Adding CPQ and Billing Functionality to Salesforce by acquiring SteelBrick

On December 23 2015, just before the holidays, Salesforce and SteelBrick announced an agreement for Salesforce to acquire Steelbrick for $360 million. Salesforce has a long history of acquiring companies that extend and complement Salesforce functionality and this is in the mid range of the scale, with ExactTarget ($2.5 billion in 2013) and Buddy Media ($745 million in 2012) at the high end and comparable with the more recent purchase of RelateIQ ($390 million in 2014) Interestingly, Salesforce Ventures had invested in SteelBrick back in February 2015. So what functionality does SteelBrick provide and why would Salesforce be interested in purchasing it?

SteelBrick has developed a native Salesforce app that covers Quote to Cash functionality. You may be familiar with Configure, Price and Quote (also referred to as CPQ), Quote to Cash adds on top of that to include billing (the cash part). Most people that use Salesforce quickly discover the quoting functionality in Salesforce is quite basic, there is no order configuration capability and it is also lacking in any billing functionality. This has resulted in customers doing custom development to enhance the existing functionality to meet project requirements or implementing functionality of a number of AppExchange vendors who have seized the opportunity to plug these gaps with their own app. There are many companies in this space either offering general CPQ functionality like SteelBrick, Apptus, Big Machines or focusing on a niche such as Zuora for subscriptions or CloudSense for the Telecoms industry.

If you are not familiar with CPQ functionality, here is some examples of  the functionality it offers:

Configure

In the Sales Cloud, you are on your own when it comes to adding products to an opportunity or quote. You select a price book and then can add any combination of products from that price book that match the currency of the opportunity. Many companies have rules around what products make sense or can be sold together. CPQ applications help to make sure that the mix of products and services is valid. Think of purchasing SasaS software (e.g. Salesforce) and the various options of editions, feature licences, storage and support plans. Another example is a combination of products and services. I worked on a project where the customer was selling satellite bandwidth and the quotes included the services (satellite transponder bandwidth, teleport hub charges, support etc.) and physical products (satellite dish, modem, etc.) which needed to be suitable for the satellite provider chosen.

So CPQ functionality for configuring products can include:

  • Use questions and filters to guide the product configuration process to a valid combination of products (guided selling)
  • Only allow compatible products to be added to quotes or orders
  • Be able to specify when only one of a set of products can be selected
  • Have multiple levels of product configuration
steelbrick configure

Steelbrick Configuration

Price

The Sales cloud allows you to store a list price in a price book, which can be overridden with a sales price when adding a product to an opportunity. It also offers the ability to apply a discount on the line item. But what if you need to apply a discount to the whole quote or there is pricing based on the product and services bundle? This is where CPQ apps can:

  • Apply discounts to individual line items or to the entire quote
  • Price according to the mix of products and services
  • Configure if approvals are required at the line item level
  • Configure volume discounts

steelbrick-pricing

Quote

After adding products and services to an opportunity, you end up with one amount. This doesn’t cater for situations where there may be a mix of one time charges and recurring charges. Salesforce has basic quote templates, but these only meet very basic needs. Customers will often turn to other solutions such as Conga for document generation. CPQ Apps can:

  • Provide a breakdown of the quote price if there are one time and recurring charges
  • Configure quote templates and configure if additional materials (such as a product sheet) should be included in the quote documentation
  • Include Cover Letters in the document pack

steelbrick-quote-document

Billing

This is one of the differences between CPQ and Quote to Cash. Billing or Invoicing functionality extends into traditional ERP territory with features such as:

  • Producing Invoices
  • Collecting Payments
  • Integration with payment gateways
  • Integrating with accounting / ERP systems

It will be interesting to see how Salesforce integrates this functionality into the Sales Cloud. It will most likely be via a feature licence as was done with Knowledge, CRM Content and Live Agent. So although this acquisition may have the other CPQ and Quote to Cash AppExchange vendors concerned, it may come at an additional cost for customers, meaning there will still be competition in the space. Also, Salesforce Ventures have continued to invest in Apttus, a competitor of SteelBrick, as recently as September 2015.

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Comments

    1. Rielle G.

      Hi Kamyar, as of the moment there are no plans of adding the CPQ course as our focus is to continuously improve and elevate the current courses that we offer, we are also working in completing the Javascript Developer I course.