Digital transformation can be something of an all-encompassing term. When applied thoughtfully to pricing, sales and commercial processes, it can lead to powerful results. Greg Peters, president and CEO at Zilliant, discusses the three critical digital transformation lessons that B2B companies cannot afford to forget and mistakes to avoid.
Customers enjoy a consistent and personalized experience across channels, and the company grows profitably. Yet, making the vision of powerful, intelligent commerce a reality remains elusive. Why? It’s simple. Pricing.Â
Pricing has been well-established as the most effective profit lever, yet, in my experience, it is too often an afterthought. However, it’s the last – and most critical – mile of digital transformation. Overlooking pricing results in a host of hard-learned lessons. Let’s look at three digital transformation lessons companies have learned (the hard way).
See More: Digital Transformation Status: Where Are You on the Low-to No-code Scale?
Lesson 1: Over-Reliance on Execution Systems for Pricing
Companies have been focused on execution systems like ERP, CRM, CPQ, and eCommerce as the bedrock of their digital transformation efforts. These systems are critical, but they aren’t built to price dynamically.Â
Typically, we see a pricing engine or the system that houses the pricing logic required to arrive at the final price residing within an ERP. While it served companies well, this first-generation approach to pricing engines didn’t contemplate how complex pricing would become, how frequently it would need to be updated, and how digital channels would accelerate the need for dynamic pricing.
Maintaining market-aligned pricing requires that companies update pricing strategies as market conditions change and immediately deploy those prices into all their commercial systems. Pricing triggers, or events that necessitate a price change, are happening with increased frequency. Inflation, cost volatility, supply chain challenges, and competitor price moves are creating rapidly changing business conditions and show no signs of slowing. Â
Pricing is a mission-critical function, and housing complex price logic and enabling real-time retrieval, often in very high volumes, within ERP is increasingly infeasible. In the Gartner report titled, Harness the Core Capabilities of a Digital Commerce PlatformOpens a new window , pricing “may need to be real-time if pricing is highly dynamic. Real-time integrations to ERP are fraught with performance risks, so often caching layers or other forms of ERP protection must be in place. [The] interaction of pricing with promotional engines can be complex and must be approached with caution. Pricing management is an area of growing sophistication and disruption. Third-party point solutions are often required to take advantage of innovations.â€
It’s not uncommon for a B2B company that once updated prices annually based on cost changes to now have costs rise many times in one quarter. By the time the pricing team exports prices from ERP into spreadsheets, makes manual updates, gains feedback from sales and other stakeholders, re-uploads prices into commercial systems, and communicates the price changes, the market has changed. Increasingly, companies are finding that the inflexibility of pricing logic and the omnichannel requirement to calculate prices using that logic in real-time completely overwhelm the traditional ERP system. Many companies operate with multiple ERP systems, further exacerbating the problem.Â
As the demand for dynamic pricing grows, companies are learning that ERP can’t keep pace with the speed of digital channels. Interrelated to this issue, another hard lesson is that manual tools are no longer sufficient to respond to pricing triggers quickly, efficiently, and effectively. Let’s dig into why.Â
Lesson 2: Not Considering the Role of Price Management in Digital Transformation
As Gartner points out above, if ERP can’t handle the demands of real-time, dynamic pricing, a third-party pricing system must be called on to serve as the centralized, flexible price management system.Â
Typically, this function of price management takes place in spreadsheets, a process that has also been outpaced by digital demands, as outlined in the above example. In practice, it can take anywhere from six weeks to four months to update pricing when using manual processes and relying on pricing logic locked within an ERP. It’s simply not fast enough. Instead, a robust price management solution can allow companies to act on strategic pricing initiatives in real-time.Â
Price management software provides pricing teams the ability to manage a wide swath of tasks in a manner that is minimally disruptive to the business. For example, automating cost pass-through processes, updating prices across channels, managing price exception and approval processes, running scenarios to understand the business impact of price changes, differentiating price across many dimensions, storing markup-over-cost, discount-from-list and other critical pricing formulas, mass updating customer agreements, and managing rebate programs.Â
There’s also a more strategic advantage: pricing teams can incorporate an unlimited amount of data to set market-aligned strategies as quickly and frequently as is needed. If pricing teams then have a centralized source of pricing truth, the dynamic pricing challenge is turned into an opportunity for pricing agility. For example, utilizing additional data sources like competitive data, abandoned cart data, and conversion data to inform eCommerce-specific pricing strategies.
With a robust pricing management system, what used to take days, weeks or months can be accomplished in hours or less. Finally, when considering the role of pricing in digital transformation, it’s critical to consider how future-proof the solution is in terms of speed, scalability, and modern commerce.
Lesson 3: Failure to Build for the Future of Commerce Â
If you’re online, so are your customers – today, this is undeniable. It’s a driving force behind the dynamic pricing trend and results in some hard-learned lessons on where pricing should reside to be as effective as possible.Â
 When companies embrace a modern approach to pricing, they are well-suited to scale quickly and satisfy buyer demand for dynamic, omnichannel pricing. From a pricing perspective, they are better equipped for digital commerce than their peers, who rely on pricing logic locked in ERPs and manual pricing methods.Â
Once a robust price management application is in place and paired with high availability, highly performant API, the groundwork has been laid to enable powerful and dynamic omnichannel pricing. Together, they can serve as a new, mission-critical pricing system of record that sits alongside ERP and performs the same pricing functions … within milliseconds.Â
A transformative pricing solution delivers margin-driving benefits such as visualizing, calculating, delivering and updating pricing in real-time across CPQ, CRM, eCommerce and any other commercial application. Customers can be empowered with self-service capabilities. Company experts remain in the driver’s seat to perform analyses against financial performance, position prices relative to the competition, and strategize on customer-specific pricing. All of these benefits can be delivered with endless scalability, high availability and high performance, ensuring market-aligned, relevant pricing in all channels at all times. Â
See More: Why APIs and Microservices Are Vital for Digital Transformation
Evolving Pricing to Meet Digital Demands
For all the talk about digital transformation, it’s a pretty simple concept: applying technology to solve business problems. Yet, one of the most significant, impactful business challenges – pricing – continues to be an afterthought. To maintain profitability now and in the future, company leaders must closely consider the role of pricing and how their pricing systems of record and management are helping or hurting their efforts.Â
How are you tackling the pricing challenge in digital transformation? Share with us on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you!