VENDOR NOTE.

UPDATE ON APTTUS:A LEADER IN CPQ AND QUOTE-TO-CASH

By P.J. Jakovljevic, TEC Principal Analystwww.technologyevaluation.com

Technology Evaluation Centers

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 2

Update on Apttus: A Leader in CPQ and Quote-to-cash

Apttus is a cloud software company that has risen fairly quickly from relative

obscurity to being a prominent fixture at salesforce.com’s major events—the

Dreamforce mega conferences and Salesforce1 world city tours. Needless to say,

the company has also grown and expanded its operations and functional scope in

just a few years. Apttus is based in San Mateo, California, with additional offices in

London, UK; Bozeman, Montana; and Ahmedabad, India. In 2014 it added about

350 people to its headcount, now nearing 550 worldwide, as well as 95 new client

logos to its install base of over 300 corporations. It is not surprising that its name

is derived from Latin words meaning “capable” and “speed.” Speed and agility

(responsiveness) in sales, service, and marketing (and entire business, if you will)

are indeed the new business imperative.

Apttus was founded in 2006, and its first solution was cloud contract lifecycle

management (CLM) software, in part owing to its founder’s involvement with “old

school” contract management software vendors Nextance and iMANY. The

company was started on its founder, chairman, and CEO Kirk Krappe’s credit card,

quickly ringing up an outstanding balance of $70,000. But in the first quarter of

the company’s existence it closed five deals. The last one was a million dollar deal

and the company was off to the races. Apttus is a software and product company

that was born in the cloud, multi-tenant on day one. This is a big deal, because

with configure, price, quote (CPQ) software (which the vendor will tackle along

the way) one can dig a hole with customizations and total cost of ownership (TCO)

spiraling out of control. This situation has dearly cost customers of other “cloud

perhaps” CPQ vendors who came on board in the late 2000s and couldn’t upgrade,

and were then faced with either a costly re-write or switch to another provider.

Apttus raised no capital until September 2013, salesforce.com being one of the

three investors. To date, every dollar spent by Apttus has been generated as

revenue by the company, while the capital raised is still in the bank. In 2007,

Apttus was interested in building a CPQ application, but salesforce.com’s product

management team announced that they were adding quoting capabilities to Sales

Cloud, so Apttus didn’t do anything at that time. A year later, however,

salesforce.com’s release turned out to be very rudimentary and Apttus started

building its CPQ solution, which launched in 2009—later to market than others,

but quickly catching up (see Figure 1).

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 3

Figure 1. Apttus’ Genesis

The reason to build everything on Force.com (and later on the Salesforce1

platform) was largely predicated on Apttus staffers’ past frustrations at Oracle,

Apple, Clarify, Nextance, and other old school enterprise software places where

building, delivering, and maintaining software was a nightmare. Neehar Giri,

President and Chief Solutions Architect (i.e., Apttus’ technical brains), built a

contract management app over the summer of 2006 on Force.com, and realized

that the platform was really well built for third-party developers. In addition,

Apttus could build a company without outside capital because it could leverage

salesforce.com’s global cloud-based infrastructure, and only had to pay

salesforce.com when a new customer came on board.

So the cloud model worked for delivery, and the business model was clearly

effective and capital efficient. Over the years, having 500,000 users in 50 countries,

with customers like GE Aviation, GE Power & Water, GE Healthcare, HP, DSV,

Global Foundry, Motorola, Phillips 66, Bobcat, Spark New Zealand (previously New

Zealand Telecom), Verizon, AT&T, Telenor Group, Covidien, McKesson, American

Express, Delta Airlines, etc., speaks to the strategic value of this decision eight

years ago. Figures below depict Apttus major clients by vertical industries (Figure

2), as well as the top 10 reasons why these customers have chosen the vendor

(Figure 3).

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 4

Figure 2. Apttus Major Customers

Figure 3. Why Apttus

Contract Management Stronghold

Given that Apttus and salesforce.com seem to be joined at the hip, salesforce.com

is also a prominent Apttus CLM reference customer after deploying it in the late

2000s. Here’s a webinar regarding the solution deployment and its use by

salesforce.com.

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 5

Considering Apttus’ origins in CLM, it is only logical that the majority of its 300

customers (about 60 percent) use that solution. Users can conveniently redline

contracts and collaborate in Salesforce Chatter directly from Microsoft Word (see

Figure 4). They can also update contracts quickly with pre-approved language

from their legal playbook. Nifty dashboards help them analyze contract workloads,

cycle times, contract value, and more for all agreements (see Figure 5).

Additionally, Apttus’ patent pending (12 patents) X-Author technology enables

Microsoft Office to be a user interface (UI) with full interaction and control

between salesforce.com and Microsoft Office.

Figure 4. Apttus CLM

Figure 5. Apttus CLM Analytics

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 6

Apttus Quote-to-cash Portfolio

During the last several years, Apttus has surrounded its original CLM solution to

become a Quote-to-Cash (QTC) software company that can cater to the vital

business process between the buyer’s interest in a purchase and the realization of

revenue. Cloud re-platforming of the IT infrastructure is creating opportunities for

salesforce.com and Apttus. A modern CIO mindset is that SAP, Oracle, and other

enterprise resource planning (ERP) products are Systems of Record, whereas

salesforce.com and Apttus are Systems of Engagement.

As Figure 6 (below) depicts, in addition to the aforementioned CLM and X-Author,

the QTC applications include CPQ, Renewals, and Revenue Management. The

system supports complex renewals, including add-ons, co-terminations, swap outs,

and end of life (EOL) situations. The enforcement of increase clauses during

renewals can result in addition of significant revenue. There is a recommendation

engine for up-sell, cross-sell, and renewals. Advanced deal management provides

insight into impact of potential changes allowing for increased control and deal

value.

Figure 6. Apttus QTC Portfolio

There is a support for complex pricing structures and deal ratings for global sales

organizations, with multiple price lists based on customers, channel, regions, etc.

The system supports a multi-dimensional pricing matrix and multiple price types

including one-time, recurring, usage-based, services, contract-pricing, etc. Also

supported are pricing tiers, ramps, pricing adjustments, pro-ration/co-termination

charges, over-rides, quote re-pricing, and more, including approvals for products

or pricing. Apttus has also been doing price guidance/prescriptive pricing based

on historical data and/or rules via machine learning.

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 7

Figure 7 (below) shows X-Author for Excel, which makes it fast, easy, and safe to

use Excel to update QTC information, including pricing. Apttus considers X-Author

a competitive advantage because Excel and Word users can use it as an alternate

UI for their CPQ or QTC processes. They can update multiple objects in Office apps

while observing all the security controls and rules defined in salesforce.com.

Moreover, X-Author currently offers the offline mode with replication capabilities,

given that the Salesforce1 mobile platform is not there yet.

Competitive CPQ Offering

In a matter of just a few years, Apttus has developed complex CPQ capabilities

that include product catalogs, groups, hierarchies, entitlements, nested

configurations (product bundles and sub-bundles), solution selling (products and

services bundles), and guided selling at any levels with intelligent constraints to

reduce sales errors and customer confusion. There is an attribute-based search

capability and asset-based ordering for existing customers.

The system provides application programming interfaces (APIs) for “headless

configuration” and custom UI to enable the automatic configuration of

customizable products that are based on a promotion definition. Headless

configuration can work with or without the UI. When you don't have a UI, you are

using the APIs to validate the configuration. This is especially useful when a quote

has been sitting for months and the customer is ready to finally sign the purchase

order (or there are changes to existing in-flight orders). This capability also allows

non-quoting apps such as back office systems to recheck orders via a UI. It also

helps in doing batch validation or individual validation of inflight orders or quotes.

You can use APIs to run through the options to confirm that what you quoted, say,

six months ago, is still valid or not.

In addition, a stateless engine allows companies to scale very efficiently since the

session can be set to any server and processed (Google and Facebook are

stateless engines and scale very well). If a session fails or hardware fails, a user

can pick up and proceed seamlessly once it is back. If it is not stateless then one

won't be able to do hot failover switching (to prevent downtime) easily, which is

needed today for 24/7 operations for global companies.

For its part, declarative programming makes it easy to specify the constraints and

rules, especially the complex ones for large companies with lots of products and

rules. It makes it easy to create a "truth table" or a set of valid solutions amongst

millions of options with support for inclusion, exclusion, compatibility, resource-

based constraints or rules, etc. These constraints and rules can fire in any

direction, as opposed to a procedural way to write lots of “if-then-else”

statements. If you have a constraint engine then you are modeling, executing, and

maintaining in a very efficient fashion. In Apttus’ case, there is no proprietary

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 8

language—everything is click, drop down, and select. Companies need data-

driven modeling with clean separation between customer data, rules,

configuration engine, and UI to achieve this. Many CPQ vendors never got there

and thus their upgrades were very difficult, and scalability and system

performance at the end of each quarter (when sales orders would typically flood)

was very difficult.

Last but not least, as Figure 8 displays, there are rich visualization capabilities via

integration with leading computer aided design (CAD) and product lifecycle

management (PLM) systems to render 2D and 3D visualizations, as well as

schematics/blueprints for more engineered products. There are integrations with

SAP, Oracle’s Agile PLM, Dassault Enovia, PTC Windchill, Arena PLM, SolidWorks,

AutoCAD, and more.

Figure 8. CAD Viewer Integration

As many other CPQ vendors do, Apttus too has some joint customers with SAP.

Thus, Apttus can import product models built in SAP Variant Configurator (SAP VC)

into Apttus. The product models actually map well given that the rules in SAP VC

can be convoluted. SAP VC is good for managing the fulfillment of ordered

products and managing the manufacturing bill of materials (MBOM). However, it

does not have the flexibility to support bundles, pricing structures, and other

creative ways of packaging the same products in different ways. It was designed

for product companies and does not work well for services-based companies such

as telecom, financial services, or subscription business models. It is also not a

customer-friendly or sales-friendly configurator.

SAP has built its own Internet Pricing & Configurator (IPC) as its front-end

configurator. Still, SAP VC customers don’t make changes often because it is not

easy, and they are also struggling with stock-keeping unit (SKU) proliferation.

Those customers want Apttus to pull the product or pricing master from SAP and

then use the flexibility in Apttus’ solution selling (bundles of bundles or nested

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 9

models) and comprehensive pricing capabilities for products and services, selling

through partners, etc. They thus consider Apttus their new “front office” for its

speed, flexibility, and being customer centric.

Strong CPQ Attracts salesforce.com As Well

Not surprisingly, salesforce.com selected Apttus for corporate-wide CPQ needs in

2013. Previously, salesforce.com had a heavily customized CPQ tool (Comergent

by IBM) that was neither efficient nor fully executed in the cloud. The vendor

needed a solution that could adapt to continuing company acquisitions and rapid

growth, given that the former CPQ solution prevented 5,000 or so reps from

effectively selling new products and company growth. Apttus was selected not

only for already being the CLM solution at salesforce.com and for being 100

percent native on the Salesforce1 Platform, but also for a proven success with

complex and large product catalogs, the ability to maintain and manage the entire

QTC process (including constant and rapid changes) without requiring proprietary

coding and developer involvement, comprehensive functionality and advanced

usability, and being multichannel for both direct and online sales. In addition,

increased collaboration from Salesforce Chatter and Microsoft Office is enabled

by Apttus X-Author for Chatter.

At the recent Dreamforce 2014 conference, there was a QTC Session with Apttus

CMO Kamal Ahluwalia and Meredith Schmidt, SVP of Revenue Operations at

salesforce.com, entitled “5 Ways Salesforce Closes Complex Deals, Anytime—

Anywhere.” Those five ways that Apttus helps salesforce.com close deals are as

follows:

1. Automate the QTC process

2. Add Deal Guidance to help sales people

3. Add E-Commerce to help customers and partners self-serve and find and

configure the right products online

4. Mobility: Explore data, uncover new insights, and take action instantly from any

device (see Figure 9)

5. Machine Learning: Data-driven dynamic guidance for deals up-selling/cross-

selling

Some competitors might point to the fact that Apttus CPQ is not yet live at

salesforce.com after a lengthy project, but Apttus claims that its solution is

ready—it is just that salesforce.com has postponed the go-live date due to fiscal

year end consideration. Also, some competitors claim that Apttus is complex

because the solution has some custom objects. But Apttus has a complete data

model for a full QTC process, which requires objects that salesforce.com doesn’t

yet have in its standard objects library. Apttus does the complete automation of

this process and can provide the right level of detail/insight for executives or

operational teams on any device.

Figure 9. Apttus Mobility

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 10

Apttus is also built for Manufacturing, Healthcare/Life Sciences, Telecom & Media,

and Financial Services verticals, and there are plenty of use cases for these large

global customers that are not yet supported by salesforce.com, for which Apttus

had to add its own objects. In addition, salesforce.com has traditionally not been

focused on transactional systems such as e-commerce platforms, where it lags

behind Oracle ATG, SAP Hybris, IBM WebSphere Commerce, NetSuite Venda,

Epicor ShopVisible, etc. That is changing now with its platform becoming more

and more capable of handling e-commerce use cases both in terms of volume and

pricing for a large number of users. Salesforce.com has let its partners lead the

investment here and Apttus is glad about the traction it is getting with its e-

commerce solution. It now has a complete multi-channel selling solution

(including e-commerce and partner commerce) for global companies (see video).

Of the aforementioned competitive e-commerce platforms, only IBM can handle

configurable products (Oracle is likely still integrating BigMachines with ATG).

Click-to-chat (Online Agent) and co-browsing capabilities are already available on

the Salesforce Platform, and used in Service Cloud. So far, Apttus has gained e-

commerce customers who want to sell across multiple channels, and sell complex

products—so catalog-based selling is not enough. More and more CIOs are

moving their infrastructure into the cloud, whereby on-premises (or hosted at

best) e-commerce solutions like ATG are not preferred. Some of the

merchandising capabilities for consumer goods are still likely to be better with

ATG or Demandware, but Apttus e-commerce is quite competitive where

complexity and configuration matter.

Expanded Quote-to-cash Analytics

Many future enhancements at Apttus will be about analytics, making everything

increasingly data driven to make the full QTC environment dynamic and

responsive to customers and markets. There will be more key performance

indicators (KPIs) and dashboards on performance/trends/risk with quotes,

products, pricing, contracts, rebates, and revenue management.

In fact, at Dreamforce 2014, Apttus announced they have joined the Salesforce

Analytics Cloud (a.k.a. Salesforce Wave) ecosystem with its new Quote-to-Cash

Intelligence (QTCI) solution. Apttus QTCI leverages quoting, contract, and data in

salesforce.com’s customer relationship management (CRM) Sales Cloud, offering

to provide actionable data including machine learning-based guidance that

ensures executives meet their targets via actionables that uncover the often

hidden behaviors and patterns. Wave is a cloud analytics platform designed for

every business user to explore data, uncover new insights, and take action

instantly from any device.

Salesforce Wave is a business intelligence (BI) offering (although some might

debate that it is rather an engaging reporting and visualization cloud solution for

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 11

now) by providing a user interface (UI) that allows data to be easily manipulated

and visualized by non-IT personnel. Wave is not about traditional rows and

columns and pivot tables and queries, and salesforce.com wanted everyone to

interact with the product and feel good using it (some suggest that video games

experiences have served as an inspiration here). Its mobile-first design, advanced

search features (enabled by the EdgeSpring acquisition), and the ability to easily

integrate with many data sources are other nice features.

QTCI works in conjunction with Apttus and Sales Cloud, providing users with

accessible and useful recommended actions for every aspect of the sales and

revenue cycle. By combining the power of the Salesforce Analytics Cloud (Wave)

with the utility of QTCI, customers now have access to a suite of predictive

intelligence tools inside salesforce.com that can provide the following:

Dynamic recommendations of what products current and future customers are

most likely to buy, and what upsell/cross-sell products representatives should

recommend. Close more business this quarter with system-driven

recommendations that learn from your historical behavior, business rules, and

revenue goals.

The optimal sales and ordering configurations for all configurable products

Suggested updates to contract terms and conditions, discount types, product

bundles, and more based on previous successes and failures

Algorithms and KPIs that generate practical and contextual tracking and

predictions against customizable goals (see Figure 10)

The ability to monitor the most critical KPIs and get alerts and notifications to

take the necessary action from a mobile device

Specific tailored recommendations for the individual, the group, and the

company

Natively integrated with Salesforce1 Platform, Salesforce Wave benefits from the

trusted platform and enables admins to quickly drag and drop salesforce.com data

to deploy sales, service and marketing analytics apps. In addition, developers and

IT can use new Wave APIs and other data connectors to easily connect to other

data sources to build custom analytics apps for any business function, or embed

analytics into analytics apps and connected products for customers.

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 12

Figure 10. Apttus QTCI Revenue Snapshot

Given that Apttus brings all sales and revenue-related processes, data, and

insights inside Salesforce CRM, companies should better understand which deals

are more likely to close based on historical success factors, and then take action

on any deals that are “at risk.” Companies can also monitor their exposure to risk

by setting risk definitions and thresholds for quoting, contracting, order

fulfillment, invoicing, and revenue management (see Figure 11). They can also

track sales activity across all their channels, including e-commerce and partner

commerce.

Figure 11. Apttus QTCI Risk Monitoring

Getting More Scalable

As a recap, Apttus has become a CPQ leader (in addition to the CLM leadership) in

the salesforce.com ecosystem almost overnight. That advancement was helped by

the exit of BigMachines, which used to be the CPQ leader at the Salesforce

AppExchange marketplace, but has since been acquired by Oracle (in fact, its

underlying technology is Oracle database and Java, which made it a logical fit for

Oracle). Certainly, FPX, PROS Cameleon CPQ, and CallidusCloud CPQ remain loyal

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 13

salesforce.com partners and strong CPQ providers, but they have their own

platforms, citing Force.com’s past issues with processing huge volumes of sales

orders, configurations, commissions, etc.

As part of salesforce.com’s insider circle, Apttus knows what is coming down the

track to address these performance shortcomings. The code-named “Aura”

framework was used last year for mobile-first applications on Salesforce1. The

recently-unveiled Salesforce1 Lightning builds on top of Aura to make it easier to

build responsive applications for multi-device interactive screens. Lightning

includes a number of tools for developers, such as Lightning App Builder (build

apps visually using off-the-shelf and custom-built Lightning Components) and

Lightning Components (re-usable, self-contained UI elements for Force.com apps).

With Lightning there is more client-side logic, which should reduce round trips

and improve performance, especially for interactive applications like Apttus. More

along the lines of improving performance/scalability, a new Salesforce Apex code

compiler will significantly speed up the first time load models. Last but not least,

the session affinity capability will be able to route new user sessions to pods that

already have the models in cache.

While Apttus can never relax, both due to the competition from the

aforementioned CPQ establishment and the Salesforce1 newcomers like

SteelBrick (which touts simplicity and Force.com purity, but is targeting less

complex and somewhat smaller companies than Apttus does), the future seems

bright for the upbeat company. It will be interesting to watch what new

developments come from the vendor, both in terms of new customers and

functionality.

Related Reading

CPQ Pioneer FPX Becomes Cloud CRM and ERP Go-to Vendor, November 2014.

Catching Up with PROS at Dreamforce 2014, October 2014.

Update on Apttus: A Leader in CPQ and Quote-to-cash www.technologyevaluation.com 14

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