Configure, price and quote

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Configure, price, quote (CPQ) software helps sellers quote complex and configurable products. [1] An example could be a maker of heavy trucks. If the customer chooses a certain chassis (the base frame of a motor vehicle), the choice of engines may be limited, because certain engines might not fit a certain chassis. Given a certain choice of engine, the choice of trailer may be limited (e.g. a heavy trailer requires a stronger engine), and so on. If the product is highly configurable, the user may face combinatorial explosion, which means the rapid growth of the complexity of a problem. Thus a configuration engine is employed to alleviate this problem.

Contents

Configuration engines

The "configure" in CPQ deals with the complex challenges of combining components and parts into a more viable product.

There are three main approaches used to alleviate the problem of combinatorial explosion:

  1. Rule-based truth-maintenance systems: These systems were the first generation of configuration engines, launched in the 1970s based on research results in artificial intelligence going back to the 1960s. [2]
  2. Constraint satisfaction engines: These engines were developed in the 1980s and 1990s. [3] They can handle the full set of configuration rules to alleviate the problem of combinatorial explosion [4] but can be complex and difficult to maintain as rules have to be written to accommodate the intended use.[ citation needed ]
  3. Compile-based configurators: These configurators build upon constraint-based engines and research in binary decision diagrams. This approach compiles all possible combinations in a single distributable file and is agnostic to how rules are expressed by the author. This enables businesses to import rules from legacy systems and handle increasingly more complex sets of rules and constraints tied to increasingly more customizable products.[ citation needed ] The concept of configuration lifecycle management (CLM), of which CPQ is a component, describes how compile-based configuration can further be leveraged to address most of the problems related to product configuration for business employing mass customization.[ citation needed ]

Industry

The CPQ industry has many vendors. Some vendors focus more on one component, for example, a price optimization provider may integrate their pricing software with another provider's configuration engine - and vice versa.

The market for CPQ technology and services is currently highly fragmented with a few large suppliers penetrating a few key market segments while the rest of the market is divided among numerous small and mid-size firms. M&A activity, partnerships, and investment in these solutions will continue for the foreseeable future. The CPQ landscape is continuously evolving and thus a challenge to navigate when critical decisions that impact the future performance of a business need to be made.

Related Research Articles

Configuration or configurations may refer to:

In computing, a plug and play (PnP) device or computer bus is one with a specification that facilitates the recognition of a hardware component in a system without the need for physical device configuration or user intervention in resolving resource conflicts. The term "plug and play" has since been expanded to a wide variety of applications to which the same lack of user setup applies.

In telecommunications rating is the activity of determining the cost of a particular call. The rating process involves converting call-related data into a monetary-equivalent value.

<span class="mw-page-title-main">Bill of materials</span> List used in manufacturing

A bill of materials or product structure is a list of the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts, and the quantities of each needed to manufacture an end product. A BOM may be used for communication between manufacturing partners or confined to a single manufacturing plant. A bill of materials is often tied to a production order whose issuance may generate reservations for components in the bill of materials that are in stock and requisitions for components that are not in stock.

Maven is a build automation tool used primarily for Java projects. Maven can also be used to build and manage projects written in C#, Ruby, Scala, and other languages. The Maven project is hosted by The Apache Software Foundation, where it was formerly part of the Jakarta Project.

<span class="mw-page-title-main">Automatic test equipment</span> Apparatus used in hardware testing that carries out a series of tests automatically

Automatic test equipment or automated test equipment (ATE) is any apparatus that performs tests on a device, known as the device under test (DUT), equipment under test (EUT) or unit under test (UUT), using automation to quickly perform measurements and evaluate the test results. An ATE can be a simple computer-controlled digital multimeter, or a complicated system containing dozens of complex test instruments capable of automatically testing and diagnosing faults in sophisticated electronic packaged parts or on wafer testing, including system on chips and integrated circuits.

<span class="mw-page-title-main">Cisco Catalyst</span> Ethernet switch product line

Catalyst is the brand for a variety of network switches, wireless controllers, and wireless access points sold by Cisco Systems. While commonly associated with Ethernet switches, a number of different types of network interfaces have been available throughout the history of the brand. Cisco acquired several different companies and rebranded their products as different versions of the Catalyst product line. The original Catalyst 5000 and 6000 series were based on technology acquired from Crescendo Communications. The 1700, 1900, and 2800 series Catalysts came from Grand Junction Networks, and the Catalyst 3000 series came from Kalpana in 1994.

Cincom Systems, Inc., is a privately held multinational computer technology corporation founded in 1968 by Tom Nies, Tom Richley, and Claude Bogardus.

A software factory is a structured collection of related software assets that aids in producing computer software applications or software components according to specific, externally defined end-user requirements through an assembly process. A software factory applies manufacturing techniques and principles to software development to mimic the benefits of traditional manufacturing. Software factories are generally involved with outsourced software creation.

<span class="mw-page-title-main">Cypress PSoC</span> Type of integrated circuit

PSoC is a family of microcontroller integrated circuits by Cypress Semiconductor. These chips include a CPU core and mixed-signal arrays of configurable integrated analog and digital peripherals.

Configurators, also known as choice boards, design systems, toolkits, or co-design platforms, are responsible for guiding the user through the configuration process. Different variations are represented, visualized, assessed and priced which starts a learning-by-doing process for the user. While the term “configurator” or “configuration system” is quoted rather often in literature, it is used for the most part in a technical sense, addressing a software tool. The success of such an interaction system is, however, not only defined by its technological capabilities, but also by its integration in the whole sale environment, its ability to allow for learning by doing, to provide experience and process satisfaction, and its integration into the brand concept.

IBM App Connect Enterprise (abbreviated as IBM ACE, formerly known as IBM Integration Bus, WebSphere Message Broker, WebSphere Business Integration Message Broker, WebSphere MQSeries Integrator and started life as MQSeries Systems Integrator. App Connect IBM's integration software offering, allowing business information to flow between disparate applications across multiple hardware and software platforms. Rules can be applied to the data flowing through user-authored integrations to route and transform the information. The product can be used as an Enterprise Service Bus supplying a communication channel between applications and services in a service-oriented architecture. App Connect from V11 supports container native deployments with highly optimised container start-up times.

<span class="mw-page-title-main">BigMachines</span> Configure, price, quote cloud software owned by Oracle

BigMachines, now Oracle Configure, Price, Quote (CPQ), was a software company founded in 2000 by Godard Abel and Christopher Shutts, which was acquired by Oracle in 2013. The software is designed to integrate with enterprise resource planning (ERP), customer relationship management (CRM), and other business systems to help companies automate the sales process. It specializes in software for configure, price and quote (CPQ). It can be used by internal teams, channel partners, VARs, distributors, customers, and outside representatives and partners.

Price optimization is the use of mathematical analysis by a company to determine how customers will respond to different prices for its products and services through different channels. It is also used to determine the prices that the company determines will best meet its objectives such as maximizing operating profit. The data used in price optimization can include survey data, operating costs, inventories, and historic prices and sales. Price optimization practice has been implemented in industries including retail, banking, airlines, casinos, hotels, car rental, cruise lines and insurance industries.

CPQ may refer to:

Pricing science is the application of social and business science methods to the problem of setting prices. Methods include economic modeling, statistics, econometrics, mathematical programming. This discipline had its origins in the development of yield management in the airline industry in the 1980s, and has since spread to many other sectors and pricing contexts, including yield management in other travel industry sectors, media, retail, manufacturing and distribution.

A data monitoring switch is a networking hardware appliance that provides a pool of monitoring tools with access to traffic from a large number of network links. It provides a combination of functionality that may include aggregating monitoring traffic from multiple links, regenerating traffic to multiple tools, pre-filtering traffic to offload tools, and directing traffic according to one-to-one and many-to-many port mappings.

Knowledge-based configuration, also referred to as product configuration or product customization, is an activity of customising a product to meet the needs of a particular customer. The product in question may consist of mechanical parts, services, and software. Knowledge-based configuration is a major application area for artificial intelligence (AI), and it is based on modelling of the configurations in a manner that allows the utilisation of AI techniques for searching for a valid configuration to meet the needs of a particular customer.

Construction by Configuration (CbC) is a process defined by Ian Sommerville in 2008 for the adoption of a Commercial off-the-shelf systems (COTS) in an organization. This can range from simple parameter setting through the definition of business rules to special purpose components development.

Configuration Lifecycle Management (CLM) is the management of all product configuration definitions and configurations across all involved business processes applied throughout the lifecycle of a product.

References

  1. ↑ Techopedia (CPQ)"Configure Price Quote Software (CPQ)"
  2. ↑ Blumöhr, Uwe; Münch, Manfred; Ukalovic, Marin (2011). Variant Configuration with SAP. ISBN   978-1592294008.
  3. ↑ Felfernig, Alexander; Holz, Lothar; Bagley, Claire; Tiihonen, Juha (2014). "A Short History of Configuration Technologies". Knowledge-Based Configuration – From research to Business Cases.
  4. ↑ Uppsala University course 'Constraint Technology for Solving Combinatorial Problems'"Constraint Technology for Solving Configuration Problems"
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