Gartner: PROS Broadens Sales Effectiveness Management Scope with Cameleon Deal

May 5, 2014-

By Praveen Sengar and Chris Fletcher

Pricing analytics firm Pros’ buy of configure-price-and-quote player Cameleon will be complementary and expand Pros’ scope. But challenges loom in integrating price and product data models and rationalizing quoting abilities.

News Analysis:

Event

On 24 October 2013, price optimization and analytics software provider Pros Holdings, headquartered in Houston, announced a deal to acquire Cameleon Software, a configure, price and quote (CPQ) software provider headquartered in Toulouse, France, for $33 million in cash. The deal, which is subject to shareholder and regulatory approvals, is expected to close in 1Q14. Pros plans to retain the Cameleon brand name and product line, which will continue to be led by Cameleon founder Jacques Soumeillan.

Analysis

This deal is the latest example of consolidation in the CPQ market, which has suddenly heated up given the close timing of this deal with the 23 October announcement of Oracle’s intention to buy CPQ provider BigMachines. Gartner expects that the crowded CPQ landscape will see continued market consolidation through 2014, forcing clients to re-evaluate their long-term sales automation and quote-to-cash process strategies.

The two companies’ products are largely complementary. The acquisition will enable Pros to expand its big data, analytics and price optimization product portfolio with CPQ capabilities. The outcome that Pros is seeking is the assembly of a broad suite of sales effectiveness applications to be sold into organizations that, in many cases, will have already bought a sales force automation application. The strengths in two geographies — the U.S. and Europe — will benefit the combined entity and help it better meet the project delivery requirements of U.S. and European markets. This deal will also help Pros expand into new industry verticals, given Cameleon’s strength and experience in insurance, telecommunications, media and high-tech markets.

The newly combined company will face a few challenges. For example, Pros and Cameleon have different pricing and product data models, so Pros will have to focus on moving to a common data model for two different tools to reduce integration and product and pricing management efforts for its current and future mutual customers. And while Pros has a strong focus in discrete manufacturing, Cameleon has limited expertise in complex assemble-to-order and engineering-to-order capabilities. In addition, prior to this deal, Cameleon was targeting the salesforce.com ecosystem. While Pros already has an integration option with salesforce.com, most of its newest customers use SAP ERP applications. Pros was already partnering with other CPQ vendors such as BigMachines, so this acquisition will disrupt these relationships.

If Pros can overcome these challenges by 1H15, the combined organization will pose a real threat to its competitors. Pure-play CPQ and price optimization vendors will suffer due to this acquisition.

Recommendations

Given the complexity of work environments and the geographic distribution of expertise across enterprises, a critical competitive advantage will accrue for the enterprises that can create a socially active workforce that can tap internal and external knowledge and expertise easily. The engagement initiative provides significant advantages in how business consumers work by delivering the following:

• Cameleon customers: Continue to invest in Cameleon, and evaluate whether you can use Pros for advanced analytics capabilities.
• Pros customers: Continue with your existing CPQ tools until Pros comes out with a common data model, and then consider migrating to Cameleon if the tool meets your specific needs.
• CPQ and price optimization prospects: Evaluate Cameleon and Pros based on independent CPQ and price optimization requirements. But discuss with Pros its integration and development plans, and ascertain the cost and effort needed to use Pros’ advanced quoting and pricing capabilities in the future. Also assess Pros’ vision and road map alignment with your long-term sales effectiveness process automation strategy.

Source: Gartner Research G00259116, Praveen Sengar, Chris Fletcher, 30 October 2013