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27 Minutes 
Mark Lerner:
All right everybody. Welcome to this episode of the Revamp podcast. I’ve got a great guest with me today Rag. Really looking forward to having a chat, talking about taking some hot takes on the CPQ space. But before we jump into it, rag, why don’t you tell the folks at home a little bit about you and your background and everything and how you got to where you’re at today.
Chirag Gulati:
Sure. First of all, thank you for having me on the pod. Yeah. So about me being in the CRM or overall Salesforce space for the last 13 years and more than half of the time I have spent in the code to Cache or CPQ space, which is, I worked on Conga, which was Apti earlier and then CPQ Salesforce, CPQ, and then I tried some of the other CPQ products, but obviously D Hub was not there then when I started, but of excited to see what modern CPQ looks like.
Mark Lerner:
Yeah, yeah. And that’s kind of what brings us to our conversation today. I reached out to you because your insights on the current state of CPQ and port to cash generally are really interesting and have caught the attention of a lot of folks here at Deal Hub. So it was really important that I reach out and introduce myself and learn about you, and I thought we could dive deep into some of the things that you had talked about. So, I wanted you to post on LinkedIn. The eye-catching hook there was that Salesforce isn’t going to invest more in CPQ and that, in light of their revenue lifecycle management product or launch, they would discontinue the CPQ within two to three years. That’s probably a hot take in some people’s eyes, but I kind of want to dive deep into what your feelings are about what CPQ was when it first came about, what it is today, what benefits it has, and what some of the shortcomings of the incumbent tools that are available.
Chirag Gulati:
Sure. Again, that post was not my statement; it was a sentiment of the market that I got to pick from my colleagues, my friends, and other people that I know in the industry. So I think the way I look at it is that Salesforce acquired CPQ back then, which was Steel Break in around 2015 and 2016, and until today, it has existed as a managed package. So, it’s not a platform offered by Salesforce. Since then, not much has been introduced or developed on the package side. There were some releases where we saw some changes, some enhancements, and some bug fixes, but it was not a major upgrade per se in terms of functionality. And there could be several reasons for that. One of the technical reasons is that it’s a managed package, which limits how much you can enhance it because the object structure or the overall architecture of the product might not fit into Salesforce’s platform.
So that’s what the other folks, who I know in the industry, and I were talking about; that’s where the major deadlock is, where we don’t see any major upgrades. But RLM definitely, which was a new product introduced by Salesforce, was, I think, an answer or a solution to the problem where CPQ was falling short in so many cases, so many industries where CPQ was not a good fit. So, RLM was an introduction to navigating or penetrating those industries. But with the introduction of RLM, if I understand from Salesforce’s official statement, it’s RLM, it’s not ready as a product yet. It’s an introduction. It’s still under development. It’s still like there are features that are not ready to be used. So the official statement is that as a customer if you want to go live with a CPQ solution before winter, you should go with Salesforce CPQ, but if you can wait till winter or winter release, then you can consider RLM, which means we are still talking about a couple of months before RLM can be used or can be fit for a go live. So that’s where a lot of customers are in limbo: whether we should invest in the current CPQ system or wait for RLM, or will it be ready by then? Or what’s the cost of opportunity versus what we get in terms of what we have already invested in?
Mark Lerner:
Yeah, that’s super interesting. So when I think about some of the other, let’s say, solutions that Salesforce acquired and eventually incorporated into their core platforms, the one that comes up is Pardot, right? Is that similar to a managed package as opposed to natively built into the product, or is it kind of the same situation that they had with that as well? Is it different?
Chirag Gulati:
No, RLM is a platform offering that is built on the platform. So all the functionalities, whether it’s the rule, whether it’s the configuration, and all the settings are on the platform. However, what they did was that Salesforce acquired Velocity, SteelBrick, and Invoice, which is now known as Salesforce billing. So it picked up the good functionalities or the good parts of those products and then built a new product with the need of what we see in the market today based on that it’s built on the platform.
Mark Lerner:
And so what do you think, even conceptually, if we talk about positioning revenue lifecycle management, it’s kind of a newish phrase and term; what does that positioning say about the way Salesforce or maybe a lot of people are viewing quote to cash generally and some of the changes that may be between today and when SteelBrick was acquired however many years ago, that was?
Chirag Gulati:
Say, ten years ago, when CPQ was still a new term when SteelBrick was actually built, it was more of like a general CPQ product, so it fits in where the CPQ could fit in, but a lot of industries where they now realize, okay, we have used CPQ, we have now mature selling process, the product itself, it does not fit in all the industries. So with the RLM, what they are coming up with, everything is composable. This means if you want to use the configurator on the RLM, you could use that, but the pricing engine could be some other; your pricing engine, the invoicing, or the billing, you can use the system, the RLM invoicing, or you can just use any other invoicing system. So everything is compostable. So you can just use the best of the class whether you want to use the platform as an RLM or use some other third-party tools that are available. That would work very well within a new platform in which Salesforce CPQ or the steel Brick package had limitations; as I mentioned, since it was a managed package, so everything was to be integrated; it was not compatible; it was the object structure or the schema. Everything was so different. So, it’s always been a challenge.
Mark Lerner:
Yeah, it’s like a square peg in a round hole that they never quite fit in. And I think obviously both you and I are in this space, interacting with people and seeing the various solutions in the quote to cash and the challenges people have. And I think that even though we talk about Salesforce CPQ being the incumbent in the space, it has always been a pain for many people. I think you even mentioned something like that in the comments here. It’s always you talk to somebody about their experience with that solution, and you’ll see them wince. Often, it’s a long implementation, or it is very rigid, or whatever it is. In your experience, because you’ve been in this space for quite a while, how has the needs of the market in the quote to cash within the context of quota cash? How has that kind of changed and evolved over the last decade or so since you’ve been involved?
Chirag Gulati:
So, it becomes different when we go from industry to industry or the size of the company. For example, even RLM, if we talk about an SMB and mid-market space, RLM would overkill it. You don’t need to have that complex sales system. If you have that complex sales process, you need to work on your processes before you even think about CPQ. So, the same thing with the CPQ depends upon which industry and size you’re talking about; I think that defines what solution would be, right, or what tool would be, and what technology would be. But I think if your product is rigid enough where it does not have the flexibility, or if you are just positioning that, okay, you are only solving certain problems, then it makes sense. But if you talk about the product itself covering everything, I think that’s probably half the big truth.
Mark Lerner:
Yeah, yeah. I think where my mind’s going is within the context of this subscription SaaS economy, and I think Salesforce themselves were kind of innovated in this place. The cloud subscription payments, that kind of thing, and that strategy of pricing and packaging, we’ve seen it evolve. There’s been a usage base or various elements involved in it. Do you think that the increase in that complexity has put pressure on some of the existing tools because they were built a decade ago when things were quite different? A hundred percent. Yeah.
Chirag Gulati:
Yeah, a hundred percent. I mean, so, say, 20 years ago, subscription was pretty new. It was all software. You take the software, and you install it on your laptop, whatever. So that’s what software meant. And then it was like, okay, there could be, you can get away with low implementation fee, and it’s all subscription, you don’t have to worry about servers and everything. So, in 20 years’ time, everything will be subscription-based now, but I think what I see or what I see in the next couple of years will become some sort of hybrid between subscription and consumption. Even now, many companies get a subscription to a product, but they don’t really use it, and they still pay for the licensing. But the problem is since they are tied up in a long-term contract, they cannot get out of it. So I think what they are most and more and more companies or clients, they are looking at, okay, how can we reduce our cost rather than can we just rip and replace a product versus if there is a way we could just have, we pay for what we use.
So, I think it will become more of a subscription or a mixed hybrid thing. A lot of companies are implementing it, and with the need for that demand, the CPQ system did not have quite a comprehensive usage base or consumption-based setup. So, definitely, that was one pain area metering. I mean, once you have usage, then metering becomes, we cannot just go consumption without a way to track how much they’re using it. So, metering will become the next thing. Then there are areas, or how can we forecast as a software company? If you are selling subscription versus usage or hybrid, what would be the forecast? And then, obviously, that’s the forecast, but there are areas that come downstream, like order management, order fulfillment, billing, and revenue recommendations. So, all of those things were missing out in Salesforce, CPQ, or the product that was developed ten years ago. Now, the market is mature, customers are mature, and the processes are even mature. So definitely, that product needs to be updated, or any CPQ product coming to any CPQ vendor that’s positioning themselves as a modern CPQ should be ready to tackle all these use cases.
Mark Lerner:
I think that speaks to a trend that I’ve observed and that many of the folks I’ve talked to on this podcast tend to observe as well, which is previous. And then, especially during the height of the pandemic, when there were low interest rates, and the SaaS tech space, in particular, was benefiting from those tailwinds, there was a proliferation of point solutions where each individual kind of need, you could get your own tool to service that need. And there seems to be a pretty big pullback and consolidation internally to focus on the core technology within the company and make it do that kind of secondary tasks also as opposed to getting a separate system that’s a budget thing as well as just because they have fewer folks to manage it, things like that. Is that a trend you’ve observed as well?
Chirag Gulati:
Yeah, yeah, absolutely. I mean, two years ago, it was like the budgets were overflowing, there was low interest, and everybody was like, alright, let’s try this. We have funds for innovation; we have funds for research, and we could try all of that. Let’s stack up our tech stacks, try this product, let’s try another product. So, obviously, the time was different. Now everybody is talking about how we can cut ghost, whether it’s the licensing, whether it’s the tech stack we have, whether it’s the people or the staff. So, the market has definitely shifted upside down. So, I totally see that happening. And I think, I think we talked on the other day, I mentioned that the last client I was working with, they were using CPQ Salesforce for the last, I don’t know, several years. As a matter of fact, the new leadership came in, and they said, alright, where can we save some costs and still do business effectively? Obviously, the first thing we were asked was what we were paying for the licensing and how we could save. That’s where they shifted from the existing tech stack and brought in Deal Hub. And that’s how I got to know about it. So, Hub is a tool that can still do the same functions, and companies are still saving their licensing fee and getting the same output out of it.
Mark Lerner:
And I think it’s really an interesting time for everyone, obviously, but within the Rev ops space, given that there’s a pullback in spending and budget and some people are losing kind of their favorite toy or whatever it is that they get to use, does that put pressure on someone in a rev ops role, whether that’s an internal rev ops person or kind of a third-party service that’s working with the team? Does that put pressure on the ops person to extend the functionality of existing tools beyond their native, and what are they able to do? And does it put pressure on an ops person to become more of even a developer to add additional functionality or build internal tooling that makes that functionality available? Is that happening more as well?
Chirag Gulati:
Yes, yes. I mean, I started my own company last year, and I think the first client I was working with, the reason why they brought me in the story was they were a team of 12, and one day, the person who was leading the rev ops team was told they are laying off everybody in the team, and he would be just one person doing everything. So, think of the work that was done by a 12-person team of 12 people. It was just one person who would be doing it. So, for him, he has to stretch not just his skill set but obviously what he has in his toolset. So then they were like, alright, he tried to stretch himself for a month or two, but he was stretched thin. And then they brought me in, like, okay, we just need some help in terms of how we can streamline our tech stack and how I can streamline our processes.
But that was the, I think, theme I have seen in a couple of cases where obviously the leadership wanted to have a lean team, and the person in charge or the person who is on the deck, they were stretched not just by what they know, but obviously they were told to that, okay, if you don’t know, you are supposed to learn new things and get your hands dirty, you should roll up your sleeves and just do more than what you were doing before. So, it’s definitely a challenging time for people who are in the rev ops role.
Mark Lerner:
Yeah, yeah. So I kind of want to take a step back and look at the bigger picture because you have a lot of experience in this space; you’ve seen a lot. You’ve seen it grow and evolve, as well as a lot of the changes that have happened in today’s environment. Let’s take the use case of, let’s say, a SaaS business as an easy example. What is the quote for cash tech stack processes that are needed to really function in today’s kind of environment?
Chirag Gulati:
I mean, again, it depends on how comprehensive your process is. It could start with anything from the lead management, wherever. And that also depends upon what your lead process is. Are you relying more on outbound? Are you relying more on inbound? Once you have the lead, what does it look like, and how big is the team? Is there a territory management? How is that lead managed or assigned internally? And then, once the lead is assigned, how do you qualify? And from that, okay, then it comes to opportunity. Opportunity becomes from a tech stack perspective; you could have everything in the CRM, but then there could be things that you need on top of it, whether it’s how you forecast things, how you collaborate, whether you are their partners, or are there just inside sales reps? So, depending on the sales process, it could be just a CRM that could function very well.
For example, Salesforce has a great partner community system, what we call an experience cloud, but if the customer is using HubSpot, which is good for what it does, it lacks that partner community thing. So, it’s not like it does not have a super comprehensive portal system where partners can come in and collaborate on the opportunity. So again, depending upon the use cases, I think HubSpot is good for inbound, and Salesforce is good for outbound in terms of what Salesforce has, says Pardo, as marketing automation. Even then, it becomes B2B, B2C, whether you need Pardo, whether you need marketing cloud or HubSpot, you need Marketo. Depending upon the sales process or the overall business process, there is more than one option available for that function. I think it just comes down to how comfortable you are to have everything in one product versus you want to have five different products for each function. But then I think the key question becomes how can you get the customer 360 view? How can you bring all the data into one place?
Mark Lerner:
Yeah, yeah, definitely. So you mentioned early on that it was the sentiment of a lot of the folks you talked about that kind of brought you to this conclusion based on just what they were kind of seeing and they were getting that there’s going to likely be a big change coming in terms of Salesforce and their revenue cloud and where CPQ fits into that reading those same tea leaves. Is there anything else that you’ve kind of picked up on about the space, about the ecosystem of Salesforce, or just more generally kind of the quote to cash world of trends that you’re kind of seeing coming down the pike that maybe people don’t quite see yet?
Chirag Gulati:
I mean, this is what I have been saying. There are more questions than answers at this moment. So, not just from a product perspective, but overall, say, what would be the cost of having one product license? Now we talk about how we would need a CRM license; then we would need a CPQ license; then, if there is now, depending upon the industry, I think 3D visualization is also coming into play a very prominent role, especially in the retail or manufacturing world. There are vendors like Three Kids; there are vendors like CDS. They have their product, but the licensing cost becomes so high it becomes 500, 600 users per user per month. Suppose you add all of that. So can all the companies afford it? Maybe not. Who are the companies that can afford it, and if they can afford it, are all these products enough to cater to what they need, or would there still be more gaps that still need to be addressed? So, I think there are still questions that are unanswered. I feel like we would need to give some time, say, I don’t like, maybe six months, maybe earlier next year. That’s where we would see, and we can obviously think about it. It could be Dreamforce, where we would get the answers. It could be the elections where we would get the answers. It could be the next year where the economy would be better. But I think there are more questions at this moment, and only time will tell.
Mark Lerner:
Yeah, for sure. I think I went to a winter tour Salesforce event in New York City in the winter, and CPQ didn’t even have any reference to it anywhere. There was no booth for it; there was no mention of it. It was like it didn’t exist. And I think we operate in the same space, so we’re very keen to understand what’s going on around us. We’ve observed what you have observed, which is there really haven’t been any product updates to that product at all, no matter how long it’s been. And yet there is often this mantra, whether it’s spoken or not, that it’s the safer choice, it’s the safer bet. It’s something that it’s just kind of a given. I actually think that the current moment and the kind of shifting deck of cards that has happened with budget constraints and changing focus on things have made people question more and more and people more comfortable questioning that.
I think you also had mentioned when we were talking that you had some client who was considering shifting from the incumbent CRM to a competitor that, I think a company, a larger company ten years ago, really wasn’t in the realm of something any company that large would consider, but today it’s people are considering it. Do you think that, in some ways, this is a tough question in some ways, kind of the spell has been broken, where people now really consider beyond just a name and look at the value that they could get, or not only the financial investment but the resource investment and the time investment?
Chirag Gulati:
I think it was down to the options. Probably a few years ago. There were not many options. If we just talked about the CRM space, there were not many options. And then, say, ten years ago, if we talk about CPQ space, there were not many options then back then. Now, if we talk about 2024, I mean, if you just Google CPQ vendors, you’ll get 20 vendors. If you search for the top five CPQ systems, you’ll find 10 to 20 articles mentioning different CP Qs. So the options are more now; I think it’s just that it becomes, what value is delivered becomes more, that becomes the major big question. And then the pricing comes the second. But I think right now, since there are more options, so everybody is mature in terms of they are educated there, and there is more knowledge that is available where there is training, there are articles, there are with obviously no call can go, we cannot shut any call down without talking about AI, right?
Mark Lerner:
Yeah.
Chirag Gulati:
It’s so simple. If you simply want to talk about it, okay, I’m using this CPQ system; how do I do this? You can go to chat GPT or any GPT, and you can get answers. If you want to do a Google search or five years ago, it would probably take half an hour for you to get the answers. Now, that half an hour had become less than a minute. So, the users are more educated and empowered, and they can make better decisions because they have more information now.
Mark Lerner:
And yes, obviously, we would be remiss if we didn’t mention those two letters that have been on everyone’s lips for so long. So, in the last couple minutes of our conversation here, where do you see the benefit and impact of AI? And maybe we think of AI as in the vernacular; it is often the same as a large language model, but maybe artificial intelligence is more broadly like machine learning and that kind of thing. Where is that going to fit in for the quote to cash beyond maybe some of the parlor tricks that ChatGPT is often good for today? I haven’t quite seen a use case where it’s very obvious to me, at least in the quote to cache piece. But so, from where you’re sitting, where do you see it fitting in?
Chirag Gulati:
I think it would still take time because everybody is focusing on AI right now, which is a buzzword, but it starts with the data. Once you have the structured data, I mean ai, what we have today, all of that existed before 2020, but it just became a buzzword. Or with the open air, it just, everybody becomes a household name with a ChatGPT. But for all of the use cases or the functions, most of it was there. For example, if you use Gmail, it was during the predictive analysis. If you were writing an email, it would predict the next word for you. That was 3, 4, 5 years ago. So all of those things were there. But what we are even missing out on is that data. Last year, I had three customers or prospects, and I had this conversation. They said, I want to do something with AI, and my, what do you want to do with AI?
And they were like, we want to hire you as a consultant. You tell us what you want to do with AI. I was like, okay, let’s do a discovery. And then the first question would’ve been, okay, where does this data stay? I was like, I don’t know. Okay, do you have this data? And like, oh, we can find, so to get your house in order, you need to have that data already. For example, if we talk about CPQ, I think one of the use cases could have been, how can we predict what sort of discount our users should be able to give for a particular configuration for a particular market segment for a particular customer? Things like that. But if you have historical sales data, then it becomes a layer of whatever logic you want to put in. But if you don’t have the data, AI cannot just create data for you.
So, I think AI is there. There are use cases that read; for example, if you want to read A PDF and extract the data, OCR was there; you could read a document, and you can get those answers. But the thing is, if you don’t have the data, it cannot tell you what to do next if you don’t have the historical data. So I think that’s what with the need for AI where everybody wants to implement AI, they will take a step back and bring the data and shape and form that it can be fed to AI, and then AI would be used for what they want to do.
Mark Lerner:
Yeah, you got to get your data in order first before you can use tools. Well, shrug, thank you so much for taking the time to chat today. Really flew by here, but I really appreciate your insights and looking forward to following you. We’ll post your LinkedIn information on the episode so folks can follow you as well. And so thank you very much and look forward to chatting again soon.
Chirag Gulati:
Great. Sounds good. Thank you. Bye. Bye.
