Maximizing Your ROI in Selectica Technology

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2 As a Selectica client, your organization possesses one of the most powerful business tools ever developed. Leading companies in numerous industries around the world use Selectica s technology to bring new products and services to market more quickly, price those products more profitably, and fulfill orders more accurately, adding millions to their bottom lines every year. In doing so, these clients combine advanced features of Selectica s technology with effective implementation and well-designed business processes to generate these benefits. This paper lays out the best practices your organization can use to increase the value it generates from your Selectica technology. And, it describes the steps you can take, starting today, to implement those best practices. The practices your company can put in place to gain the maximum return on your investment in Selectica technology fall into three areas: 1. Having a fully integrated solution for the Opportunity-to-Order cycle. 2. Using Selectica across all of your products and services 3. Having the most technologically effective implementation of Selectica s technology. Integrating the Opportunity-to-Order Cycle Most of Selectica s customers use the Configurator for sales configuration. By doing so they ensure that orders are processed with every detail of the product and service configurations reflected accurately. This means that the company s order reflects the customer s desires, that the company can manufacture and deliver the products or services as requested, and that they will work to meet the customers needs from both a technical and business perspective once delivered. However, you may not be aware that Selectica now offers a full set of technologies to support a broad range of needs in the Opportunity-to- Order Cycle. In naming this suite of tools we recognized that they worked together to help our clients Simplify the Complex, and so we call this solution set the Selectica Simplexity Configuration Framework. We have also renamed our core configuration product as the Selectica Simplexity Configurator. We re happy to see that our customers using our technology in many beneficial ways. For example, some clients use the Simplexity Configurator for designing their products and services. This ensures that products will meet requirements for technical performance as well as manufacturability. One Midwestern manufacturer of electrical parts uses the Simplexity Configurator in its engineering design processes. Customers select different connectors to create an assembly to suit their requirements while the Simplexity Configurator ensures that the assembly meets component guidelines, ratings, size, tolerance, etc. by enforcing relevant configuration rules. The final assembly thus created is used by the design engineers as inputs to create CAD drawings which aid manufacturing building the assembly. For many years now, companies have been using the Simplexity Configurator to manage manufacturing configurations as well as sales configurations. Since it is both flexible enough to support applications used by non-technical sales or customer service staff and robust enough to support the most demanding manufacturing applications, the Simplexity Configurator is well suited to the task. A major high-tech company uses the Simplexity Configurator in two ways. The first is at order creation when it confirms the accuracy of the order. Then, anywhere from a few minutes to a few days later, when they are ready to submit the order to manufacturing, the Simplexity Configurator rechecks the order. This verifies that, in the time since the order was originally created, no changes have been made to the manufacturing specifications, the product components are still available (and have not been end-of-lifed), and that the software components are still the latest release, among other things. The configurator then creates the Bill of Materials (BOM) and passes it into the ERP system to process the order. Remarkably enough, some companies are still unaware that the Simplexity Configurator supports the most advanced pricing applications. Among the attributes the Simplexity Configurator can store at any component level are cost, margin, and price. 2

3 In some ways, the Selectica Simplexity Configurator is like a business rules management system (BRMS) only exponentially more powerful. As clients configure a specific solution for a customer, ensuring that it meets all technical requirements, the Simplexity Configurator can use business rules to roll up the costs, margins, and/or prices as appropriate to determine an overall price for their customer. The resulting price meets all of the client s objectives for revenue and margin generation on a component by component basis as well as for the overall solution. An excellent case in point is an industrial manufacturer who manufactures and sells valves, regulators, and other products for managing fluid flows. This manufacturer uses the Simplexity Configurator to drive three major business functions Sales Configuration, Pricing, and Manufacturing Configuration. Most of their orders are automatically created either through being entered online by end customers or CSR s or by being received via Electronic Data Interchange (EDI) from resellers. Online orders are configured and priced on the fly with instant feedback to the person entering the order. EDI orders are configured and priced on receipt. Configuration errors, if any, are noted in an Error transaction sent back to the reseller. Otherwise, the fully priced order is confirmed via an EDI Purchase Order Acknowledgement. Once the order s configuration has been verified and the order has been priced, the Simplexity Configurator then generates the BOM and passes it into the manufacturers ERP system. The additional financial and manufacturing control companies achieve by integrating sales configuration, pricing, and manufacturing configuration at a single control point is invaluable. The Simplexity Configurator has been successfully integrated with CRM and ERP suites and best-of-breed solutions offered by every major software vendor in the market from SAP and Oracle on down. This means that you can be confident that you, too, can extend the value of your Simplexity Configurator across a broader range of business functions in your organization. However, the range of applications that can be supported by the Simplexity Configurator goes far beyond configuration and pricing. (See Figure 1.) With the Simplexity Configurator powering your enterprise, you can integrate processes from product configuration and pricing through quoting, proposal generation, deal negotiation, and contract management. Simplexity Configurator Contract Management Negotiating CRM (e.g., Siebel) Proposal Generation Quoting ERP (e.g., SAP/Oracle) Accounting Pricing Mfg/Eng Product Configuration Master Data Management (e.g., IBM WPC / SAP C&V) Product Mix Management Figure 1 The Selectica Simplexity Configurator Opportunity-to-Order Cycle 3

4 At every step, and for every transaction, the Simplexity Configurator can ensure that all decisions are made in full compliance with technical constraints, business rules, and corporate objectives. And because Selectica has been successfully integrated with all the leading ERP and CRM suites, you can be confident knowing it will work smoothly in your technical environment. Is your organization applying the power of the Selectica Simplexity Configurator to the full range of business functions applicable to your company? If not, contact Selectica and ask for a Selectica Certified Professional Services Consultant who can advise you on how best your organization can extend the power, and value, of the Simplexity Configurator deeper into your enterprise. Using Selectica Across All Your Products and Services Some Selectica clients have not yet recognized the necessity of having all their products and services supported by the Simplexity Configurator. In some cases, they say, We already have our most complex and best-selling products on the configurator. This ensures that our orders for those products are configured and priced correctly. Why bother to put the rest of our products and services on the system? Since they are less complex and/or sell in much smaller quantities, we can configure and price them manually. Isn t that good enough? In actuality, it s not. The reasons are straightforward. Business is getting increasingly complex. Customers are no longer content to purchase just physical products. They are looking for fully integrated solutions that incorporate, as appropriate, hardware, software, and services including even such highly specialized services as financing. Fortunately, the power of the Selectica Simplexity Configuration Framework can extend the breadth of solutions you can offer your customers far beyond just the configurable products themselves. There are several good reasons why your organization should have ALL your products and services powered by Selectica. Briefly, these are: Integrated Solutions Enhanced Channel Support Product Substitution Enhanced Deal Negotiation Guided Selling The fundamental principal that all five of these business practices share is that, doing them well, and in many cases, doing them at all, requires that the full range of your organization s products and services be implemented with the Simplexity Configurator. Let s take a closer look at each of these business practices and see how they can benefit your organization. Integrated Solutions Providing your customers with integrated solutions often means combining products and services from across the full range of your portfolio of market offerings. The Simplexity Configurator adds even more value when it s used to configure not only individual products or services but solutions that include multiple products and services even across product lines. Figure 2 illustrates how businesses are providing broadly integrated solutions: Here we see how an integrated solution, or Deal, actually consists of multiple products and services from each of three different lines, S, T, and R. This is shown in the case of product line S, where products X, Y, and Z each are a part of the solution. And, in this case, product X is configurable and includes components A, B, C, and D. Of course, not all products and services are complex or configurable. But the Simplexity Configurator can maintain key attributes, such as cost, margin, functionality, utility, and compatibility at any level. So for example, it can calculate the total price for the solution by using cost and margin information from the lowest component level for configurable products and services and from the product or service stock keeping unit (SKU) level for non-configurable products and services. But if those non-configurable products and services are not in the system, then manual intervention is often required to access information from two or more systems to achieve the same result. This adds delays, effort, and cost to the process as well as allowing for the introduction of errors in the manual processes. 4

5 Deal Product Lines S T R X Y Z SKUs Configuration A B C D Components Function Compatibility Cost Margin Utility Figure 2 How Businesses Are Providing Broadly Integrated Solutions More value can be added by using the strength of the Simplexity Configurator to manage the configuration of the overall solution. Just as the configurator can be used to apply rules and constraints to the components comprising a complex, configurable product, it can also be used to apply rules and constraints the products and services comprising an overall solution. So, for example, several major telecommunications service providers use the Simplexity Configurator to manage delivery of solutions across their Wireline, Wireless, Internet, and Media Services product lines often referred to in the industry as Triple Play or Quad Play solutions. This allows them to configure solutions for their customers that address both technical constraints and business rules across their product lines. By having a single system supporting their full range of products and services, one telecommunications giant was able to reduce the time it took to bring over 90% of their new products to market from an industry average of seven months to less than a day. Another reduced the customer service order entry process from 50 screens across six different systems to two screens in a single system. Enhanced Channel Support If you only have a portion of your goods and services available through the Simplexity Configurator, you might be missing out on incremental sales from your channel partners. Because the Simplexity Configurator makes it so easy for channel partners to sell your products, they might be reluctant to sell the products not incorporated into the Simplexity Configurator, because they are so much more difficult to deal with. Product Substitution It s a reality of business. Sometimes there s a need to substitute components within products or even products within solutions. It may be that a given product (or a key component need to manufacture a given product) is simply not available for a specified configuration. Without the Simplexity Configurator, it s often a time-consuming, laborious, and expensive effort to determine whether and how a substitution can be made that will be technically valid and still meet the customer s needs. However, by having all your products and services on the configurator, you can implement the rules and constraints that allow for product substitution. Of course, substitution may be made for other reasons. For example, it may be that the price computed to meet the seller s revenue and margin goals is not acceptable to the customer. This leads us into the third area of opportunity presented by having the full range of your products and services implemented on the Simplexity Configurator enhanced deal negotiation. 5

6 Enhanced Deal Negotiation If an initial solution specified for a customer will not work with that customer s budget, than it necessary to reconfigure the solution for that customer. This is where a unique capability of the Simplexity Configurator comes into play Reverse Configuration. Reverse Configuration allows you to start at the top, with the overall solution, and change attributes at a summary level. The configurator will then identify feasible combinations of products and services (and, as appropriate, configurations of those products and services) that will meet the overall objectives. This, of course, parallels the analytical process that sales people, sales engineers, product managers, and pricing specialists typically go through in a similar situation. However, with the Simplexity Configurator powering the analysis, it can be completed in a tiny fraction of the time and effort otherwise required and with a much higher level of consistency across the enterprise. Solution Recommendation Even when they understand their needs very well, customers often lack the technical expertise to specify exactly what configurations of products and services will meet those needs. For most companies, helping them do so is one of the most time consuming and expensive parts of the sales process. Furthermore, more and more customers of Selectica are moving into the solution selling space by offering solutions comprising products, services, bundles, warranties, etc. rather than just independent and disparate products. There are a number of ways to automate aspects of the solution recommendation process, and, for those companies offering complex, configurable products and services; the Simplexity Configurator is a critical part of this process. Once more, though, it s imperative that all your products and services be implemented if you wish to reduce your cost of sales for all of your transactions. The bottom line is simple. If you hope to get the full value from your Simplexity Configurator, you simply must put the processes and procedures in place to ensure, first, that all of your current products and services are implemented on the configurator and, second, that your new products and services are implemented on the configurator as a standard part of your new product introduction process. Your Selectica Certified Professional Services Consultant can help you design and implement the processes and systems you ll want to have in place to do so. Optimizing the Technical Implementation of Your Simplexity Configurator Of course, none the business benefits you need to compete in today s challenging marketplace will materialize if you can t implement a system that is scalable, performs well, and utilizes IT resources effectively. To ensure that your implementation achieves these objectives, it s critical that you have the latest features and capabilities of the Selectica Simplexity Configurator in place. These include the following: A single engine for sales, pricing, and manufacturing configuration Automated configuration modeling Performance and Scalability Standard product architecture Dynamic product changes Order integration A Single Engine In theory it might be possible to have separate engines managing configuration for sales, manufacturing, pricing, and the rest of the Opportunity-to-Order cycle. But why would anyone want to do that? Aside from the time and effort needed to implement multiple separate product and service engines, keeping them synchronized would be next to impossible. Clearly no one would start out planning to implement multiple engines. However, many people tolerate multiple engines in a legacy environment. Continuing to invest in managing and synchronizing separate engines is a colossal misuse of resources. Furthermore it effectively prevents you from ever achieving the business benefits of a single engine. Selectica s Certified Professional Services Consultants can help you develop and implement the migration path for moving all of your products and processes onto the Simplexity Configurator. 6

7 Automated Configuration Modeling In the early days of configuration software, one of the limiting factors in generating the benefits of the technology was the time and effort needed to model product configuration rules and constraints. In years, however, Selectica s has led the way by dramatically reducing the time and cost of product configuration in the Simplexity Configurator. The Selectica KnowledgeBase Development Environment (KDE) has ushered in the era of Automated Configuration Modeling. This upgrade to the base Simplexity Configurator eliminates much of the configuration modeling effort. Payback of the cost of acquiring and implementing the KDE is measured in months or even weeks. While a detailed description of the KDE is beyond the scope of this paper, your Selectica Certified Professional Services Consultant can show you how it works and can help you develop and execute your plan to implementing the KDE. Performance and Scalability High-complexity to high-throughput Selectica s Simplexity Configurator can not only handle high-complexity solution but also deliver high-throughput systems where the models are not very complex but high-throughput is a requirement. A major telecommunications carrier is using Selectica for configuring a complex service offering but is also using it for billing where the models are simple. In this case, though, the system needs to process more than 50,000 bills per hour requiring a sub-second response time for each transaction. Scaling with increasing load Selectica s Simplexity solution has been designed to scale extremely well to support ever increasing loads as your business grows. Typically, the application response time remains constant (with less than 10% overhead) under load compared to single-user response time as long as there are sufficient resources available. Beyond that, one could simply add more server instances and/or appropriate hardware to scale up for increasing needs. Our customers have employed these techniques successfully in their deployments and are able to achieve highly-scalable systems. Selectica provides all the required components for load balancing, server management, etc. to deploy a solution like this. For example, one customer s solution supports a load of 1500 sessions per hour with more than 75 concurrent users requiring average response time of less than 5 seconds. They do this using 10 server instances on 2 IBM P-Series servers with 12 GB of memory-heap per server instance. Everyone needs their applications to make the most efficient possible use of computing resources. The latest versions of the Simplexity Configurator are even faster and more efficient than their predecessors. In some cases, processing speeds have increased 40%, 50% or more. Dynamic product changes How dynamic is your business? Are you facing difficulties in introducing new products due to your IT solutions? Is your time to market longer than acceptable? Even if your products are not changing, the parts they are made up of may be changing with a rapid pace. Selectica s Simplexity solution solves this problem very elegantly. Figure 3 shows Selectica s Knowledgebase Development Environment (KDE), which is an automated modeling system that can enable auto-generation of your product models without any human intervention. We call this touch-less modeling. Figure 3 KnowledgeBase Development Environment 7

8 Also, the Simplexity Configurator will automatically hot-swap the old models with new models for future transactions without any downtime. So you can update your systems as frequently as needed. Once such a system is put in place, you could publish your models as per your requirements every few hours as done by one multi-billion dollar high-tech company, daily as done by most of our customers, or whatever your business may require. Standard product architecture Standardization and repeatability is key to a scalable and maintainable deployment. Over the years, Selectica professionals have implemented KnowledgeBase architectures for many different products and services. Our analysis of this experience led us to design a Selectica Best Practices Modeling Standard for product and services Knowledge Bases based on the similarity of behaviors typically desired for those products and services. Now, as part of our implementation methodology, we can incorporate this Best Practices Modeling Standard for the Knowledge- Base design for your products and services. The benefits of such standard product architecture go a long way in ensuring that Different products and/or services with similar structures and behaviors can be modeled in a standard way. Customers can achieve complete modeling automation using tools like the Selectica KnowledgeBase Development Environment (KDE). Customers can develop common user interfaces or application pages that serve such products and services without requiring changes to those UI s when introducing new products and services that conform to the same architecture. This not only makes new product introductions faster and easier, but also reduces maintenance costs for the entire deployment. As we all know, the Selectica KnowledgeBase (KBS) forms the core component of a Selectica deployment. Customers can develop several applications which can cater to different categories of users such as the web, reseller channels, internal sales, etc. with the same set of KBSes. This makes designing a standard product and KBS architecture a very important part of a Selectica engagement process. With tools like KDE, several Selectica customers have achieved total KBS automation with a standard and extensible product architecture reducing new product introduction and change management time from months to days. Order integration Selectica s Simplexity Configurator plays an important role in the opportunity-to-order cycle and has excellent capabilities to aid order booking. Our customers have leveraged this effectively to take the perfect order from Selectica and put it into their ERP systems to book the order. A large network equipment customer of Selectica integrates product configuration details into their Oracle ERP implementation using built-in functionality for exporting configuration information. For example, customers can order a typical router with 3, 6, 9, 13 or more slots. In addition, they have the choice of cards, DRAM memory, flash memory, software, etc. Selectica's configuration technology ensures that the relevant rules are enforced and the components of the product form a valid, buildable configuration. The output of the configuration in this case is a Bill of Materials which, in turn, is the input to the Oracle Order Management module for conversion of the quote to an order. What would happen if the customer now wishes to change the order? Selectica recognizes that this is a frequent occurrence. Selectica s Simplexity Configurator restores the order and allows the users to make changes, while ensuring that the changes always reflect a perfectly buildable configuration. By doing this, customers have benefited tremendously by eliminating margin erosion from returned orders, non-buildable products and assemblies and related shipping overheads. 8

9 How Selectica Can Help You Gain More From Your System Are you ready to take the next steps to get more out of your existing implementation? Selectica offers a number of professional services programs to get you moving quickly on your way toward the vision described in this paper: Upgrade Your Current Implementation The Selectica technology has evolved by leaps and bounds over the years. We have significantly enhanced such critical areas as new product introduction, change management processes and pricing optimization. This has been very beneficial for many of our customers. Selectica has made several very important enhancements to its Configuration Engine including Reduced Enumeration Domain Dynamic Component Properties Resource Constraints Multiple Rollbacks Configuration Context Advanced Messaging Configurator as an Enterprise Java Bean Leveraging these new features will make your deployment much simpler, faster and easier. Expand Your Configuration Range to Your Entire Product Set If you have only a portion of your product set enabled through the Simplexity Configurator, you are leaving money on the table. By expanding your configuration footprint to include your entire product set, you can facilitate sales, either through direct customer sales or through partners, as well as provide cross-sell/ up-sell opportunities by ensuring that all products are in the same knowledgebase. And don t worry about the load Selectica products are designed to scale easily. Implement Knowledge-Based Development Environment (KDE) Is it taking too long to introduce new product or change existing ones? Ever wish you could add and/or modify products in a few days? By implementing KDE you can take advantage of product modeling automation to standardize modeling, enabling you to get products to market even more quickly and make product changes seamlessly. The productivity benefits of using Selectica s KDE to automate the configuration modeling process are tremendous. With an effective implementation of KDE, customers have experienced dramatic reductions in modeling and IT support efforts for updates and changes to existing products and time-to-market for introduction of new products. Enroll in Training Courses Selectica offers a host of training courses to ensure that you and your staff can get the most out of your Selectica system. In addition to the Selectica Core Technology course, we offer the following courses: Selectica Knowledge Base Development Environment Advanced Configurator Features Configurator as an Enterprise Java Bean Selectica Advanced Development Toolkit These new and enhanced course offer great hands-on experience to both business and IT teams aiming towards a highly scalable deployment using Selectica best practices. The courses are offered at the Selectica offices in San Jose, CA and in Pune, India as well as at the customer locations by highly experienced Selectica Certified Professional Services Consultants. 9