Smarter Quoting Drives Profits for Services Firms

At a Workday Rising session in 2023, we explored why quoting for services is so difficult for firms today, and how Workday Professional Services Automation (PSA) can help revolutionize this space by driving more efficient and accurate sales cycles, more reliable delivery, and better margins.

Two employees in conversation with each other while sitting on a couch

For services organizations, determining which services to offer, how to sell and staff them, and what to charge for the right margin is fundamental to the business’s bottom line. Getting this estimation process right (or wrong) can make or break an organization’s success. And yet, many firms are still using manual and inefficient tools.

“95% of the clients we have worked with are using spreadsheets and Word documents as part of the quoting process,” said James Cramer, vice president of product management for Workday. 

Quoting processes can be disconnected and siloed from the rest of the organization—practically marooned within many different spreadsheets. The pricing process can range wildly in accuracy and complexity depending on who is doing the pricing. And, pricing is rarely directly connected to the cost of delivery or forecasting. 

Most services organizations strive to create a more standardized and repeatable quoting process that drives profitability (or predictable results). Yet, there are no tools that allow them to flexibly price and quote in a way that stays connected to the projects, revenue, and margins downstream. 

With this in mind, at Workday Rising in 2023, Cramer and Kate Harris, director, product management at Workday, introduced Workday Services CPQ—a new services quoting solution fully integrated with Workday Professional Services Automation (PSA), and designed to support the full breadth of services businesses from quote to cash. The following is a summary of that conversation. 

Why Are There No Common Services Quoting Tools on the Market?

Clearly quoting for services requires technology that’s tailored to the unique challenges of the modern services industry. The real problem is much larger than just the quoting process. 

Technology should be streamlined, automated, and connected to the other critical professional services tools that run the business. And we plan to help the services industry rethink this interconnected problem. 

“Quoting doesn’t happen on an island,” Cramer noted, explaining that it is just one part of running a services business. And it must work seamlessly in conjunction with other tools, people, processes, and data.

“95% of the clients we have worked with are using spreadsheets and Word documents as part of the quoting process.”

headshot of James Cramer James Cramer Vice President of Product Management Workday

What Is Services Quoting?

Workday Services CPQ (configure, price, quote) is a way to quote the unique needs of professional services organizations. At its most basic, Workday Services CPQ can be boiled down as follows: 

  • Configure: Preconfigure and select which services your customer will buy, including cost of labor, hours, and phases—all of which come directly from the system firms will use to deliver on those services.

  • Price: Leverage preconfigured rates to price for those services in a more standardized way and adjust as necessary.

  • Quote: Automatically generate quote documents for firms to send to their customers.

“What’s important is the integration of quoting, which is both a sales and operational motion, and how it connects to the rest of the organization,” Cramer said.

Workday built those integrations into the heart of Workday Services CPQ. Not only does it help firms quickly and accurately sign new business, but it also automates downstream opportunity-to-cash processes and delivers insight into resource demand as an integrated part of Workday PSA.

Services vs. Product-Based Quoting

Most CPQ solutions on the market today are built for products, not services. According to Cramer, services and product CPQ solutions tackle fundamentally different challenges.

For service-centric businesses, people and their associated billable skills are not static and not always predictable. The ultimate profitability of each services quote depends heavily on an accurate estimation—where the quoter is attempting to quite literally predict the future for things such as resource availability and timelines, and then price accordingly.

This means the quote needs additional dimensions to help with that accurate estimation, such as roles, phases, tasks, rates, rate cards, and so on.

“A product-centric CPQ doesn’t have concepts like skills, roles, or rate cards,” said Cramer. “It doesn’t automate the creation of statements of work. It doesn’t have time dimensions that you can summarize by week or by work breakdown structures. It’s a completely different dimensional view of what you’re selling.” 

Traditional CPQs often fall short of supporting these requirements, or require heavy customization (shouldered by the services business) and costly integrations. Many professional services firms have resorted to manual Excel-based quoting, elongating sales cycles and creating misalignment between what is sold and delivered.

“First and foremost, we want to make quoting more efficient and more accurate. This is an area of business that has not changed in decades.”

headshot of James Cramer James Cramer Vice President of Product Management Workday

The Benefits of Integrated Services Quoting

So why is Workday adding quoting as a fully integrated part of a firm’s financial solution? According to Cramer, quoting is just one piece of the puzzle in services that ultimately leads to better margins. Firms connect what they estimate and sell with what they can deliver profitably. And it’s not just the clock speed of creating a quote, but also the accuracy of what is in it.

“First and foremost, we want to make quoting more efficient and more accurate,” says Cramer. “This is an area of business that has not changed in decades. A large percent of the industry is still doing what they did 25 years ago.”

The second important improvement is that Workday Services CPQ integrates and automates the creation of contracts, projects, resource lines, and budgets. “Talk to the folks that do this manually today and they will tell you that just double checking, as opposed to having to create every single line, would be great,” said Cramer.

And the third, and perhaps most important benefit of all, is that Workday Services CPQ captures resource demand earlier than firms traditionally do in services, in vivid detail and in real time on the same platform that will be used to staff and deliver. According to Cramer, “That changes what’s possible in resource forecasting.”

“It extends how far into the future our customers can see demand—skills, roles, geographies, hours, rates, margin, and much more,” Cramer said. “If I go back and change the quote, everybody downstream who’s responsible for resourcing can see this information in real time.”

Ultimately, when quoting and PSA are integrated, firms can bring sales, operations, and finance closer into alignment. Different people doing different jobs—from quote to delivery—will more easily come together in one platform, with visibility across all of it.

“Firms could quote, price, or resource with AI or machine learning capabilities based on the marriage of these areas and a shared data platform.”

headshot of Kate Harris Kate Harris Director, Product Management Workday

The Future of Services Quoting

So what’s in store for our future investments in Workday Services CPQ?

A big priority is data insights. “We’ve had a lot of conversations with customers about what insights they want to see at different levels—margin evolution, inaccuracies, gaps between what was quoted and what was delivered,” said Harris. “So expect us to spend a lot of time on further strengthening and leveraging the data that will underpin the whole of the services business through all these different processes.”

Workday is also intent on leaning farther into the unification and innovation of quoting and delivery. One of these is a services catalog. It not only provides a faster way of populating a quote for the services that are most repeatable from a sales perspective, but it also drives consistency in what firms sell, as informed by what you can deliver. It’s a tool that strives to broker tighter alignment between the sales and the operations organizations and get them working toward a common goal: profitability.

“It’s the place where the things that you sell live,” said Cramer. “I might have a simple service I’m selling, a single line item for $50,000, for example. But that simple line item could have a work breakdown structure and resource estimates that are important to the teams that deliver the service. These resource details don’t matter as much in the sale, but they matter a lot to the teams that plan, staff, and deliver the service.”

Harmonizing what happens in sales and downstream when setting up budgets and projects can often be two different worlds, Cramer noted.

“Everybody does it a little bit differently,” Cramer said. “We are thinking about the framework that needs to be in place to support that journey. We’re taking a lot of feedback from customers and we hope that you’ll join us. And it’s not just quoting—it’s also estimating and modeling data with actuals that live downstream.”

Cramer and Harris said they are most excited about the future possibilities in resource planning and automated intelligence to drive improvements across the business.

“This is just the beginning,” said Cramer. “Imagine a world where you know what resource demand is coming at you well in advance in all kinds of detail, and you now have time to react and to plan for that demand before it lands on you.“

“And not only that,” said Harris, “But firms could quote, price, or resource with AI or machine learning capabilities based on the marriage of these areas and a shared data platform. The possibilities are endless.”

To learn more about how Workday Services CPQ can help services organizations, visit our website.

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