Buy vs. Build CPQ software
Companies we talk to are often challenged to decide whether to buy a Configure, Price, Quote (CPQ) software or to build one themselves. Both approaches have their advantages and disadvantages. Today, we are making a comprehensive comparison of the two. We believe it is more beneficial for companies to buy CPQ software. Find out why below.
Buy vs. Build CPQ software
Demands for custom products are driving manufacturers to shift from standardized to configurable goods. Enter Configure, Price, Quote (CPQ) solutions, streamlining the marketing of complex products. CPQ has become pivotal for manufacturers, enhancing efficiency and reducing errors.
This article explores the critical decision of whether to buy an off-the-self CPQ solution or build a custom one. Uncover the advantages and disadvantages of each approach, with insights into implementation time, costs, customization, expertise, and more. Discover why buying a CPQ solution is a more advantageous strategic investment in the long term.
What is CPQ?
Customers are increasingly looking for products tailored to their own preferences and requirements. This trend pressures manufacturers to transition from standardized goods to configurable products. As the demand for configurable products rises, the necessity for Configure, Price, Quote (CPQ) solutions grows.
Configure Price Quote (CPQ) is a software system that helps manufacturers market complex products. Users are able to configure products by combining product and service options in a powerful configurator. The software instantly calculates the price for the configured product and generates a quotation in just one click.
CPQ helps you save time by streamlining your sales process and reduces the margin of error. CPQ increases your sales, improves customer experience, and generates a greater sales potential. Discover more information about CPQ and its benefits here.
When do you need a CPQ?
Configure, Price, Quote software can be beneficial in several scenarios. We’re summarizing some signs that indicate you need a CPQ:
- Complex product offerings make your sales process cumbersome and error-prone
- Mistakes creep into your orders, wasting time and resources
- Creating a quote takes days or weeks
- Finding the right product and pricing information is difficult
If you recognize your business in these statements, it shows that you too could use a CPQ solution. But then we get to the next obstacle. Are you going to buy a CPQ off-the-shelf? Or would you rather build it yourself?
Buying CPQ or building your own software?
Many companies we talk to are challenged to decide whether they want to buy a CPQ solution or build it themselves. That’s why we’ve decided to make an elaborate comparison in this month’s blog post. Let’s dive into building vs. buying Configure, Price, Quote software.
Why buy a CPQ
Buying a Configure, Price, Quote solution from vendors in the industry has several compelling advantages for businesses.
- Lower implementation costs. Choosing to buy a CPQ translates to lower implementation costs, as businesses can use ready-made platforms without the need for extensive custom development. Pre-built CPQ solutions often come with streamlined processes, reducing the time and resources required for implementation.
- Faster go-to market. In line with lower implementation costs, buying a CPQ tends to have a faster go-to market. The pre-built systems allow for organizations to bypass cumbersome development cycles, ensuring a quicker development and enabling a faster response to market demands.
- Learn from industry experts. CPQ vendors bring industry knowledge and best practices to the table, leveraging insights gained from working with various businesses. This expertise contributes to the effective implementation of the CPQ system in alignment with industry standards.
- Scalability. Purchased CPQ solutions are designed to scale with your business. They offer flexibility to accommodate the expansion of product lines, increased transaction volumes and evolving sales strategies without the need for extensive development.
Why build a CPQ
Building your own Configure, Price, Quote software can be beneficial in its own way.
- Custom software. You can build a solution that perfectly fits your business requirements. You can cover all the features you need and you won’t have to pay for modules you don’t use. Your solution is unique in the market and competitors cannot copy your approach.
- Stay in control. An in-house solution provides greater control over updates, enhancements, and the ability to adapt swiftly to evolving business requirements. You have a deeper understanding of the system’s architecture, without relying on third parties.
- No recurrent license cost. Liberate your budget from recurrent license costs. With a self-built solution, you eliminate on-going expenses or hidden costs or price increases after go-live.
- More flexibility. Building your own CPQ gives you the flexibility to make changes through the implementation process.
Comparing buying with building CPQ solutions
Both approaches to implementing a CPQ solution come with distinct advantages and disadvantages. To provide a clearer understanding of the differences, let’s compare them side by side.
- Faster deployment with ready-made solutions
- Lower upfront costs, but ongoing license fees may apply
- Standard solution with customization options
- Relies on vendor expertise and industry best practices
- Regular updates and support from the vendor
- Typically scalable to accommodate business growth
- Pre-built integrations available, reducing implementation time
- Ongoing support from the vendor
- Longer time to develop, test, and integrate in-house
- Higher upfront development costs, potentially lower long-term operational costs
- Fully custom solution
- Requires in-house expertise or hiring external developers
- Full control over updates, but may require more resources for maintenance
- Scalable but development effort required for expansion
- Full control over integrations but may take longer
- Internal support structure needed; may require training
Why buying a CPQ is more advantageous on the long term
It is more beneficial for businesses to buy a Configure, Price, Quote solution rather than building one themselves. There are several compelling reasons leading us to believe this.
A solution is only as strong as the people that built it.
If you choose to build your own CPQ solution, you will need talented and experienced developers on board. In times where the war for talent is still raging on, it isn’t always easy to find the right people, and they are in a very good position to negotiate the highest salaries possible.
What happens when you cannot find these developers in time? Or how will your business cope when the person who’s been building the software decides to leave the company during the project?
A Configure, Price, Quote solution is complex. It’s not something you build in one day, let alone in one month. The lack of knowledge about CPQ within your business will trouble you throughout the project. Opting to buy a CPQ solution instead will take this worry away.
CPQ vendors have years of knowledge and experience working on various projects with different customers and partners. They can leverage their best practices to build the best possible platform for you. Their knowledge is indispensable for the success of your CPQ. That’s why we highly recommend working with a renowned CPQ expert instead of trying to build a CPQ yourself.
Building a Configure Price Quote solution from scratch is often underestimated in terms of technical intricacies and complexity. The project involves a high level of technical sophistication, entailing security aspects, backup plans, and more. There are many hidden technical costs when building a CPQ software that you can avoid when you’re simply buying a solution. Let’s take a deeper look at this.
On your CPQ platform, you’ll be managing customer, dealer, product, and price data. Imagine for a moment that your competitor somehow gains access to this information.
When building a custom solution, you’ll need to invest in keeping your platform safe: that means investing in regular measures, but also in a yearly penetration test.
Now imagine your CPQ system goes down. How much time would it take to be fully operational again? And are your backups good enough to make a full restore if a disaster strikes?
A reliable backup and recovery strategy is crucial for software. Take this into consideration when you’re building your CPQ.
Hosting and monitoring
What happens when your platform is down? Who will be there to fix the issue and make sure you’re back online ASAP? What is the cost of downtime or slow system performance?
Your CPQ solution needs to be monitored; this is an additional cost that most businesses were not expected to have. Make sure you get notified in case your system goes down.
Maintenance and updates
Every now and then there are new security standards and web browser updates that will force you to make updates to your existing application. And as you’re using the software, the growing datasets will make it slower, requiring more updates and performance tuning. In mean time, users will find bugs, make new feature requests, or develop new workflows on the platform, requiring extra work from your side.
A CPQ project is therefore not necessarily done once your software is live. Who will be taking care of these bugfixes, improvements, and new features?
To get the most out of your CPQ software, you need to integrate it with your existing IT environment to create automated processes. You typically need integrations to CRM, ERP, PIM, and reporting tools.
How will you build these integrations? Does your team have the experience needed to do so? Do you know what your system architecture will look like? What happens if a new system is introduced?
While maintaining full control over the integrations, building a CPQ entails a lengthier process to develop integrations compared to purchasing a ready-made solution. In the latter scenario, you can rely on pre-built integrations, significantly reducing implementation time.
All these technical aspects have hidden costs for businesses that are building their own CPQ solutions that could have been avoided if they had opted for buying a CPQ from a vendor instead.
3. Cost and time
As mentioned earlier, there’s a huge difference in the time-to-market and cost for building vs buying a CPQ.
We typically see that it takes businesses over six months to have a first version (MVP) ready. Let’s compare that to an MVP in Hive CPQ: this takes us less than one month. A full implementation typically takes us three-six months.
A lot of things can happen in this time: your own business scope can develop; or customer needs can change in less than six months. The real cost of a slower implementation can be a lot higher than just the price difference. You need a fast go-to market, so you can get results and adapt the software to real user feedback.
These things make it more difficult to build and manage your own CPQ solution, making the buying option much more advantageous.
In this blog, we discovered the differences between buying and building CPQ software. We firmly believe it is more beneficial to buy a Configure Price Quote solution than it is to build one yourself. When going for the latter, consider the following:
- Higher cost of personnel (they will be in the position to negotiate their compensations)
- Recruitment fees and time needed to hire new staff, including training time
- Security testing and solution budget
- Documentation budget
- Cost for time to market
- Running costs:
- Monitoring tools and time
- Backup and recovery
- What is the cost to develop new features in a later phase?
And in the end ask yourself what you’re best at. Is it manufacturing your products, or is it building software?
Let our experts help you out.
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