Telco-Specific CPQ Systems

Whitepaper October 2024

Telco-specific CPQ systems The anchor for CSP-enterprise engagement Author: John Abraham, Principal Analyst

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Telco-specific CPQ systems - The anchor for CSP-enterprise engagement

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Publish date 25 October 2024 Cover image: Photo by CHUTTERSNAP

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Telco-specific CPQ systems - The anchor for CSP-enterprise engagement

EXECUTIVE SUMMARY Configure/Price/Quote (CPQ) systems are a relatively new class of software application, which broke cover as a standalone solution in the late 2000s starting in enterprise verticals before making it into telco in the mid to late 2010s.

As the name suggests, CPQ refers to a range of capabilities that allow the sales team to check availability of product or service, confirm pricing and provide a quote. The genesis of the CPQ system was as a means to simplify the sales agents’ process flow from the moment they receive a request for proposal until the time the quote is generated. Before CPQ, the sales process was highly inefficient; multiple tools and systems had to be consulted, which took a considerable amount of time and also introduced numerous inadvertent errors which further delayed sales completion. CPQ engines emerged in the 2000s as a system that offered a unified interface to configure, price and generate quotes for enterprise orders.

The successful adoption and practicality of CPQ systems in various enterprise verticals was a key driver for CSPs to conduct trials and assess the value of these systems in their operations framework. In the initial phase, telecom communications services providers (CSPs) relied on generic CPQ systems which made an immediate impact on sales and ordering processes. However, there were numerous telco-specific challenges in the quote to cash workflow that these systems were unable to address. The generic CPQ system was based on a lowest-common-denominator principle, which, while suitable for some other industry verticals, was not built for supporting telco-grade protocols and a fusion of legacy and modern multi-vendor software environments.

Telco approaches to CPQ systems have gone through multiple iterations since the early experiments in the mid-2010s. It was evident that CSPs required a CPQ that can engage with and provide support for telco-specific systems and processes to simplify and automate the quote-to-cash process. The evolution of the telco-specific CPQ can be roughly summarized over three phases, illustrated in Figure 1.

This report explores CSPs’ understanding, preparedness and approach towards adoption of modern CPQ systems. For the report, Appledore Research surveyed and interviewed over 50 senior executives across 23 countries, mostly tier-1 and selected tier-2 CSPs. We limited our survey panel to CSPs who have had a CPQ system deployed for at least a year, have more than one line of business (such as mobile and fixed/cable) and whose enterprise business accounted for more than 10% of revenues.

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Telco-specific CPQ systems - The anchor for CSP-enterprise engagement Figure 1: Overview of how telco approach to CPQ systems have evolved

Source: Appledore Research

RECOMMENDATIONS FOR CSPS 1. CSPs must consider transformation of their CPQ systems as a priority initiative, ideally accelerating existing plans to modernize these capabilities. Enterprises demand rapid response and customized solutions, and outdated CPQ systems directly impact market competitiveness, especially against more agile digital service providers. CSPs that delay CPQ transformation risk more than just operational inefficiency; they risk losing strategic enterprise opportunities to competitors who can configure, price, and quote complex solutions in days rather than weeks.

2. CSPs should favor specialized telco-specific CPQ engines that are far better equipped to manage and support telco operations in the long run. While these systems may come with higher costs and require more complex integrations compared to generic, industry-agnostic CPQ solutions, the added investment is justified. The telecom sector's inherent complexity necessitates CPQ solutions tailored to its needs. These specialized systems outperform generic offerings by managing challenges specific to telecom, such as supporting telecom-specific APIs, enabling catalog-driven ordering, handling COM-to-multi-SOM handovers, and accommodating inflight order changes effectively.

3. CSPs should plan for legacy transition and identify partners who are experts in CPQ and have exposure to complex telecom integrations. CSPs should prioritize partner demonstrating deep understanding of telecom reference architectures, industry-specific data models, and experience handling complex service dependencies across fixed, mobile, and digital portfolios and frameworks for managing complex data migration from legacy CPQ and catalog systems.

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Telco-specific CPQ systems - The anchor for CSP-enterprise engagement

THE CASE FOR ADVANCING CPQ TRANSFORMATION CSPs need to upgrade their Configure, Price, Quote (CPQ) systems to remain competitive in an increasingly fast-evolving market, especially if they are planning to expand their B2B offerings for both big and small enterprises. Legacy and generic CPQ systems were not designed to support the complexity of modern telco offerings, which often includes intricate bundles of services, hardware, and software delivered over multiple transmission mediums, some owned and some via partners.

In our survey, 85% of respondents confirmed that their existing CPQ systems meet fewer than threequarters of their requirements (Figure 2). 60% said fewer than half of their requirements were being met.

Figure 2: CSP response on if their CPQ system meets requirements (n=48)

Source: Appledore Research survey The incumbent systems face problems common to legacy setups such as: disparate silos, inability to scale, lack of flexibility requiring expensive customization, high support costs etc. More crucially, they also miss out on modern CPQ capabilities, the most prominent of which are: 1. Qualification inaccuracies: Qualification of order request is a highly complex and intricate task especially for CSPs with fixed lines. Qualification requires extensive feasibility checks which include partner and own asset mapping, policy constraints review, resource availability etc which requires integration with multiple other systems. Inaccuracies in qualification

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Telco-specific CPQ systems - The anchor for CSP-enterprise engagement

leads to revenue loss or customer dissatisfaction and predictably, this remains an area of concern for many CSPs, especially for complex multi-site orders.

Among the CSPs surveyed, over 48% flagged this as a priority issue that needs immediate attention.

2. Delayed responses: This is perhaps the biggest concern for most CSPs, especially as they compete against webscale providers who are setting benchmarks for turnaround time.

Response time speaks to the degree to which the order to quote process flow is seamless and absolute. Lack of clarity on policy constraints, partner pricing and qualification are some of the key reasons for delayed responses.

In the survey, over 50% of CSPs said they take more than 3 days to respond with an appropriate quote to the customer (Figure 3). Even among the CSPs who take less than 3 days to respond, some believe they are losing out by not responding in less than 1 day.

Figure 3: CSP response on time taken to send quote (n=48)

Source: Appledore Research survey 3. Lack of automation, requiring human intervention: Process flows that require human intervention, be it from quote-to-order or from order-to-fulfilment, can be a handicap as it delays responses and can introduce inadvertent errors. For CSPs looking to scale their enterprise engagement, it is essential that they plan for a zero-touch order-to-cash workflow in the long term, even if human interventions may be required in the near term.

As seen in figure 4 below, most CSPs reported this to be an issue.

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Telco-specific CPQ systems - The anchor for CSP-enterprise engagement Figure 4: CSP response on degree of automation from quote to order and from order to fulfilment

Source: Appledore Research Survey 4. Lack of clarity on margins in real-time: Visibility on margins can be a crucial factor in determining profitability and quote approval times. Over a quarter of CSPs surveyed cited lack of visibility on margins in real-time. For many others who have access to this information, there is uncertainty about the correctness of the data, which makes it redundant.

5. Poor financial capabilities and control: Most CSP systems today are incapable of supporting what is often termed as ‘exceptional scenarios’ such as partial refunds, policy-based discounting, real-time billing updates for edited orders etc. At scale, these capabilities become indispensable. Depending on the CSP’s incumbent infrastructure and lines of business, it will require multiple integrations with legacy and adjacent systems to achieve agility and control in monetization functions.

CSPs surveyed acknowledge the importance of financial capabilities and their responses highlight the importance of solving this across the board, rather than focusing on a selected few capabilities (Figure 5):

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Telco-specific CPQ systems - The anchor for CSP-enterprise engagement Figure 5: CSP response on the key commercial and financial capabilities required (n=48)

Source: Appledore Research Survey 6. Incomplete catalog: Catalog-driven ordering is at the heart of modern CPQ systems. This is, however, dependent on having a real-time synchronized catalog, that serves as the complete source of truth for all product and service offerings.

Also related to the catalog is the ability to retire and transition legacy products, which 43% of survey participants called out as important.

Most CSPs have multiple catalogs from different vendors with various restrictions, which makes it quite challenging to establish catalog-driven ordering approach for CPQ. 44% of surveyed participants called out incomplete catalog as a concern. The survey also explored catalog focused capabilities that CSPs consider essential for CPQ (figure 6).

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Telco-specific CPQ systems - The anchor for CSP-enterprise engagement Figure 6: CSP response on essential capabilities for CPQ catalog (n=48)

Which of the following capabilities are essential for the CPQ catalog?

Openess and standardization through TMF SID models, Open API etc.

Ability to manage geo dependencies through catalog Ability to manage complex network relationships through catal og Ability to create new offers by reusing existing configurations Ability to drive end to end configurations from a central catalog, even for partner offerings Central ised product catalog that provides a single point of truth 0

5

10

15

20

25

Source: Appledore Research Survey 7. Limited support for inflight order changes: Post-order changes are a common occurrence, yet support for such changes are not consistent across CSPs. Over 48% CSPs called out inflight order changes as something that needs to be improved. Orders must be broken down into granular components within the CPQ system to enable precise management of in-flight changes. When a component has not reached its point of no return (the point at which the order becomes irreversible), the changes can be implemented immediately but they may need to be scheduled to maintain alignment with dependent components that have passed their point of no return. When a component has passed its point of no return, the granularity allows support for two scenarios: a hard point where no changes are possible, and a soft point where changes are possible, but will incur some costs due to resources already committed.

8. Limited support for multi-country operations: This is a not-so-often considered capability that can be a gamechanger for CSPs operating across multiple regions with different taxation and other regulations. Most incumbent CPQ engines provide very limited support for multicountry operations as it is very complex to modify legacy systems for such requirements.

CSPs surveyed highlighted a range of priorities for multi-country operations (Figure 7).

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Telco-specific CPQ systems - The anchor for CSP-enterprise engagement Figure 7: CSP response on essential capabilities for CPQ multi-country operations (n=48)

Source: Appledore Research Survey

KEY CONSIDERATIONS FOR ASSESSING TELCO CPQ SYSTEMS When evaluating telco CPQ solutions, it is essential to focus on industry-specific capabilities and scalability that can handle complex product catalogs, including bundled services, usage-based pricing, and customizable plans.

A solution should support multi-play offerings and easily accommodate frequent changes in pricing and promotions.

Integration capabilities are key: the CPQ system must seamlessly connect with existing BSS/OSS systems, CRM platforms, and order management tools.

Advanced features like guided selling, AI-driven recommendations, real-time network inventory checks and marketplace linkages can significantly enhance the quoting process.

The CPQ engine’s performance in generating accurate quotes quickly, even for complex configurations is also crucial.

As evidenced above, there are numerous factors to consider for CSPs assessing future-proof CPQ engines. Appledore Research’s five key criteria for assessing CPQ systems are: Page 8

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Telco-specific CPQ systems - The anchor for CSP-enterprise engagement

1. Built-for-Telco solutions: These are purpose-built from the ground up for telco-specific applications and process flows to address the unique challenges faced by CSPs such as complex product bundling, dynamic pricing models, legacy multi-vendor environments and intricate service configurations across both physical and digital offerings. Key capabilities of such systems include telco API compliance, support for telco hierarchies, catalog-driven architecture, COM to multi-SOM support, integration with billing etc.

2. Self-service and automation: The future of telco-enterprise engagement will be highly reliant on automated process flows with autonomous self-service channels. Over three quarters of CSPs surveyed highlighted self-service as ‘important’ from a CPQ standpoint. Advanced CPQ platforms now incorporate smart recommendation engines that can suggest optimal service configurations based on customer requirements, usage patterns, and network availability.

This self-service approach is particularly powerful for standardized enterprise services such as SD-WAN, where automated feasibility checks and real-time pricing calculations eliminate manual intervention. The automation can also extend to other functions such as contract generation, SLA specifications, technical documentation etc. Additionally, Gen-AI is poised to enhance service configuration recommendations and implementations in the future, although this advancement depends on establishing robust foundational process models first.

3. Agility and composability: Composable product models enable CSPs to rapidly configure and launch new offerings by assembling pre-built components rather than undertaking lengthy development cycles. A composable CPQ architecture leverages microservices and API-first designs to enable rapid integration with both legacy systems and new digital capabilities, allowing CSPs to progressively modernize without disrupting existing operations. In addition, CSPs also need to plan for systems that are flexible enough to be deployed in cloud or in private data centers as a hybrid approach is likely to be part of telco operations framework for the foreseeable future.

4. Financial dexterity: Telco CPQ solutions are required to handle intricate pricing variables such as usage-based billing, subscription plans, discounts, bundling, and dynamic contract terms to ensure profitability while offering competitive pricing. CSPs also need to plan for a comprehensive framework for advanced financial capabilities, such as modern revenue models (subscription, rev-share, intent-based etc.), partner settlements, refunds and discounting, revenue assurance and fraud management etc.

5. Legacy expertise and enterprise exposure: CSPs should favor partners with expertise in legacy telco integrations and exposure to non-telco enterprises. The complexity of telecom product catalogs, pricing rules, and BSS/OSS integrations demands partners with proven experience in telecommunications CPQ migrations, not just generic CPQ implementation capabilities.

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Telco-specific CPQ systems - The anchor for CSP-enterprise engagement

CONCLUSION The telecommunications industry stands at a critical inflection point. CSPs face mounting pressure to drive revenue growth and shareholder value yet find themselves constrained by operational inefficiencies and a saturated consumer market. The enterprise segment represents a crucial growth frontier, with connectivity serving as the foundation for modern business services. However, capturing this opportunity requires CSPs to overcome significant challenges in offer complexity, competitive differentiation, and time-to-market.

Specialized CPQ systems emerge as a vital enabler in this transformation, particularly for enterprise market success. These solutions address the fundamental challenges CSPs face in monetizing complex service portfolios and accelerating deal cycles. By streamlining quote generation, automating complex configurations, and enabling flexible pricing models, telco-specific CPQ platforms help providers overcome the systemic inefficiencies that have historically delayed new service launches and hindered enterprise market penetration.

Success in the enterprise domain demands a radical transformation in how CSPs approach product development, pricing, and sales execution. While CPQ systems alone cannot address all transformation challenges, they provide a critical foundation for modernizing sales operations and accelerating go-to-market capabilities. CSPs that invest in these specialized platforms position themselves to capitalize on enterprise opportunities more effectively, with the agility and precision required in today's competitive landscape.

ABOUT THE AUTHOR With over 16 years’ experience in the telecom industry, John leads Appledore’s Digital Enablement & Monetization program. Previously he was at Analysys Mason for 11 years where, as Principal Analyst, he led the Digital Experience research segment. He has experience working with a varied client base on topics ranging from digitisation benchmarking and procurement for CSPs; strategy and go-to market for vendors and commercial and technical due diligence for financial institutions.

Earlier as a consultant at a BSS vendor, he led requirements gathering, solution definition and implementation at multiple tier-1 telcos in Asia and Europe. John holds a bachelor’s degree in computer science from Anna University (India) and an MBA from Bradford University School of Management (UK).

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