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Big Pricing Transformations - 7 Ingredients to Swiftly Pivot from Excel to PROS

Strong inflation and high volatility combined with major trends of digitalization and big data in sales and finance over the last years have raised attention across all companies to build and upgrade pricing functions. The linchpin of a performant pricing function is a state-of-the-art pricing software. However, transitioning from simplistic pricing spreadsheets to state-of-the-art software like PROS is often (and unnecessarily) associated with nightmares. Actually, this “pricing transformation” can be swift and easy – when following and sticking to 7 ingredients for success. Marcus will share best practice how to accelerate a pricing transformation and what really needs to be in place to swiftly pivot to PROS.

Full Transcript


Dr. Marcus F. Demmelmair: Hello and a wonderful welcome to the session on Big Pricing Transformation. Let me ask you one question. Who of you has already done a pricing transformation, moving from Excel to PROS? Okay, two, three, four, five, six. Who of you plans to do a pricing transformation? About a bit more. And who have you in the room just is here to have a good time? [laughter] Also a couple of people. Great. Good. Yeah. Very warm welcome. My name is Marcus. I've been doing pricing consulting for around 10 years. I am leading the pricing and commercial practice at Horváth. Horváth is a European based consulting company. We just opened an office two years ago here in the United States. And we typically advise our clients on pricing strategy, pricing analytics, and also pricing implementation and configuration. So we have kind of a one-stop shop offering, and that's what we call pricing transformation. But what exactly is pricing transformation? I skipped this. This was the take over to intro. [chuckle] What is pricing transformation exactly? Pricing transformation is that today pricing is done decentrally in local markets, in local entities, in Excel. And going forward, the idea is to move towards a swift smart and hassle-free PROS solution....

Dr. Marcus F. Demmelmair: However, this obviously takes a lot of effort and it needs to change a couple of things, particularly on the pricing strategy side. If you do pricing decentrally in the markets, basically all the markets do it a bit differently, everyone has a bit his own rules, so these needs to be consolidated. Then the pricing analytics, we need to kind of develop the logics, how to set the prices consistently, but also taking care of the local and market specifics. Then the topic of baking into these logics into PROS, that's the configuration piece to it. Then the implementation of PROS within the ERP and CRM landscape. And last but not least, also the roll out of PROS throughout the segments, throughout the markets. And this all requires a lot of change management, as you can imagine. So this is a quite a journey. Those who already did it might know what I'm talking about, but this journey can be swift and can be easy when following seven ingredients. And these seven ingredients I want to introduce today to you, and I don't want to hide it to you. So we have seven ingredients based on our project experience, which we think are really key in such a transformation. First, C-level Sponsorship. Second, Biz and technology ownership. Third, focus on the big wins. Fourth, internalize the know-how. Fifth, include the local teams. Six, work agile but not chaotic. And last but not least, change, change, change.

Dr. Marcus F. Demmelmair: Now, I want to dive into each of those topics. So in the first place, what does it mean C-level Sponsorship? C-level Sponsorship is basically that the top management really owns this topic and really is an advocate of a pricing transformation. And this sounds easy, but it's actually not, and in our experience is that the C-level needs to really constantly communicate the importance of a pricing transformation. And why is this the case? Because a pricing transformation typically involves not just sales, not just IT, not just finance, not just product marketing, not just the local teams. It's like a big thing where really like all the different silos, all the different functions need to work together. Therefore, the C-level sponsorship, the C-level commitment is super, super important. Second, own it from Biz and tech. A pricing transformation coming with the PROS solution it's not an IT project. It's not an IT project, and I think that's very, very important. As often it's kind of considered as an IT transformation project, it's not. It's biz and IT project. As said before, basically you need to kind of look into sales, you need to look into finance, into product marketing. It's really cross-functional.

Dr. Marcus F. Demmelmair: And don't leave it just to IT. I love IT guys, by the way, [chuckle] but don't leave it to the IT guys because price in the end is actually the most important component of your company. It tells, so how much you charge, where you charge, how much from them, from whom, and therefore don't leave it to the IT guys when making such a transformation, but own it from biz and IT. Talking about ownership, I think this is very important to also internalize, sorry, it also important to get the buy-in right from the beginning. And how to get the buy-in right from the beginning is, if you can deliver results from the very first moment of such a pricing transformation, how do you do this? So, typically in our projects, we start with a diagnostics phase. In this diagnostics phase, we look into pricing quick wins. These pricing quick wins are typically a couple of percent from your revenue, which we kind of get based on some typically pricing analysis, looking into discount compliance, looking into list price levels on your top sellers on the long tail and so on. And by this, we already deliver the first results. We already get the first financial results, which then help us to fund the journey. And very important, this already creates a lot of buy-in in the organization. Hey, they've already achieved a couple of millions, so this project makes totally sense and everyone is on it.

Dr. Marcus F. Demmelmair: Number four, internalize the know-how. So, very important in these pricing transformations, you work with PROS, you work with consultants like us, you might work with someone else, but make this your project, make this an internal project. Of course, this transformation requires like external expertise, external advice, which is super important because otherwise I wouldn't be here, [chuckle] but make this an internal project. So typically in my projects, we staff this like one consultant and one internal guy from our client. And we have teams of one-to-one. Why? Because once the project is done, you need to know what we did, and you need to operate it. You need to run it, you need to own it. And therefore it's really important to not just rely on the consultant or rely on the PROS architects, but internalize this know-how for like sustainable success. Number five, include local teams. This is a very important topic. So in my experience, what we saw is that these pricing transformations are typically driven from HQ. It's mostly an HQ project, an HQ-driven program. And don't make it like an HQ Ivory project where some theoretical thinkers that are never like truly in the business, in the markets and have nothing to do with the actual business, do like some fancy pricing strategies. That's definitely the wrong approach.

Dr. Marcus F. Demmelmair: So make this a true experience, make this go out to the markets, test your concepts, involve the local sales reps and make it their project. And this is also super important for change management, right? But what we've seen is that those projects that come to a great success is where we flew into the regions, where we discussed the concepts right from the beginning with the markets, where we validated the concepts, where we collected the feedback, where we showed the MVP, where we showed the pilot, where we showed how it would work, and where we tweaked it jointly with the local colleagues there. And this makes the quality of the transformation much much better. And it makes it like the project of the local sales reps, and that's super, super important. And you really avoid like the not invented here buyers. So go out, make it their project. Number six. Work agile but not chaotic. What does it mean? So, as I said before, this transformation is like a sales finance IT project, as an operations project. So you need to do your homework from the beginning, you need to collect the functional requirements, you need to tweak the strategy, you need to develop the strategy, you also need to look into the technical dependencies.

Dr. Marcus F. Demmelmair: The clients I typically work with, they have a bunch of different Europeans CRM systems. It's typically where the fun starts, right? So make this really, yeah, think this through from the beginning. But I can also say you cannot think through everything. So therefore, like an agile working mode is super, super important. Don't make it chaotic where you kind of jump into the transformation without doing the homework. And I saw clients, they thought like the pricing software would solve all the pricing problems, [chuckle] which is not the case. Therefore, you need this upfront phase to really define the functional and technical requirements. So, nevertheless, as I said, you cannot anticipate all the different dependencies. So once you roll it out you might see, hey, this market or this segment, they need a different pricing logic. So you need to go back and reconfigure your PROS system or you might find that a specific market has a different ERP landscape where you need to tweak a bit your APIs and so on. Therefore, always plan it decently, pilot it, test it, tweak it, and then roll it out.

Dr. Marcus F. Demmelmair: Number seven, change, change, change. I said this before, but that's really, really key. What is change management in such a transformation? Change management start very latest at the first day by top line communication, ongoing communication, newsletters, videos, also where the top management gives town halls and really emphasises the commitment, really makes this a priority for everyone. And if it's not a priority, then it would definitely fail. Second, in my experience, what we typically do, we set up a pricing committee. Pricing committee consists of some of the ivory tower people, [chuckle] the HQ managers, but also people from the markets, people from the field who really know how the business is run. And so we bring them together in a pricing committee or a sounding board, depends on you how you wanna call it. It's a weekly meeting where we go through the developments, where we go through decisions, and so everyone owns it, and that's very important and to key of change management. And last but not least, trainings. Sounds simple, but trainings are super important. Like the one week full fledged trainings. We also have good experience with like training nuggets. Yeah. So what can we do like in 10-30 minutes, what can we train more on a continuous base throughout the pricing transformation journey to make this a true ongoing experience?

Dr. Marcus F. Demmelmair: So seven ingredients, and I personally think that all the seven ingredients are super necessary. So, when you miss out one ingredients, you might be in trouble. Let's have a look on this, 7 x 7 matrix. So if you miss out the C-level sponsorship, this would quite easily yield to frustration. So, if the people, the teams need to do work, which is not valued, which is kind of something no one cares about, people get easily frustrated, right? This also goes in line with, they don't get the resources, they don't get the teams, people leave, and this is just a frustrating experience. Second, we set the biz and tech ownership. Remember, it's not an IT project. [chuckle] If it's an IT project, it would, from a business perspective, quickly be insignificant because the rules would not exactly fit what the business needs. It would not really be like what sales needs, the system would be there, would be up and running, but sales in the markets, they would have their Excel on the side and do their pricing based on their spreadsheet. And this is definitely what you want. This definitely what you don't want, I gonna say. [laughter] Was just paying attention if you're still there. [chuckle] So this is definitely what you don't want. So, make it a biz and tech project.

Dr. Marcus F. Demmelmair: Number three, focus on the big wins. If you start this transformation and it requires budget, that's no secret, and you don't deliver the results, then you will always run into justification problems. You're spending so much money, where are the results? You're spending so much money. Where are the results? If you prove from the very first day that there is value behind, that you have reaped the quick wins, then it helps you to really avoid these justification topics. Internalize the know-how. If you don't do this, you would always run into dependencies. So no one wants this and therefore like avoid this by staffing such a pricing transformation, really also from your internal teams to also learn from the consultants. Include local teams. If you don't include them, I think we discussed it now quite a lot, you will always run into resistance. Ah, that's wrong. Oh, that's an HQ project. Ah, they have no idea how our business works. Yeah, if they're part of it, there's no discussion.

Dr. Marcus F. Demmelmair: Work agile but not chaotic. If you work chaotic, you would always run in delays and it would be a disaster. If you work too much, like in a waterfall style, it would end up in rigidness. Yeah. So it's kind of, you need this leeway, you need this flexibility. And it's always a fine line between allowing flexibility and changes while sticking to the bigger picture. And last but not least, change management. If you miss out on the change management, you would always have the anxiety problem. Why are we doing this? I don't feel good about it. So avoid this by change management, trainings, communication, right from the first day. Thank you so much. Big Pricing Transformation. We have like a couple of minutes left, 10 minutes left for Q&A.