Michael Warady: Thank you for listening to strategies and ideas for US businesses. This is Michael Warady, Certified Financial Planner and Regional Director at Source HOV Tax. Today we have in house, Mick McDonnell, CEO of Configure One which has built the most powerful CPQ software solution. Thank you for being with us today, Mick.

Mick McDonnell:  Thank you Michael. Happy to be here.

Michael Warady: I’m really excited about this, especially because this is the first time I’m interviewing a client on this podcast about their business and Mick, we’ve worked together, I think for about six years now on your RD tax credit and it’s worked out well.

Mick McDonnell:  Oh, it really has. Yes. I was quite candidly ignorant of the fact that that opportunity existed. Once it came to our attention with the help of our accountant or accounting firms, CDH and you, once we began looking into it, we realized that we were right in the sweet spot of what guaranteed credit is intended to do. We didn’t know how to do it, but with your help and your team’s assistance, we made our way through it and we’ve been going after it every year since.

Michael Warady: Great. Thank you. Thank you for saying that. It’s been a pleasure. So Mick, I asked you to join us today because the work that Configure One is doing really has brought a lot of value to your customers and I felt it’s worth it for our listeners and our subscribers to understand what that value is. And I know by the end of the podcast our listeners are going to have a better understanding of how the work that Configure One does is ultimately helping us as consumers. So Mick, just to get started, can you give a back story of Configure One and really how did you get into the industry?

Mick McDonnell:  Yes, absolutely. So we saw an opportunity to help simplify configuration pricing, quoting and manufacturing processes for companies that make other than stock products. In other words, they make some of the order, engineered to order, designed to order products. Industry is now known as CPQ, but nobody used that term at the time. We were making a configurator as far as we could tell and how we marketed it. Early on, our goal was to automate computerized design programs, CAD programs.

We started by working with Parametric Technology Corporations, pro engineer product, which was at the time, one of the, or I think the only solid model CAD application on the market. But our vision was to take product knowledge that was locked inside engineer’s minds within an organization and centralize it to expose it to the larger enterprise, allowing folks who lack the deep knowledge of a particular product to interact with an application, configure a product while adhering to all the engineering and manufacturing rules that are relevant to it. While the early versions of our software relied upon CAD. In other words, you had to use CAD with our software.

Together, we quickly broke that dependency, created the ability for our users, our system admins, to model their products within our application itself. We still support CAD automation. Now we work not only with that original pro engineer product, which is now marketed as Creo but also with Solid Works and Autodesk Inventor. As far as how we got into it, my educational background was computer science engineering and had worked in technology after I left the army in the late nineties. We three co-founders, Ron Mau, Dan Howe and I simply saw a market opportunity to leverage internet and make CPQ widely available. They were working in CAD, working for PTC and they saw that there was a demand out there for it. So we three came together and built a prototype, did some market research and realized that there was an opportunity and launched the company in early 2000.

Michael Warady: Wow, that’s a great story. Thank you. And it was almost like destiny that you guys got together and built this. So we have some subscribers that are not that familiar with the manufacturing process. And I’ll be honest, when I – before I started in the consulting and the research and development tax credit about 15 years ago, I had no idea how much ingenuity goes into making the products that we actually buy. It’s amazing.

Mick McDonnell:: Oh yes. Without a doubt, from the outside looking in, it seems very simple until you get up close and personal with it. Like any inventive process, product development and manufacturing their product it’s a lot of iterations. And some trial and error trying to get it right. Certainly from a “what does the market want,” but also from what’s possible and what’s durable and in what achieves the goals we’re looking to achieve. Over the almost 20 years we’ve been doing this, we’ve seen thousands upon thousands of different products get modeled in our application to make them configurable. And what I’ve learned is never look at a product and assume it’s simple. We have customers that make van bodies and elevators and then power transmission equipment and some things that you’d look at and you’d say, that’s a complex product, but we also have a customer that makes envelopes.

And they make – think the junk mail that arrives at your house. There’s a custom mail campaign that somebody wants to do; well they go to this company to get the envelope that is going to be the mailer. And when they first came to us, I looked at him and said, “How hard can envelopes be? You don’t need to spend your money on us. Make the envelope.” And, I immediately learned how wrong I was. Even an envelope can be really complex. Give you some examples, if there are windows on the envelope, not only do you know where – you need to know where they are and what size they are, but there are rules associated with how close they can be to each other, how close they can be to the edge of the envelope.

You’re going to print on the envelope. You need to understand what quality and how many colors your target weight that needs to be adhered to. That’s going to affect a number of things. Principally the paper, but also the windowing. What does the flap look like and how does it interact with other features of the envelope? And then when you get to paper, it has an impact on how you can print and how you can add windows and the location sizes of those windows. There’s a lot of complexity to a custom envelope. So you know, we’ve, like on the Allstate commercial, we’ve seen it all right?

Michael Warady: Yes, it’s, you take it for granted and you’re right, you do it, you take it for granted that you just go to the store, you buy something and you never even think about what’s involved in it. And I’ve walked through hundreds of manufacturing facilities over my 15 years plus, since I’ve been doing this and it’s amazing. The processes that they go through from the bidding the job all the way through to commercial production. Can you share? So here’s what I want to be able to convey back to the listeners. Can you share an example of how that process of manufacturing process would traditionally work and then how when you integrate Configure One’s CPQ system, how that creates all the efficiencies?

Mick McDonnell:  Yes, absolutely. So our focus, the heart of what we do is to dramatically improve the speed and accuracy in which products are specified, price quoted to customers and manufactured. So we impact, not only the manufacturing process, but really upstream of that. Also the sales and quoting processes. By way of example, consider how a product is specified. Traditionally a rep would talk to a prospective customer and gather some information. They’d write that down, maybe put it in a spreadsheet, email, whatever. But ultimately they send it to their sales engineering group and say, “Hey, customer XYZ needs one of our products that does this. Inevitably, the rep would leave something out or forget to ask a question or identify two features to go together that were incompatible and couldn’t be used together. Sales engineer then goes back to the sales rep and says, “I need this other information or you forgot this.”

Then sales rep goes back to the customer and that cycle may repeat a few times. So that specifying process or the C in CPQ, the configuration process. When we centralize that product knowledge that the sales engineer has, put it in a database, put an attractive front end on top of it, allow someone to interact with an application to configure their product showing them all the options that are available; showing them in real time how their decisions impact the price of the product or its capabilities. Ensuring that all the information that’s required to make the product is captured. Making sure that the configuration is valid, that all the options are compatible, that product is manufacturable. We greatly improve that, specifying the configuration, that sales process.

Once the product is configured, we generate quote documents that describe the products being proposed, images of that product were to be built, the capabilities or limitations of the product, if that’s applicable to a given opportunity, terms and conditions of sale, warranty information and the list goes on. It really depends on what is specific to that product, what our customer wants to present to their customer in order to ensure that customers make an informed decision and that there is no questions once a product is delivered that “Oh, I didn’t ask you what color it is, so I assume you wanted it white and the customer wanted it in gray.”

Taking it further downstream, once that quote is accepted, we generate whatever information is required to make it. That can be simply a list of options, but frequently, and with more complex products, can include bills of material, manufacturing, routers and instructions. CAD files of the assembled product, and if it’s component products, drawings of the product and its components and all of those integrated to the right systems so that there’s no double entry, there’s no errors. Comes right out of the result of a configuration, gets into a quote with very little manual intervention. Once that quote is won, it goes through an order and the order data goes to some cases, ERP. in some cases, PLM, some cases CRM, it really depends on the organization and what their workflows are. But all of that data is centralized now and it’s done at light speed compared to how it was once done and it’s done right.

Michael Warady: That’s amazing. I remember looking at or speaking with a couple of manufacturers and they walk through their process, their bidding process, all the way up to, like I mentioned before, up to commercial production. And there’s definitely quite – without the system, I get that because I’ve seen it. The amount of time spent on quoting a job and the back and forth and the re-dos. It’s a lot of time that could be focused in other areas by having something like the Configure One CPQ system in stock.

Mick McDonnell:  Yes. It really is. When you consider the cost of errors, whether it’s rework or scrap or customer concessions, that drives a lot of cost into the equation. So we look to impact that greatly.

Michael Warady: Yes. And I would think with the challenges or the expansion I should say, of competition globally, efficiency and quality is really the name of the game. Is that fair to say?

Mick McDonnell:  Yes, I think it is a fair statement. With globalization, manufacturing is certainly more competitive than it once was. And consumers are more particular. Henry Ford, “you can have any color as long as it’s black.” Approach no longer works. Folks want what they want, exactly how they want it and by the way, they want it tomorrow delivered on their doorstep. Not a week from now. We help our customers sell more, accelerate the sales process, reduce costs, increase quality, reduce errors, and quoting, as I described a moment ago, and improve the overall process.

Michael Warady: That’s great. So I assume that there’s other companies doing this, but what makes Configure One different from other companies?

Mick McDonnell:  Yes, you’re right there. There’s a lot of really good technology out there. Submit that ours is the best, but we’re not the only player in this market. Really our biggest differentiators are our people. Some of that’s experience just `cross the entire company. We have hundreds of years in CPQ, engineering and manufacturing experience across the country. And while that’s extremely valuable, it’s really the commitment of our people to make our customers a success that differentiates us from our competition. In every engagement, someone has placed a bet on us. They’ve gone to their boss, the board and said, “Configure One is the right partner for this effort.” And we take that really seriously.

We sold our first deal. We were three guys and a dog. So their first deal to Precision Quincy in Woodstock, Illinois, Michael Lauric, the engineering manager went to his boss, John Guanci, made the case that these three kids with this new kind of software could take Precision Quincy to the next level. So we were determined to do everything humanly possible to make him a hero, prove him right and we did. We still maintain that attitude today.

Michael Warady: That’s great.

Mick McDonnell:  Twenty years later. Yes. We are incredibly competitive group of people. We don’t like to lose, failed implementation is a loss not only for the customer, but for us. And we take it personally. It takes the right kind of people, the right mindset, the attitude and our people are really our secret weapon.

Michael Warady: That’s phenomenal. So as we’re talking about this, I know there are going to be some of our listeners that will still – they still want people be able to get their arms around this. If you’re in front of your computer at any point – when you get in front of your computer and this goes out to our audience, go to this website, configureone.com/what-is-cpq. It is an amazingly easy to understand example of exactly what it is and where that efficiency has really come together. I just read it, I think it was a couple of days ago and it just – you guys made it easy to understand and in such layman’s terms, I walked away saying “I can repeat that story”.

Mick McDonnell:  Great. That’s the goal.

Michael Warady: Thank you. Exactly. So, speaking of your website, I did read some comments by some of your customers and I love the honesty that they provide and even more impressive that you actually respond to their comments. So that’s great. But how has their comments and their, their postings, how’s that helped the evolution of Configure One?

Mick McDonnell:  Yes, it’s a great question. We have the benefit of having customers in a broad array of industries, geographies, varying sizes, privately held, public companies, everything in between. What’s interesting is that two companies in the same industry, same size in the same city, may have very different challenges they’re trying to solve. One size doesn’t fit all because of that and for a number of other benefits, we actively solicit that feedback from our customer base to ensure that we’re focusing our product development efforts in areas that will provide real value to them. This helps ensure that the value they see in the software five years from now is just as great as it is today. So that ongoing dialogue with our customers, whether it’s through our help center or the configure one community site or our customer advisory board is a terrific conduit for us to hear what folks expect the software to do. Not only today but tomorrow. And that greatly informs our software development processes.

Michael Warady: That’s great. That’s wonderful to hear. Mick, one last question. So you guys have on your website, you list a very impressive list of clients and just one that came that I noticed was a company like Janus International Group and they’re listed. Can you share what challenges can figure one solve for them?

Mick McDonnell:  Yes, Janus is a great company and really a great story. They had which one of those first world problems, a great problem. They were simply growing too fast. The market space was growing and they were growing and they just couldn’t keep up. Sales order entry, manufacturing processes were all bottlenecks in their own way. So they had errors in order entry, pricing errors and consistent pricing, manufacturing errors, delivery problems, sending the wrong product or sending product that they thought the customer wanted, but really realized they wanted something different, paying all the freight to return it. So, they were rocking and rolling, but they were fighting some, some headwinds at the same time. So the first look was to implement the new ERP system, but they quickly realized that that wasn’t going to solve all the problems.

So they began to search for CPQ partner. They went to an evaluation process, brought a number of vendors in and we were fortunate enough to be able to be selected at the end. When they went live the first week, they processed over a thousand orders through Configure One, valued at over $10 million. So a real, real positive slope to their trajectory and they haven’t slowed down. We help them solve the bottlenecks they were suffering while helping improve the pricing, actually they’re quoting orders, quality manufacturing and is a result of that and other factors. Certainly they’ve been able to gain even more market share and make acquisitions. It’s a, it’s a real neat story in terms of the company.

Michael Warady: That’s great. Wow. Well, thank you for sharing. Mick, thank you again for joining us today.

Mick McDonnell:  Of course, Michael, it’s been my pleasure.

Mick McDonnell:  This was wonderful. For our audience and listeners, if you have any questions for Mick, you can always reach him at configureone.com. That’s the website and again, if you have questions of exactly what the process looks like, on their website, they walk through everything. If there are other topics that our subscribers want to listen to or learn more about, please email me at michael.warady@sourcehovtax.com. Thank you again for listening. Everyone take care.