VideoEven with slightly skewed data, however, price-optimization software promises to improve the RFQ process. Before deploying Zilliant's PO software two years ago, GE TIP/ModSpace's price-setting structure was a decentralized, ad hoc effort. Local pricing, notes Towe, was done manually by individual associates. "This made it very difficult to ensure that the best customers received the best prices, especially with national contracts," he recalls.
The GE TIP/ModSpace software not only pinpoints the best possible price points, but it also helps managers act and react more quickly. The numbers tell the tale. Towe says the unit's cycle time for matching the appropriate price to a particular deal has dropped by 97 percent, with deal response time halved. "The investment has more than paid for itself," he says. "It allows us to be very competitive with almost any player in the market."
Swelling, Tapping
Despite the raves, price-optimization backers warn potential adopters to carefully plan their PO strategy. Software is only part of the game, notes Towe, who advises users to match technologies with long-term strategies for a particular customer base. His advice? "Bring in the pricing professionals to understand your environment and educate you on the appropriate solution."
The ranks of pricing professionals will likely swell in the next few years. Analysts say it's probable that CRM and ERP suite vendors will eventually want to integrate PO technology into their product lines. "A large suite vendor, like an SAP or an Oracle, might buy up one of these vendors and just take over the industry," predicts Huang.
Until then, existing vendors should see a steady—if modest—rise in business. Blumstein believes makers of PO software have just begun to tap the market's potential. But he adds: "The market isn't going to grow as fast as it could if it had lower price points."
Oh, sweet irony.
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