Nov 24, 2020

B2B Pricing and Sales Software: Knowing When It's Time to Invest

By Mick Naughton

In this two-part blog series, Zilliant Regional Sales Director Mick Naughton is back to share thepros and cons behind the timing of pricing and sales software investment decisions, based on his experience from both sides of B2B. Read Part 2 here.

Confession time:I tend tosuffer from analysisparalysis.The world is filled with somany variablesand my A.D.D.-addled brain does its best to trytoincorporate every single one of them intothedecision-makingalgorithm.For example,I havegiantspiral binders of data and analyst reports dedicated to a recentcar purchase.In the end I bought the Jeep Grand Cherokee...mostly,because I just liked it.But I could backup that decision with a lot of information!This trait certainly has its upsides and downsides. It has made me a reasonablysoundcritical thinker. It allows me to consider outside-the-box solutions. I think it made me a goodpricingdirector.Complex problemsshouldbe consideredcarefully,and nothing can be quite as complex as B2Bpricing.

“Withenough reflection, even the most straightforward problem can be turned into an unsolvableconundrum”- Anonymous

I’ve had the opportunity now to see this processin action at severallarge B2B organizations when it comes tomaking a decisionabout investing in enterprise software. Inmycase specifically,thepricing/salesoptimizationandmanagementfunctional area.It’s a big move and requires a lot of different parts of the company to be involved. Inthe end there seemsto be a common set of questions that determinewhethera companyactually pullsthe trigger. These aren’t criteriaonhow to pick one software vendorover another. That’s a topic for another blog(spoileralert:the answer is always Zilliant...**wink**).These are the big obstacles that usually prevent an organization from doinganythingat all.It’s not right versuswrong. Each has their ownmerit and reasoning. ButI’ve seen companies take very different approaches to each of these areasand make very different decisions.

When to Start a Pricingor SalesProject?

When considering theprosandconsof starting a pricing project, in the context of doing it before, after or duringeach of these cases, one fundamental question to ask is,“Howbrokenis our current process?”Oncea company is willing to look under the hood of their existing technology, theyoftenstart to see issues that might be larger than the original problem they were solving for.If the currentpricingprocesses are in bad enoughshape,a fix can often fund the investment of other systems and cause a re-prioritization of which technology to invest in first!

CaseNo.1– PricingBeforeOtherTechnologyProjects(ERP, CRM, CPQ,MarTech, eCommerce,etc)?

Many stalwart business professionals have the 1000-yard stare associated with having been through an ERP systemtransformation. “It changes you,man!”Any large-scaleenterprise systemupgradeoftenopensand thensometimestemporarilyshutsthe door to investing inpricing/sales technology.When adecision has been made toinvest inanotherkeyenterpriseapplicationthatusually causestheorganizationto take a long,hard look at several business processes.Pricing is generally a core componentof anybusiness'sDNAand is always part of the discussion,particularlyin the B2B space.Once the door is openedtomaking a change,looking at technology to improve systems tomanage andoptimizepricing is a natural move.

Once ageneral pricing health check has beendonethere are usually a few pluses and minusestothink about when considering whetherto start a pricing project before or after other enterprise changes.

Pro

Reducepotentiallyunnecessaryconfiguration

Often times, particularly with a pricing projectthat integrates with other backend systems (like an ERP)there isusuallycustom logicconfigurationwork that needs to be doneto allow the new system to generate similar in-market prices to match those of the old system. If the company is considering new pricing technologythevendor willusuallyconsulton how those prices arecurrentlybeing derivedandexplain howa new pricing technology will bebecome thesystem where thatpricing logic isdone.This allowsthe backend system to simplyexist asthe repository ofthese new prices for accountingpurposesandhas the potential to reduce redundant configuration work in both an ERP and apricemanagementapplication.

Cloud-basedintegrations are now more portable

With the move of mostSaaS providers to the cloud versusthe traditional on-premiseapproach,the issues associated withimplementing, integrating and customizing an application are much more lightweightandarein the hands of the technology provider. Work can be done outside of a customer’s internaltechnology stack. Connectingthe systems canthentake place in a muchmore portable manner. Connecting,de-connecting and then reconnecting to new technology is generally a much simpler task andrequires less sequencingand resources.

Con

Limited ITresources

Eventhoughcloud-based SaaSrequireslesscustom configurationand integration work, you do still need the engagement of IT resources.Depending on thetiming, theIT organization’sproject load anditstechnologyroadmap,there are only so many IT team members available to help manage another project.A pricingtechnology investment might just need to wait in line.

LimitedBudget

Similar toIT resources,there isusually(always)only so much budget to go around!The case can be made that a pricing project typically pays for itself within the first year ofimplementation, but therearestillcostsassociated with the investment andif those dollars are not in the budgetthere is not much that can be done about it.

CaseNo.2-BeforeaDataCleanup?

This scenario has always felt like a combination of pragmatism and embarrassment. It’s the heart-poundingpanic of a good friend wanting to stop by the house unexpected,when you have dog hair on the sofa and empty Chinese food boxesin the family room.Of course,you want tosee the friend but,“Oh my gosh this place is a mess!”It’s all understandable and there are a couple of ways topreventletting a “messy room” keep your company from making a change that can haveimmediate impactonthe bottom line.

Pro

Get help! Your data might not be as bad as you think

Often,a problem that you think is embarrassing or unique is something your vendor has seen a hundredtimes before andwill not onlynotbeshocked,butwill likely have resources and techniques to help get your data cleaned up and in a state that it can be worked with.Yourcompany likely has plenty of useable data anddata sparsity is a common challenge in B2B companies that can beeasilyaddressed.

Forcing function

Analogousto planning a big event atyourhouse like agraduation or birthday party,nothing motivates you to get project work donequitelike adeadline! The forcing function of a specific project will oftenlight the fire to take care of a long-neglectedissue.

Con

Garbage in/garbageout

Ultimately for a pricing project to be effective you do need a certain amount of reliable data that can be accessed.If your systems are in such a state that you know the data is inaccurate and/or you simply are not capturing the right elements anywhere, then there is no point in trying toderive meaningful insights from it. This again is where engagement and discussion with areputable vendor is a worthwhile exercise,as they can help make that diagnosis.Additionally, one of the cleanest, most reliable datasets lies in your transactional history, which should be a fundamental data set taken into consideration from a pricing perspective.

Stay tuned for next Tuesday’s blog where Mick will share two additional scenarios: whether to implement pricing and sales software before a company re-organization andbefore a financial recovery or anticipated ownership change.He’ll also share some consideration around change management – be sure to stay tuned to the Zilliant Blog!

About the Author

Mick Naughton, M.S., MBA, is a sales director at Zilliant where he helps global B2B companies realize improved financial performance using advanced technology. Prior to joining Zilliant Mick spent 20 years in the life sciences industry in a variety of pricing, sales and technology roles.

More Content by Mick Naughton

Are you ready to learn how Zilliant can help you overcome your inflation challenges?

Reach out to us today to learn how we can help!