5W – Understanding Quote-to-Cash (QTC)

Thank you for reading! Please see “Why 5W?”  for context, methodology and disclaimers.

Quote to Cash Overview

The Quote-to-Cash process (also known as Q2C or QTC, the latter I am using as the acronym in this article) is a set of business processes that includes product / offering selecting, quoting, pricing, up-sell, contracting, invoicing, integration with payment systems, contract renewal and more. We should all recognize that reducing friction after the sale is a critical component to engaging delivery, achieving revenue targets and getting paid. In an ideal world, QTC would be automated and heavily integrated with all component systems and dependent systems.

Given the importance of streamlining revenue-associated business processes, it is surprising to note that many companies have not effectively automated or standardized their QTC processes. While some businesses have standardized some of them .. others have selected or inherited multiple SaaS-based systems over time, and still others rely on separate processes. However, there is a significant lack of end-to-end integration for QTC in most businesses.

You might also have heard of Order to Cash (OTC). While the terms may be used interchangeably, OTC and QTC are different:

  • OTC likely does not include configuration capabilities for the product / offering, like setting the price, creating a quote, or any bits associated with Contracts and Contract Renewal. OTC tends to be at the order level, where these items are simple (quantity, color, etc.), or already identified.
  • QTC encompasses a much larger set of business processes and as noted above, may well include OTC bits for scoping, pricing, logistics and delivery.

An effective QTC implementation will be tightly bound with company Enterprise Resource Planning (ERP), Configure Price Quote (CPQ), inventory and Point of Sale (POS) Systems for brick-and-mortar establishments. If the organization transacts business online, an E-Commerce System acts as POS, and a Customer Experience Management (CXM) System can provide significant Business Intelligence (BI) value by tracking customer interactions on the site, capturing buying patterns and interest in other products for future cross-sell / up-sell outreach.

If the organization lacks native (or effective) integration across systems, it can consider deploying Robotic Process Automation (RPA) as an effective stopgap to connect other systems to a QTC system while integrations are built.

 
QTC Business Benefits

QTC falls on the right-hand side of a Supply Chain Management (SCM) diagram, where an end customer has selected / described a finished product / offering and is entering purchase / contract / services negotiations. Note that in a retail E-Commerce transaction, there is typically little complexity on this: select the item, customize, click the quantity, enter payment and shipping information and the product shows up. For more complex offerings, scoping, customization, integration with external systems, current-customer discounts and much more will require much more detail when finalizing an purchase.

Consider QTC enabling / automating a complex set of transactional steps, including:

ActionActorNotes / Opportunities
Product / Offering SelectionBuyerGuided by Seller / Automation
Configuration / ScopingBuyer / SellerGuided by Seller / Automation
Configure Product / Offering / Services Price Quote (CPQ)SellerSeller Document Workflow
Approve / Reject CPQSeller ManagementIterative; should be automated
Create ContractSellerSeller Document Workflow
Provide Approved Quote and Contract to CustomerSellerSeller Document Workflow
Negotiate ContractBuyer / SellerIterative; requires multiple entities.
Sign ContractBuyer / SellerLogistics: ‘wet’ versus digital.
Check Customer CreditSellerExternal System
Place OrderSellerSeller Internal System
Create InvoiceSellerSeller Internal System
Send InvoiceSellerSeller Internal System
Pay InvoiceBuyerBuyer Internal System
Revenue RecognitionSellerSeller Internal System
Contract RenewalBuyer / SellerTypically outside the QTC scope.

This list is not complete and will vary widely across companies.

QTC Capabilities

Many E-Commerce transactions automate the early stages of this (Product / Offering / Configuration / Scoping, some quoting), but as the bulk of these processes involve disparate systems (including internal systems like Contracting, Financial and Warehouse Management), E-Commerce can (and should) only go so far in the overall QTC scope.

QTC transactional steps touch multiple systems in the Seller environment:

  • Order Management
  • Configuration Management
  • Quoting (CPQ) Management
  • Contract Lifecycle Management (CLM)
  • Credit Management
  • Warehouse Management (WM)
  • Accounts Receivable (AR)
  • Payment Management.

.. and so on. Automation is the first step, but integration is the real key to accelerating the entire scope of QTC to business benefit.

The QTC process is comprised of discrete steps, a subset of which are described above. A QTC system that integrates, automates and governs transactions, including policy-based logic, approval routing, notifications, and providing an all-up process view is a major benefit to an end customer. A quote from the Aberdeen Group (provided by BlackCurve) cites QTC ROI is significant, resulting in:

  • 105% larger deal sizes.
  • 49% higher proposal volume
  • 28% shorter sales cycle
  • 26% more sales representatives meeting their targets
  • 17% higher conversation rate

These benefits are largely due to streamlined, interconnected and error-free automated processes. Please note the numbers above were extracted from QTC systems across multiple sales organizations and across all industries. End customers should take a serious look at QTC to achieve this kind of reporting alone .. most organizations can search across systems to validate these findings in their present environment.

Addressing the automation and interconnectivity use cases in the ‘Business Challenges’ section above will aid in the selection of a QTC offering, as each represents a checklist item to be confirmed in an end-customer environment during discovery.

Organizations with robust Supply Chain Management systems will recognize the opportunity to improve in-chain payment processes by expanding the scope of the QTC process to include Trading Partners for whom they are a Provider or a Seller.

QTC Use Cases

QTC is effectively its own use case, speeding the process between initiating, configuring, pricing and closing on a sale to receive revenue. Granted, you’ll note a lot of complexity across a large number of systems that describe a complete solution.

QTC Providers

The major ERP, CRM and SCM players have a QTC offering or integration / implementation:

CompanyFeatures / Notes
AcceLIMPrimarily visibility and integration tools.
AccumaticaERP with CPQ and QTC integration.
ApttusCPQ, contract management, E-Commerce and revenue management. AI- / ML-enabled.
Callidus SoftwareCloud-based sales, marketing and customer experience. SaaS-based, with flexible (subscription, services and licensing) pricing options. Owned by SAP.
CapgeminiCPQ and Contract Lifecycle Management (CLM) with QTC integration.
Cincom SystemsCPQ with QTC integration.
CloudSenseCPQ, OM, CLM and E-Commerce built atop Salesforce.
ConnectWiseCPQ, RPA and QTC integration.
DataServPrimarily FPA with QTC integration.
DocusignThe DocuSign Agreement Cloud is a significant expansion to their online document management capabilities, which now include CLM.
experlogixCPQ and OM for Salesforce and Microsoft Dynamics CRM.
FPXExperience Management solutions for Enterprises, providing CPQ for Sellers and Buyers.
KBMaxCPQ with Salesforce integration (Epicor).
OracleThe Oracle CPQ Cloud is tightly integrated with its CXM suite.
SalesforceCRM provider. Acquired SteelBrick in 2015. SB built QTC as an SFDC application.

ED: As Article Publish dates are frozen in time, it is quite possible that reviewed vendors and their capabilities may have advanced beyond those presented herein. Please accept my apologies for my shortcomings. A note to vendors: please reach out to update your current offering capabilities and I will update.

QTC Audiences

A QTC engagement is unlikely to be greenfield, as some automation, on-premises or SaaS silos will likely exist. It will also cross multiple audiences within an organization, including:

  • IT
  • Contracting
  • Quoting
  • Finance (AR / AP)
  • E-Commerce Platform Owners
  • Logistics and Fulfillment Roles

.. and all the way to the executive suite.

A modern QTC offering should have no issues connecting with modern SaaS silos via API or RPA. This is a solid benefit to call out as end customers will be rip-and-replace averse when engaging with critical legal and financial systems. Initial engagement will include:

  • Discovery of the current order, fulfillment, payment systems, plus business workflows.
  • Capture integration points (by name and integration method).
  • Document the present workflow as part of solution planning.

Some reluctance will surface as many will cite some of their processing components are working well enough to suit their needs. This posture will manifest itself early in a conversation, especially among operators of ‘in the chain’ components. While a company-wide QTC effort will be driven from the top, there is still value in engaging with operational entities within an organization to ascertain process, performance and contract intelligence.

Common Customer Objections include:

  • QTC is expensive: Cost is relative, and like any investment in business technology, a customer must examine the ROI of the purchase against the potential value the technology and disciplined business processes will bring to the company. There are many SaaS-based QTC offerings with robust integration points offering process improvement without a rip-and-replace requirement.
  • QTC is complicated: The short version: it is. As QTC requires discipline both in process management and integration, suggesting a dedicated resource or a partner to assess and execute. QTC is connecting, configuring and NOT coding in over 75% of the use cases, and creates huge time savings when deployed. It is not all sunshine and roses .. if systems that cannot be integrated (siloed, lacking APIs or are paper-based) are in the process, you may not be able to eliminate some manual steps in the first iteration.
  • QTC is overkill: Many organizations may feel they’re too small or not complex enough for QTC. Tease this out in Discovery .. if the customer has a quoting and approval process, they will benefit from QTC capabilities.
  • We lack the bandwidth to deploy QTC: See ‘complicated’, above. There are companies who can assist with this.
  • We already have QTC: I appreciate it when an organization has an existing implementation as it results in a shorter education cycle and lets us engage more directly. Through Discovery, unpack the extent of their implementation, any components are getting old / need updating, or don’t play well (integration or reporting) with others. You may also be able to expose opportunities for QTC within their SCM implementation, as noted in ‘capabilities’, above.

Not an objection, but a QTC implementation isn’t typically do-it-yourself. Most organizations will recognize this, so it is important to have engaged Partner Sellers to provide Services in these engagements.

Conclusion

You may surmise QTC is a less common implementation in companies and not likely a greenfield solution. Companies will have manual or semi-automated processes, each with a process discipline. QTC is an enabling technology within E-Commerce, Logistics and Fulfillment platforms, so industry / vertical is less important than how the customer transacts business.

Some offerings are more end-to-end than others .. but note: as flexible Integration is a requirement for a QTC offering, an end customer can select and right-size a solution that has just the features they seek at a price point they can afford. Most of these are SaaS-based, allowing for a low barrier to customer entry and flexible entry / escape paths.

About Michael Coates
I am a pragmatic evangelist. The products, services and solutions I write about fulfill real-world expectations and use cases. I stay up-to-date on real products I use and review, and share my thoughts here. I apply the same lens when designing an architecture, product or when writing papers. I am always looking for ways that technology can create or enhance a business opportunity .. not just technology for technology's sake. My CV says: Seasoned technology executive, leveraging years of experience with enterprise and integration architectural patterns, executed with healthy doses of business acumen and pragmatism. That's me. My web site says: Technology innovations provide a myriad of opportunities for businesses. That said, having the "latest and greatest" for its own sake isn't always a recipe for success. Business successes gained through exploiting innovation relies on analysis of how the new features will enhance your business followed by effective implementation. Goals vary far and wide: streamlining operations, improving customer experience, extending brand, and many more. In all cases, you must identify and collect the metrics you can apply to measure your success. Analysis must be holistic and balanced: business and operational needs must be considered when capitalizing on a new technology asset or opportunity.

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