystem with its new Quote-to-Cash Intelligence (QTCI) solution. Apttus QTCI leverages quoting, contract, and data in salesforce.com’s customer relationship management (CRM) Sales Cloud, offering to provide actionable data including machine learning-based guidance that ensures executives meet their targets via actionables that uncover the often hidden behaviors and patterns. Wave is a cloud analytics platform designed for every business user to explore data, uncover new insights, and take action instantly from any device. Salesforce Wave is a business intelligence (BI) offering (although some might debate that it is rather an engaging reporting and visualization cloud solution for
  11. 11. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 11 now) by providing a user interface (UI) that allows data to be easily manipulated and visualized by non-IT personnel. Wave is not about traditional rows and columns and pivot tables and queries, and salesforce.com wanted everyone to interact with the product and feel good using it (some suggest that video games experiences have served as an inspiration here). Its mobile-first design, advanced search features (enabled by the EdgeSpring acquisition), and the ability to easily integrate with many data sources are other nice features. QTCI works in conjunction with Apttus and Sales Cloud, providing users with accessible and useful recommended actions for every aspect of the sales and revenue cycle. By combining the power of the Salesforce Analytics Cloud (Wave) with the utility of QTCI, customers now have access to a suite of predictive intelligence tools inside salesforce.com that can provide the following:  Dynamic recommendations of what products current and future customers are most likely to buy, and what upsell/cross-sell products representatives should recommend. Close more business this quarter with system-driven recommendations that learn from your historical behavior, business rules, and revenue goals.  The optimal sales and ordering configurations for all configurable products  Suggested updates to contract terms and conditions, discount types, product bundles, and more based on previous successes and failures  Algorithms and KPIs that generate practical and contextual tracking and predictions against customizable goals (see Figure 10)  The ability to monitor the most critical KPIs and get alerts and notifications to take the necessary action from a mobile device  Specific tailored recommendations for the individual, the group, and the company Natively integrated with Salesforce1 Platform, Salesforce Wave benefits from the trusted platform and enables admins to quickly drag and drop salesforce.com data to deploy sales, service and marketing analytics apps. In addition, developers and IT can use new Wave APIs and other data connectors to easily connect to other data sources to build custom analytics apps for any business function, or embed analytics into analytics apps and connected products for customers.
  12. 12. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 12 Figure 10. Apttus QTCI Revenue Snapshot Given that Apttus brings all sales and revenue-related processes, data, and insights inside Salesforce CRM, companies should better understand which deals are more likely to close based on historical success factors, and then take action on any deals that are “at risk.” Companies can also monitor their exposure to risk by setting risk definitions and thresholds for quoting, contracting, order fulfillment, invoicing, and revenue management (see Figure 11). They can also track sales activity across all their channels, including e-commerce and partner commerce. Figure 11. Apttus QTCI Risk Monitoring Getting More Scalable As a recap, Apttus has become a CPQ leader (in addition to the CLM leadership) in the salesforce.com ecosystem almost overnight. That advancement was helped by the exit of BigMachines, which used to be the CPQ leader at the Salesforce AppExchange marketplace, but has since been acquired by Oracle (in fact, its underlying technology is Oracle database and Java, which made it a logical fit for Oracle). Certainly, FPX, PROS Cameleon CPQ, and CallidusCloud CPQ remain loyal
  13. 13. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 13 salesforce.com partners and strong CPQ providers, but they have their own platforms, citing Force.com’s past issues with processing huge volumes of sales orders, configurations, commissions, etc. As part of salesforce.com’s insider circle, Apttus knows what is coming down the track to address these performance shortcomings. The code-named “Aura” framework was used last year for mobile-first applications on Salesforce1. The recently-unveiled Salesforce1 Lightning builds on top of Aura to make it easier to build responsive applications for multi-device interactive screens. Lightning includes a number of tools for developers, such as Lightning App Builder (build apps visually using off-the-shelf and custom-built Lightning Components) and Lightning Components (re-usable, self-contained UI elements for Force.com apps). With Lightning there is more client-side logic, which should reduce round trips and improve performance, especially for interactive applications like Apttus. More along the lines of improving performance/scalability, a new Salesforce Apex code compiler will significantly speed up the first time load models. Last but not least, the session affinity capability will be able to route new user sessions to pods that already have the models in cache. While Apttus can never relax, both due to the competition from the aforementioned CPQ establishment and the Salesforce1 newcomers like SteelBrick (which touts simplicity and Force.com purity, but is targeting less complex and somewhat smaller companies than Apttus does), the future seems bright for the upbeat company. It will be interesting to watch what new developments come from the vendor, both in terms of new customers and functionality. Related Reading CPQ Pioneer FPX Becomes Cloud CRM and ERP Go-to Vendor, November 2014. Catching Up with PROS at Dreamforce 2014, October 2014.
  14. 14. Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 14 About Technology Evaluation Centers Technology Evaluation Centers (TEC) provides insight and expertise in offering impartial resources and services to minimize the costs, risks, and time associated with software selection. Over 3.5 million technology decision makers visit TEC’s Web sites each month, to find information on hundreds of solutions, and to access articles, white papers, and podcasts. TEC’s decision support system (DSS) and analyst data assist with the evaluation, comparison, and selection of enterprise solutions and services. TEC’s offerings include in-depth research, detailed product information, and software selection services for any industry or company size. Technology Evaluation Centers Inc. 740 St. Maurice, 4th Floor Montreal, QC H3C 1L5 Canada Phone: +1 514-954-3665 Toll-free: 1-800-496-1303 Fax: +1 514-954-9739 E-mail: asktheexperts@technologyevaluation.com Web site: www.technologyevaluation.com TEC, TEC Advisor, and ERGO are trademarks of Technology Evaluation Centers Inc. All other company and product names may be trademarks of their respective owners. © Technology Evaluation Centers Inc. All rights reserved. APT20150112

Apttus CPQ

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