Configure Price Quote (CPQ) Software is a term used in B2B to describe software systems that help sellers quote complex and configurable products. An example could be a maker of heavy trucks. If the customer chooses a certain chassis, the choice of engines may be limited, because certain engines do not fit certain chassis. Given a certain choice of engine, the choice of trailer may be limited (e.g. a heavy trailer requires a stronger engine), and so on. If the product is highly configurable, the user may face combinatorial explosion. Thus a configuration engine is employed to alleviate this problem.
Configuration Engines
The "C" in CPQ deals with the complex challenges of combining components and parts into a sellable product. There are three main approaches employed to alleviate the problem of combinatorial explosion.
- Rule-based Truth-maintenance systems was the first generation of configuration engines, launched in the 1970s based on research results in Artificial Intelligence going back to the 1960s. Notable implementations are XCON and SAP's Variant Configuration Module in SAP ERP. and Oracle's Cloud CPQ integration with Salesforce.
- Constraint solving engines were developed in the 1980s and 1990s. They can handle the full set of configuration rules to alleviate the problem of combinatorial explosion but can be complex and difficult to maintain as rules have to be written to accommodate the intended use
- Compile-based configurators builds upon constraint based engines and research in Binary Decision Diagrams. This approach compiles all possible combinations in a single distributable file and is agnostic to how rules are expressed by the author. This enables businesses to import rules from legacy systems and handle increasingly more complex sets of rules and constraints tied to increasingly more customizable products. The concept of Configuration Lifecycle Management (CLM), of which CPQ is a component, describes how compile-based configuration can further be leveraged to address most of the problems related to product configuration for business employing Mass Customization.