Pricing Leadership

We have been discussing the impact of SaaS on IT decision making as well as sales force adoption.  It is clear vendors are working hard on the following questions:

• How do I make it easier for my customers to get my software in use and start getting value?
• How do I continue to provide value, while simultaneously (a) offering high business value innovation and (b) as little IT cost as possible?

Recently, HP and Microsoft announced they will be working together to simplify the software delivery model.  This announcement, coupled with other options Microsoft offers, such as Windows Azure and Dynamics xRM, point to larger strategy Microsoft intends to use to offer a spectrum of options to customers. This spectrum ranges from on-premises and custom apps, to cloud-based apps built by 3rd parties on Pinpoint.

Other vendor examples include Salesforce.com’s AppExchange and Force.com platform.  Oracle and SAP also have offerings. 

What does this mean for someone interested in Pricing Applications?

It will no longer be “good enough” for an application to be conceived independently of these larger ecosystems.  To offer a J2EE or .NET app is no longer enough.  It is now critical to consider the various vendor ecosystems in the decision to buy.

Is my pricing system going to be an island that I have to integrate into my ecosystem?  How much will that cost?

Does the vendor offer seamless integration into the ecosystem(s) I have chosen?  Will my pricing system be a “good citizen” in my chosen ecosystem(s)?

Most importantly, which systems do my users prefer to work in?  This question points to the larger struggle between users and IT, usability versus manageability, and conflict between ecosystems. This is most pronounced in situations where users work in Excel but the system of record for data is SAP.

We have been discussing the fact that sales adoption of pricing tools is a difficult problem to solve. Lately, I have been observing a pattern towards bringing pricing into the sales tools that exist today. These solutions utilize SaaS and mobility platforms. Recent SaaS examples I have observed include companies that utilize Salesforce.com and Microsoft Dynamics CRM. Recent mobility examples include companies that utilize Blackberry devices and Microsoft Excel, in a remote environment.

These companies need pricing to help in the sales processes. This includes quoting tools to help the sales team make the right choices. They need multiple price points, as guidelines to the process. Some want to know, “what is the right offer for my customer”?

What are the technologies required to support these processes? Here are a few that are important:

Real-time Quoting and Pricing
As the combination of possible products, channels, customer segments, and negotiation methodologies explodes, it is infeasible to store all pricing permutations on the CRM tool. Service-Oriented Architecture is critical for pricing. ERP vendors have solved this problem using rules. However, creating a copy of a rule engine in every application you use is problematic for many reasons I will not dive into at this time. Real-time architectures can grow as your business rules change, and help you to maintain a single set of rules. Flexibility is really important, depending on how quickly your business strategy changes.

Composite Application Support
To maintain user interface consistency, composite application architectures are really important. These architectures allow “mash up” style interfaces where components of pricing can be interweaved with other business process components. Salesforce.com has APEX. Microsoft has SharePoint and the Dynamics xRM platform. Single “large” applications are a thing of the past. Composite applications are where the market is heading, and it is heading there fast.

On/Off Premises Integration Support
I have heard from customers that they are uncomfortable having their pricing data “in the cloud”. Can vendors offer a composite sales and pricing experience that meets the best of both worlds? The questions I hear include “can you keep critical pricing information on-premises, integrating with a cloud-based CRM tool?” and “can you make it seamless?”. Required technologies include SaaS integration technologies, such as that offered by Cast Iron Systems, and Single-Sign On technologies, such as Salesforce.com’s delegated LDAP integration.

Mobility
I will save discussion about mobility for a future article. We need to think about the mobile sales force. They are using handheld smart phones, laptops and yes, tablet PC’s. Internet access, such as 3G is becoming more prevalent.

What tools do your salespeople prefer and why?

I was catching up on my RSS feeds and I came across this excellent article by Professor Ford: http://professorford.com/2009/09/23/building-accountability-without-authority/

Many in the pricing profession are faced with a situation where they are trying to influence behavior without having direct authority over those who make the decisions. This article addresses the point head-on, with an example from the NCAA. Performance measurement and peer pressure are two ways to influence human behavior and accountability. Do you have the tools you need to increase accountability?

If you are a pricer, marketer, or are in the market for a pricing optimization solution, you have surely heard about “segmentation” and probably have some questions about exactly how it will help you do your job better. I’d like to share some insight from a high-level perspective of how this can help.

I had the pleasure of attending the Microsoft World-Wide Partner Conference last week and there were two take-aways that I wanted to share:

(1) Microsoft is placing a heavy focus on its vertical strategy this year.  This is good news. They are looking at how their solution stack meets the needs of enterprise businesses in a holistic fashion. If you are a manufacturer, it is very likely that you are looking at cutting IT costs. Microsoft wants to help you do that by offering an integrated landscape that includes non-Microsoft apps. For an example of this, see my second point. Companies are making their “bets” about enterprise software stacks and looking for opportunities to cut costs. Microsoft is working hard to be included in those decisions.

(2) Companies that use SAP should take a look at Duet.  Duet is an excellent example of an Office Business Application (OBA). This is the future of enterprise software. If you used SAP, you know the difficulty of the user interface. Microsoft and SAP have worked together to wrap core business workflows in an Outlook interface. The results are very compelling. 

We at PROS are working to extend our applications to bring a similar type of OBA experience to Pricing Optimization.

One challenge I hear again and again is the issue of how to get your sales force to use new pricing tools to promote better practices. There are many difficulties to adoption, but technology should not need to be one of them. Integrating your pricing tool with familiar sales tools, such as Microsoft Outlook, can make things easier. 

Microsoft has been making it easier for PROS to integrate our pricing expertise into their “people ready” productivity tools. They have really taken it to the next level with the Office 2007 platform.  We at PROS have focused part of our product strategy around offering Web Services to take advantage of these innovations. Through the web services, we can integrate valuable pricing capabilities, such as price quotes and deal guidance, into the user’s familiar desktop environment. Adoption is pretty well instant as there is little in the way of training required because people are using tools they already use every day.

Some best practices to consider: 1) Try to deploy to a few influential sales users to pilot. Your newest employees can become productive quickly with new tools and can also effectively influence your experience staff by their success. 2) Look to users to communicate their experiences. Involved early in the process, they can help improve the experience so that adoption is greater as systems are rolled out to everyone. 3) Work out how can adoption be measured and tracked, and decide what metrics that matter to you.

Does your pricing tool integrate with Office? I’d love to hear from you on your experiences.