Explaining SAP CPQ Support for Quote Process in the BRIM Context

For their business, CutAbove needs more storage for "Video Cutting" in the Cloud. From the O2C Company, they can buy a cloud selection service that allows them to store extra videos, if necessary. Mark, at the O2C Company, negotiates with CutAbove for the configuration of the high-tech service and the price conditions.

The quote process is an interactive communication between both parties.

CutAbove requests a quote from the O2C Company.

Using SAP CPQ, the O2C Company can quickly and easily generate a professional PDF quote to submit to CutAbove.

Let's begin by introducing O2C’s sales engineer, Mark.

We explore the necessary steps that Mark needs to create a quote with configurable products for a customer.

First, Mark creates quotes to accurately reflect the customer's needs and specifications. Once the quote is prepared, Mark sends it to the customer for review. Sometimes, Mark can change the quotes by providing discounts or adjusting the amount to better fit the customer's budget. Also, Mark can change the configuration according to the customer's specific needs, such as adjusting the volume or using a different technical ID.

Finally, once the customer has approved the quote, Mark creates a customer confirmation letter to confirm the details of the transaction. Each of these steps is essential for Mark to effectively manage quotes and provide customers with accurate and tailored product offerings.

SAP CPQ (Configure, Price, Quote) is a cloud-based solution that streamlines the sales process for complex products and services. It enables guided selling by walking sales reps through product configuration based on customer requirements and compatibility rules.

SAP CPQ automates pricing calculations, applying relevant discounts, promotions, and customer-specific pricing. It generates professional, accurate quotes and proposals quickly.

The solution integrates with CRM and ERP systems to apply customer and product data. It enforces pricing and discounting rules to protect margins while allowing flexibility.

SAP CPQ provides analytics on sales performance and quoting metrics. It supports multichannel sales, enabling partners and customers to self-configure and generate quotes. For solution architects, CPQ offers extensibility options and APIs to customize and integrate with existing systems. It can handle complex product catalogs, pricing models, and approval workflows to meet diverse business needs across industries.

1. Guided Selling

Helps sales reps navigate complex product catalogs and configurations through an intuitive interface with guided questions.

2. Product Configuration

Allows configuration of complex products and bundles based on rules and constraints defined in the system.

3. Dynamic Pricing

Calculates pricing in real-time based on configurations, volume discounts, promotions, and so on. Supports complex pricing models.

4. Quote Generation

Automatically generates professional quote documents with configured products, pricing, and terms and conditions.

5. Approval Workflows

Configurable approval processes for discounts, special pricing, and so on.

6. Subscription Management

Handles recurring revenue models and subscription products.

7. Omnichannel

Supports quoting across multiple channels - direct sales, partners, self-service.

8. Rules Engine

Powerful rules engine to enforce product compatibility, pricing, and business policies.

9. Upsell/Cross-sell

Recommends relevant add-ons and complementary products.

10. Document Generation

Creates customized proposals, contracts in addition to quotes.

11. Internationalization

Supports multiple languages, currencies, and localization.

12. Analytics

Provides insights on quoting performance, popular configurations, pricing trends, and so on.

13. Integration

Integrates with CRM, ERP, and eCommerce systems to pull in customer data, product info, and push orders.

The key benefit is that CPQ automates and streamlines the entire quote-to-order process, reducing errors, improving sales productivity, and enhancing the customer buying experience. It's especially valuable for companies selling complex, configurable, or customized products and services.

During the subscription lifecycle, charges are calculated only once, including charges billed in advance when the subscription becomes active. It ensures that customers are aware of the total cost from the outset and allows for clear billing and transparency throughout the subscription period. By calculating charges once at the beginning of the subscription and including any fees billed in advance, customers can have a clear understanding of their financial commitments and can plan accordingly. This approach also helps to streamline the billing process, making it easy for both the company and the customer to manage the financial aspects of the subscription.

The usage charges are applied to transactional pay-per-usage activities and are billed in each billing cycle in which the usage occurs. This structure ensures that customers are only charged for the specific services they use, fostering transparency and cost efficiency. Billing the charges for pay-per-usage activities in each billing cycle provides customers with a clear overview of their ongoing expenses and allows them to monitor their usage against the associated costs. By aligning charges with actual usage, customers can make informed decisions about their usage patterns and effectively manage their expenses.

The recurring charges are billed in each billing cycle in which a recurring charge occurs, unless waived. Customers have the option to have these recurring charges billed in advance or in arrears, providing flexibility in managing their financial commitments. This billing structure ensures that customers are informed about their recurring expenses and have the opportunity to plan for these charges. The option to waive recurring charges provides customers with the ability to adjust their billing based on their specific needs. Whether billed in advance or in arrears, this approach allows for transparency and predictability in managing recurring expenses.

With SAP CPQ, you can define and sell subscriptions. SAP CPQ is preintegrated with SAP BRIM and allows you to replicate subscription products and charge types like one-time charges, recurring charges and usage charges that can be bundled in CPQ with other products and services.

In the following video, you discover how Quote-to-Cash is a cyclic process.

Integrating SAP Configure, Price, Quote (CPQ) with SAP s/4HANA for Billing and Revenue Innovation Management (BRIM) can significantly enhance the end-to-end Quote-to-Cash (Q2C) process for organizations. Particularly the organizations operating in subscription-based or usage-dependent business models. This integration ensures that the configuration and pricing created in SAP CPQ are seamlessly carried through to the billing and revenue recognition stages managed by SAP BRIM. Here’s an overview of how this integration can be achieved:

SAP CPQ is integrated with SAP S/4HANA BRIM application over the SAP Business Technology Platform (BTP). BTP is a comprehensive technology foundation provided by SAP that enables businesses to connect, manage, and innovate with their data across various environments, be it on-premises or in the cloud. It serves as a unified platform for integrating, building, extending, and running applications.

For the integration, first the master data like products and business partner must be replicated.

SAP CPQ receives master data like products and business partner from SAP S/4HANA.

CPQ product model is extended with subscription-specific fields to adopt SAP S/4HANA BRIM product. Enhancements in CPQ are subscription-specific fields like billing cycle, contract duration, and so on.)

The Data Replication Framework (DRF) filter can be used for S/4 product types (not all products are relevant for CPQ) and the distribution chain. CPQ does not support, for example, sales area-specific data in the product.

SAP Cloud Platform Integration (CPI) is a dynamic cloud-based integration service, designed to facilitate seamless and secure data integration across different SAP and non SAP systems, on-premises, and in the Cloud.

In CPI, it is possible to do the mapping of the fields, such as:

• Direct mapping for most of the fields.
• Define if a product is a subscription product (Value mapping on S/4 product type) .
• S/4 product group (MARA-MATKL) mapped to CPQ product type..
• S/4 product hierarchy mapped to CPQ product category (Value mapping)
• For bundles, only a dummy bundle product is replicated that is used in CPQ to bundle specific products together.
• MDI Master Data Integration service is used to replicate the business partner.

For customers that do not use MDI BuPa Service, CPI iFlow can also be connected directly to S/4 without MDI in between. Contract accounts are not replicated; in integration that we assume that the business partner has only one contract account which can be used as default; otherwise a custom integration is needed.

In SAP, the CPQ product can be configured. During the configuration process, it is possible to call SAP Variant Configuration and Pricing Service (CPS) to get configuration and the prices from SAP S/4HANA.

The CPS provides Variant Configuration and sales pricing functionalities with high compatibility to the back-end. The CPS calculates prices for configurable and non configurable products.

The pricing service lets the sales teams, customers, and channel partners price the products accurately and efficiently. Apply the knowledge of SAP sales pricing to model rules in the back-end and use them everywhere. That allows smooth end-to-end data flow between cloud applications and the SAP back-end. Relevant pricing data is replicated from SAP S/4HANA in the SAP Cloud to allow the pricing service to use that data independently of the back-end load or availability.

By using the CPS, the SAP CPQ’s own engines for configuration and pricing is bypassed. With it, configuration and pricing models can be created in SAP S/4HANA and can also be used in SAP CPQ. Instead of remodeling them again in SAP CPQ, map them when sending the quotes to the back-end.

The integration of SAP CPQ with CPS is done in runtime when the user starts the internal sales process by creating a new quote for a customer. Then, selecting a configurable product from the catalog, adding products to the quote, and configuring the quote.

SAP Variant Configuration and Pricing is used as the default mechanism for configuring and pricing subscription (SAP S/4HANA for Billing and Revenue Innovation Management) products in SAP CPQ. If the quote item is configurable, the quote data from SAP CPQ and the configuration data from SAP Variant Configuration and Pricing are combined and sent to SAP S/4HANA for Billing and Revenue Innovation Management. Otherwise, only the standard product information and pricing details are transferred to SAP S/4HANA for Billing and Revenue Innovation Management. Products that have not been replicated from SAP S/4HANA for Billing and Revenue Innovation Management, but created directly in SAP CPQ, are ignored in the integration which creates the SAP S/4HANA Solution Quote from the SAP CPQ Quote.

The prepackaged integration content uses the SAP Event Mesh to process events for the quote integration from SAP CPQ to SAP S/4HANA and for the change contract processing status from SAP S/4HANA to SAP CPQ. In both cases, the sending system does not send the complete document but only a notification about a create or change as an event.

SAP Event Mesh is a dynamic, distributed architecture that enables seamless and efficient event-driven interactions between applications, systems, and devices across diverse and often geographically dispersed environments. It effectively creates a "mesh" of interconnected event brokers that facilitate the real-time flow of event data, ensuring scalability, resilience, and high availability in modern enterprise systems.

At the end of the sales process, when the quote is accepted by the customer, the quote is replicated to SAP S/4HANA BRIM and a solution quotation and the relevant subscription contract are created.

It is possible to change existing contracts in SAP S/4HANA for Billing and Revenue Innovation Management from SAP CPQ.

After a quote is created, the customer can decide after some time to change the quantity of an item, cancel an item that is already in the quote, or renew a subscription by extending the contract duration. In such a scenario, a sales representative in SAP CPQ finds the contract with the items that are to be updated, canceled, or renewed (contracts are located in SAP S/4HANA, they are not replicated in SAP CPQ), and adds the items to SAP CPQ as assets.

The sales representative then applies the needed change process group (for example, to renew a contract item, they can apply a change process group with the EXTENSION change process) to the asset which adds it to quote items. Eventually, they can update the item based on the customer’s wishes (for example, extend the contract duration for two years).

Integrating SAP CPQ with SAP SOM for handling change processes creates a streamlined and efficient system for managing subscription modifications. This integration ensures that changes are accurately reflected in both configuration and billing systems, maintaining consistency, reducing errors, and improving the overall customer experience. By using modern integration technologies and best practices, businesses can further enhance their Quote-to-Cash workflows, driving greater efficiency and satisfaction.

The following are the steps in CPQ Subscription Product Model Process Flow:

1. SAP CPQ receives subscription master material from S/4 BRIM and creates a simple product.
2. SAP CPQ adds specific (system) attributes, Contract Duration and Billing Cycle, and creates configurable products.
3. SAP CPQ receives characteristics (attributes) for particular master material over KB sync from SAP Variant Configuration and Pricing Service and adds them to CPQ subscription product.

The SAP CPQ to SAP S/4HANA for Billing and Revenue Innovation Management integration supports simple and configurable products. Subscription products are mastered in SAP S/4HANA Billing and Revenue Innovation Management and they arrive via SAP Cloud Integration to SAP CPQ as simple products. In Subscription products, three system attributes (Contract Duration, Billing Cycle, and Contract Extension Period) can be added.

Contract Duration

The contract duration determines the duration of the contract. Transferred from the configurator.

Billing Cycle

The billing cycle determines the billing invoice timing, for instance, the frequency (for example, monthly) and day (for example, first in the month). Transferred from the configurator.

Contract Start Date

The contract start date is the start date of subscription contract.

Contract End Date

The contract end date is the end date of subscription contract. Calculated from the Contract Start Date and the Contract Duration.

If more complex configuration is needed, SAP Variant Configuration and Pricing Service attributes are added to the simple products. If SAP Variant Configuration is used for product configuration, the attributes (VC characteristics) are synchronized from SAP Variant Configuration to SAP CPQ via the knowledge base synchronization.

When configured items are sent to Solution Quote, separate subscription contracts for each item are created. In this case, the quote data from SAP CPQ and the configuration data from SAP Variant Configuration and Pricing are combined.

In the integrated scenario of CPQ and SAP S/4HANA, you have the options to maintain product configuration rules and pricing either in SAP S/4HANA or in CPQ depending on your business requirement.

When a product is replicated in CPQ from the backend, it will, by default, use the SAP Variant Configuration and Pricing Service during the product transaction to run configuration rules and get the pricing.

Beside the default scenario, it is possible to define CPQ as a configuration engine and/or pricing engine.

When the product is replicated in CPQ from the backend, it is possible to define product configuration rules in CPQ, and during the product configuration. Run the CPQ configuration rules instead of using the default SAP Variant Configuration and Pricing Service.

Also, it is possible to define product pricing in CPQ for replicated backend products. Regardless if product configuration rules are run in SAP CPQ or SAP Variant Configuration and Pricing Service.

The integration of SAP CPQ with SAP S/4HANA provides the following advantages:

• One aligned data model for the master data like Products and Business Partner in the Quote-to-Cash process.
• Replication of master data is based on a central master data integration service. This makes the solution:
  • Semantically aligned – one aligned data model across SAP applications.
  • Flexible – easy to adapt SAP applications or third party applications.
  • Extendable – adapt according to your business needs.
  • Compliant – consistent, scalable, purpose-driven.
• The integration is preconfigured and the comprehensive data model enables new innovations.
• Easy to integrate new solutions.
• The integration is preconfigured and the comprehensive data model enables new innovations.
• Easy to integrate new solutions.
• TCO reduction for customers due to minimal configuration.