2008-07-22 08:38:30 - Patent-Pending Technology in Selectica's Sales Configuration Engine Includes Component-Level Pricing, Reverse Configuration, and Dynamic Component Models

SAN JOSE, Calif. - July 22, 2008 - Selectica (NASDAQ: SLTC), a leading provider of sales and product configuration and enterprise contract lifecycle management solutions, today announced that the company has filed a patent for three new innovations that will enhance its declarative sales configuration engine: the ability to set prices/margins at the product component level, a unique reverse configuration

process that maps design options to meet buyer objectives, and dynamic components to change attributes of components in a configuration model. These patent-pending innovations will make it possible to declare an 'intent' for a product design or features, and then determine available configuration options, including associated costs down to individual components.
'Most product configurators use linear business logic, focusing on how to build it, not what the end result should look like,' said Dr. Pravil Gupta, Vice President and CTO for Sales Configuration Solutions for Selectica. 'With our new patent-pending technology, Selectica will be able to create a dynamic sales configuration engine that lets you declare what you want, rather than offering only what's available, and more closely align customer needs with available options. It will be ideal for highly complex products and services, allowing you to design in exactly the features you want. And with component-level pricing and dynamic components, you can be sure of offering the most competitive prices without sacrificing margins.'
Other product configuration software creates dependencies between component parts and assemblies or stock-keeping units (SKUs), incorporating pricing at the SKU level into the process. Incorporating pricing at the lower component level requires a more detailed model of the end product, but gives more flexibility to the buyer and the seller in designing the end product. Selectica's patent-pending configuration engine incorporates pricing rules at the component level, eliminating the need for manual pricing/margin calculations and maintaining endless spreadsheets. As a result, the configuration uses hierarchical models that include both rules and constraints for pricing and margins, as well as other rules and constraints. During product configuration, the engine filters the most appropriate rules based on selected components.
The patent also extends to reverse configuration, a unique sales configuration approach that captures the buyer's objectives and matches them to specific components and SKUs to create custom solutions. In reverse configuration, the configuration engine first captures decision criteria that make up a deal between buyer and seller, then configures the SKUs to maximize the solution against those criteria. The result is an optimized end product that offers the closest match of possible features and the best price.
Also included in the patent is the concept of dynamic components, which permits the attributes of a configuration model to change over time. Normally, the person building the model of the end product or service is limited to using only fixed component attributes, such as physical characteristics and interdependencies (e.g. power requirements or dimensions). With dynamic components, attributes can change as needed, enabling much more flexible configuration and pricing.
The Selectica Configurator uses a declarative constraint engine, which provides a fast, efficient, and compact method of describing the most complex business processes. Where rules-based sales configuration engines must apply a linear process, which makes it difficult to accommodate changes in configurations, a declarative constraint engine allows users to model business logic directly. In this way, they can set parameters once and be assured that the business rules remain in force. For example, when modeling a complex blade server system with preset power requirements, any change to the parts list or bill of materials automatically validates the new part against the existing power specification. This eliminates problems in complex product orders and ensures that even the most complex orders will be right from sale to manufacture.
About Selectica, Inc.
Selectica (NasdaqGM:SLTC - News) provides its customers with software solutions that automate the complexities of sales configuration and enterprise contract management lifecycles. The company's high-performance solutions underlie and unify critical business functions including sourcing, procurement, governance, sales and revenue recognition. Selectica has been providing innovative, enterprise-class solutions for the world's largest companies for over 10 years and has generated substantial savings for its customers. Selectica customers represent leaders in manufacturing, technology, retail, healthcare and telecommunications, including: ABB, Ace Hardware, Bell Canada, Cisco, Covad Communications, General Electric, Hitachi, Juniper Networks, Levi Strauss & Co., Rockwell Automation, Tellabs, and 7-Eleven. Selectica is headquartered in San Jose, CA. For more information, visit the company's Web site at www.selectica.com.
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Investor Contact:
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