What Infrastructure Do I Need to Use Pricing Software?
June 29th, 2022 (Updated 03/10/2023) | 10 min. read
Despite evidence that pricing is the most critical predictor of profitability, the science of pricing and using price software is still relatively underdeveloped for many businesses. Some organizations may not have made the switch because they are still comfortable with using their legacy pricing systems, and many other companies (despite knowing the power of automated pricing and being able to eliminate manual pricing for good) can feel needlessly intimidated by not believing they are technologically ready for the switch. That is why we have decided to debunk those myths and more as we discuss ‘What Infrastructure Do I Need to Use Pricing Software?’ in this article.
Together at Cognitius and Pricefx, we have been working together for a while now answering questions just like that for multiple companies. We have partnered to resolve the pricing dilemmas of businesses just like yours, that are looking to integrate the powerful Pricefx price optimization and management capabilities with Cognitus’ SAP S/4HANA and the CX portfolio (Sales, Commerce, and Marketing Cloud) expertise to streamline and optimize the creation of quotes and orders for complex, configurable products, and services.
In this article, we will dive into what kind of infrastructure needs to be in place to successfully implement and use pricing software, breakdown the ‘nice to have’ from the essential and how to prioritize what you need if you don’t already have it.
The 4 Infrastructure Components You Need to Use Pricing Software
There are four basic infrastructure components that your company will require to get pricing software up-and-running and consequently, driving your business forward to become a lean and efficient pricing machine;
- The Right Technology
- The Right People
- The Right Budget
- The Right Experience
Let’s dive in and take a detailed look at each of those four critical infrastructure components that you will need to make pricing software an integral part of your pricing system.
1. The Right Technology
In the shift transitioning from spreadsheet driven pricing and/or reactive ad-hoc pricing to state-of-the-art automated pricing software, your organization will need to have the right technology in place already to do so. A lot of that technology will be concerned as to how and where your organization’s data sits.
Depending on the size of your company, the way you do business and your data storage capability, the following four pieces of the technology puzzle will be essential in successfully transitioning from your current pricing setup to pricing software:
- An ERP (Enterprise Resource Planning) and/or CRM (Customer Relationship Management) tool that your organization uses as your company’s core system (such as SAP ECC or S/4HANA for example among many others like Microsoft Dynamics 365, Oracle, etc.) Whichever tool you use will be the software managing the key transactions. This may include the many areas that make up your business. For example, Order to Cash, Procure to Pay and Record to Reporting business critical processes.
- A Clean Set of Master Data – A complete and data cleansed product, sales, customer, and vendor master data will be required. If as a business, you have taken meaningful ownership of your data, the result will be improved data quality and visibility – which in turn will make for more insightful and better-informed decisions when using your pricing software.
- A Well-Defined Order-to-Cash Process – Order-to-cash (OTC) is the entirety of a company’s order processing system. It begins the moment a customer places an order and includes shipping the items, , creating invoices, and reporting on to financials. The Order to Cash process impacts your bottom line and relationships with your customers, so the process must be well-defined.
- Accessible Billing Data – Access to clean billing data, visualized in a powerful way, is especially critical, as these insights can drive real-time decision making with your pricing software. When real-time billing data — collected with each transaction and throughout your quoting processes — is available briefly, businesses can use their pricing software to quickly spot trends in product performance and customer engagement. This enables more accurate and informed product decisions, and quicker responses to changes in customer preferences and market trends.
2. The Right People
Let’s dive into the different people you will need to get involved with setting your business up for success with pricing software from the day-to day user, the critical IT people, and all the way up to the C-suite or Executive Level member that might be reporting it to the board, that need to be in place to build that infrastructure and use it for a successful implementation.
- Steering Committee: The steering committee usually runs above the individual project team to assist in resolving issues at the individual project level and clear obstacles and grant approvals on anything that may affect the organization past the project core team.
The steering committee will almost always include a VP or someone at the Executive or C-level, depending on the size of your organization – as an ‘Ultimate Decision Maker’ or Executive Sponsor – who can remove obstacles and provide resources and is dedicated to seeing the project through to success. Depending on your company, this person may be found in finance, sales, pricing or could even be the CEO.
- IT Project Manager: You will need a strong and experienced (preferably in implementations) IT Project Manager – someone who can navigate the different areas of your organization to get things done on time and help to make sure project activities, tasks and people are coordinated.
- A Core Software Implementation Team: Your people that will work closely with your pricing software vendor’s team to deliver the pricing solution.
- Project Owner/Lead: Usually the head of pricing – to control priorities to work on, what is ready for reviewed and assessment by the team, and what gets implemented first.
- IT Lead: A strong IT Lead who understands the company’s system landscape, the ERP system, your clean master data set and where it sits, and importantly, has a vision for how it will be implemented.
- Subject Matter Experts: Your subject matter experts should be chosen based on the specific function you will implement. If you’re implementing a CPQ (Configure Price Quote) solution, those people may come from your sales team. If it is a pricing solution you’re interested in, you will want to pull in experts from that area. On the other hand, if you’re looking for both CPQ and pricing functionality, bring in your experts from both areas to help you make appropriate and savvy pricing decisions applicable to your unique business model.
3. The Right Budget
It is always tough to determine a budget and throw out a ballpark figure of how much buying pricing software costs. There are so many factors to consider when making that estimate like the size of your organization – large enterprise level multinational company vs medium-sized national organization – for instance. Other factors like your company’s pricing maturity, data cleanliness, level of pricing functionality required and/or CPQ functionality etc.
As a general rule of thumb, you are looking at a 6 figure to 7 figure sum, but it will differ depending on your organization’s size and requirements.
Dive deeper and learn more costing specifics here in this article on ‘How Much Does Pricing Software Cost?’
4. The Right Experience
A critical part of the right experience in implementing a pricing software project is maintaining an open mind. Part of that critical cocktail for success is prior experience integrating Software-as-a service (SaaS) products and along with that, maintaining the level of open-mindedness and flexibility that those types can lend to a successful implementation of pricing software.
For example, the less your company can hold on to its technological past in forming your own opinions as to how your existing architecture will integrate with pricing software, potentially the more successful your integration will be.
Of course, if you can enable and use the people in your organization that have used pricing software before in other companies as champions in your software’s integration cause will be of great assistance. Those people with experience in visualizing how advanced data analytics previously changed their everyday working lives elsewhere can be the best advocates in getting widespread company-wide buy-in and user adoption of your new pricing software solution.
However, returning to the mechanics rather than emotion of your software integration for a moment, as we mentioned above, if your IT Team Leader in the project has prior experience in software implementation, that will constitute a big win for your organization.
Likewise, if your Executive Sponsor can communicate from prior experiences how the pricing software tool will bring about your organization meeting its unique set of business objectives, that will be a powerful experience to help sway the ‘undecideds’ in your company.
What Can I Do Without the Infrastructure in Place?
Most companies will have data of some kind somewhere, even if you don’t realize it. Most modern companies will have an ERP or at least method of capturing data of some kind during the transaction process and storing it in Excel or a similar in-house system. You will have that data somewhere, or bluntly put; the chances are you have it or you would not still be in business.
So, that’s your data checked off – great.
Your business might have been going through an extended period of growth for 4 or 5 years and you have continued to make money. Understandably, your business may not have been required to closely analyze why or how a granular extra 1% of profit might make all the difference to your bottom line.
Then, BAM! Along came COVID-19 and the war in Ukraine straight off the back of it, and suddenly you need to make extra revenue and watch those profit margins like a hawk. Whether you have an internal champion, or it’s time to start working with a partner to help you with your pricing strategy or software implementation journey, having that right person to consult will be a godsend.
Plugging Your Profit Margin Leaks
Plugging those profit margin leaks will pay off (and faster than you think too) and the software will pay for itself in quick time. The Return-on-Investment (ROI) of pricing software is exceptional and getting better all the time.
And if you don’t have the experience, well, you’re going to get it throughout the journey of the implementation process. Bear in mind, if you have gotten this far through this article, you have the vision to make pricing software a success for your business, and that’s what really matters.
Your vision and being able to adjust and pivot on the fly to your business needs and demands and being able to demonstrate that to your Executive Sponsors will make every decision and discussion around acquiring pricing software a much easier one with your organization.
If your business is looking for pricing software but lacks some of the required expertise in strategy development and integration, then take the opportunity here to learn more about the Advantage Pricefx Partner Network, Cognitus, and other pricing software partners available for your business to work with.
On the other hand, if you already have all the pieces of the pricing software infrastructure in place and you would like to stay one step ahead of your competition, then check out the article below that takes you through choosing the right pricing software for your company’s unique needs;