For those who don’t remember, I wrote an article called “Buy the Car, Rent the Car or Take the Bus” which explains the difference between on-premise, single-tenancy and multi-tenancy.

“Many people are confused about what SaaS is, and about the benefits of a pure SaaS solution” said Cabrera. “Many companies use the term incorrectly to be buzzword compliant. That’s too bad because some people start to believe it is only a marketing gimmick.” I asked him why people should actually care about if a solution is SaaS or not. Playing the devil’s advocate, it would seem like most potential customers would not care if a solution is really a SaaS solution versus hosted, or multi-tenancy versus single-tenancy.

Chris mentioned 6 reasons why potential customers should care:

1. It is in the client’s interest for the vendor – their technology partner – to be around long term. On-premise solutions are not cost effective because they have so many technology stacks and versions of the software that need to be maintained and supported. With SaaS solutions, some of the savings are passed back to the client, and a significant portion of the revenues are reinvested into the infrastructure as well as in the development of new features.
2. SaaS vendors can focus on improving a single software version, used by every customer. Every engineer is dedicated to improving a single source of code. This allows the vendor to release new features and improvements much more quickly than is typically feasible with an on-premise solution.
3. Upgrading a SaaS solution usually happens ‘behind the scenes’. New SaaS software releases are tested extremely rigorously before being released. A quality problem would impact thousands of customers and hundreds of thousands of payees. On-premise solutions often transfer the quality ownership to the clients who must perform their own regression testing after an often labor intensive upgrade process.
4. Non-SaaS solutions are not always scalable. For example, with 10, 100 or even 1000 customers, an on-premise solution might work. But the real test will be when a solution is used by thousands of customers – will a non-SaaS solution really be able to scale up? “Probably not” said Cabrera.
5. SaaS vendors constantly measure and monitor their environment. They make a significant investment into that infrastructure to ensure an optimal performance for all of their customers.
6. SaaS solutions are usually sold on a basis of $ per payee per month. Solutions such as Xactly Incent all of a sudden become cost effective for even small companies which can avoid a high upfront infrastructure and license cost.

Chris Cabrera is convinced of one thing: SaaS is the future. “On-premise solutions might still be appropriate for a very small share of the market, but SaaS is appropriate at least 98% of the time.” Looking at the market trends, I would say he’s right. Most vendors realized the benefits of SaaS and are rushing in that direction.

Management of producer (payee) data
The insurance industry has very challenging requirements regarding producer (payee) data. ACom3 supports an unlimited number of direct and indirect hierarchies with no limits on the number of levels it contains (some of ActekSoft’s clients pay more than 20 levels). ACom3 also has an integrated license and compliance module which can easily manage logic for compliance violations.

Communication / Workflow
ACom3’s correspondence module can be setup to automatically send letters or emails on demand or based on conditions configured the system (for example in can send an e-mail when a license will expire in a certain number of days, or when a debit balance exceeds a certain dollar amount). The workflow module can be leveraged to facilitate and streamline internal and external communications.

Unearned Commissions
ACom3 provides built-in features to facilitate logic to handle unearned/future commissions such as annualized payout and advanced payment with automated charge backs for policy terminations that take place while there is still an unearned commission balance on the advance. ACom3 also has a reserve feature which holds back a portion of the advance payment to offset future chargebacks.

Scalability
Unlike many other industries, the insurance industry always requires computation at the transactional level and not at a summary level. Because of the volume of transactions and often complex hierarchies which can transform an originating transaction into an additional 10 or 20 transactions, efficient scalability is critical. ACom3 uses the concept of work units which can distribute processing across multiple servers and processors.

Insurance specific concepts in Formulas
Compensation formulas contain many insurance specific concepts such policy age and policy age/holder age calculations, a wide range of performance based tiering options, and the ability to tie advances and automated charge backs to calculations.

Strong Retroactive Capabilities
Retroactive processing is particularly important to the insurance industry and ACom3 supports in excess of 20 retroactive objects that allow the system to reverse and reprocess transactions for as many periods back required. Retroactivity is often required to resolve incorrect assignment of producers to a customer or policy, incorrect hierarchies, the use of an incorrect schedule, etc. ACom3 marks all transactions that need to be reprocessed in prior and current periods to ensure that tiered based payments are correct.

Security and Audits
Data confidentiality and security is highly regulated in the insurance industry. ACom3 was built with these requirements in mind and offers strong security and audit functionality, audit reporting, secure data transfers, and encryption out of the box.

Final Thoughts
Overall, I was impressed by the richness of ACom3. The size of the company could have been a concern for potential clients, but with Callidus now standing behind ActekSoft, this should no longer be a concern. The new challenge which ActekSoft will have to manage is to retain the same level of client-focus they have demonstrated in the past for their current and new customers.

While I found that ACom3 is not the ‘sexiest’ application, several improvements were recently made to its user interface with its release version 6.0. ACom3 provides several insurance specific features, and its focus on transactional processing makes it a solution worth considering for many projects.

As I’ve discussed in a previous post, Gartner recently released their 2009 ICM MarketScope for the insurance industry. Gartner cites the following as some of the main reasons why ActekSoft deserved a positive rating:

ActekSoft was rated Positive this year, due primarily to its deep understanding and ability to deliver health insurance requirements, the number of new deals in the past 12 months and the positive nature of its customer references. Four of its customers were interviewed for this report… Several themes resonated throughout these interviews. First, ActekSoft is very committed to the pricing that is quoted to the customer… Second, customers cite a culture of customer satisfaction and commitment to project delivery.

ACom3 is accessible via a web browser. After logging into the application, administrators find themselves into a relatively intuitive interface; the various application areas are accessed via the top menu, and configuration for each of those areas are accessible in the left menu. Different sections can also be expanded and collapsed by clicking on the + or - icons. The content of each of these sections is completely configurable by simply dragging and dropping fields into the appropriate section. Sections can also easily be added as required.

A plan consists of ‘schedules’ which are applicable to a certain region and hierarchy. These schedules are rule driven and reference formulas, filters, tables, etc. Reference data is typically imported into the application, but editing information such as transaction details or producer information can be performed manually by inserting text into text boxes, or by selecting values from drop down menus.

The look and feel of the interface for payees is very similar to the administrator’s interface. Upon logging in the application, the payees can access performance details for themselves and for their subordinates via reports and dashboards. They can also access important information such as their appointments, their book of business, etc.

All of these features are very similar to what is expected from any sales performance management solution, so you may wonder what makes ACom3 different than other non-insurance specific solutions. I will discuss some of these differentiators in my next post.

Incentives have the power to motivate almost any kind of behavior if the reward is attractive enough. Let’s look at sales teams for example, the Olympic stars of a corporation. A number of incentives and SPIFFs are implemented into their quarterly sales plans to drive a particular behavior. It could be to focus on a particular product, cross-sell, up-sell – anything the company needs or wants based on its sales strategy. Slap the right incentive on anything and you’ll see results.

Incentives play a huge role in both sports and sales; they are the driving force behind motivation. Although motivation is the heart of success, it isn’t the only factor. For sports and sales, success relies on a number of elements. Motivation, talent, coaching, strategy and communication all play a part in the success of a team.

Motivation
It is important to know what drives your players. What are their incentives? Is it winning, lots of praise, mental coaching or a combination of factors? Finding the right balance is difficult. Managers have the same problem with their sales teams. What will motivate their employees? A big cash bonus? A trip to Hawaii? Fortunately for sales managers, technology has turned this guessing game into a science. With the help of incentive compensation solutions, managers have visibility into sales to see what incentives are working and can adjust sales plans quickly to align employee behavior with corporate goals.

Talent and Coaching
Coaching your players is vital to the success of any team; that’s a given. Coaches provide the right tools and expertise to help the players uplift their performance (individually and as a team). A coach must know how to take an individual from a B player to an A player. It’s the same with sales managers. If a sales rep isn’t meeting his quota, it is up to the manager to coach him to improve his performance.

Coaches must also deal with situations like bringing on new players, incorporating them into the team, as well as letting players go and deciding who has potential and who does not. Time is of the essence; when a coach brings on a new player he must quickly bring him up-to-speed on game strategies and team culture.

Like coaches, sales managers must quickly get new sales reps set up with their plans, quotas and verify they have the right qualifications and certifications required. Time is money, so a fast rollout in essential. Luckily for sales managers there are solutions that can help with this process. Sales performance management software streamlines these processes saving time and resource by eliminating the manual burden.

Strategy
A good strategy is the key to success. No matter how fast, skillful and intelligent your players are, without a strategy, the team is lost. Coaches are responsible for creating the game plan. They must have visibility into the game to be able to see what strategies are working and what they can do to quickly change the plan to overcome obstacles. In sales, a strategy is critical. The strategy ensures employees will meet their quota and execute against businesses goals. Like coaches watching a game, managers must closely watch the performance of their sales team in order to identify weaknesses, motivate the team when the numbers are down and change the strategy to reach the goal. It is important for companies to invest in solutions that provide visibility into performance and flexibility to be able to quickly change strategies in order to meet sales goals.

Communication
For professional athletes, incentives can be much more obvious than for sales reps. Fame, fortune and achievement: the three inherent rewards of any successful athlete. However, for sales professionals, the rewards aren’t always clear. Sales plans are changing constantly; every new quarter, every time a product is introduced, every adjustment affects the plan. If incentives are not clearly communicated, then the sales team won’t realize their rewards or understand how to get the reward. Managers must lay the plan out simply: you get this reward for doing this action. It is imperative to invest in tools that can ensure clear communication between employees and management in order to align sales behavior with the overall corporate strategy.

Go for it!
To turn your sales team into super star Olympians like Michael Phelps, it takes dedication, focus and motivation. Motivation is the powerhouse behind success. In an interview in 2008, six months before the Beijing Olympics, Phelps revealed he kept an article about Ian Crocker’s record setting win in the 2003 World Championships and a list of goals posted next to his bed. “…That’s something that’s definitely there for me to see and get me motivated and more excited.” Realizing his goals on a daily basis perpetuated his motivation.

To foster his motivation, Phelps invested in his talent: a great coach, lots of training time, strict workouts and good nutrition. With this strategy, he honed in on his talent, he was able to change swimming from a sport to a science. This gave him a competitive advantage over the rest of the swimmers. With the correct tools and incentives, he was able to become one of the most well-known, successful athletes in history.

Sharon Seitz is a public relations specialist currently contracted with Callidus Software. She can be contacted at sharonseitz09@yahoo.com.

There are many things that make this facility particularly interesting. At the time it was built, the prison was the most expensive building built in the U.S. Its innovative design and high technology (flushing toilets!), made it a model for over 300 prisons in the world. Criminals were sent there to reflect upon their actions, “find God”, and become law abiding citizen. This goal was supposed to be achieved by placing the inmates in permanent solitary confinement.

I’m sure the intentions behind the solitary confinement were good, but in practice there were several issues. First, as sales reps do with many incentive programs, inmates found ways to ‘game’ the system by finding ways to communicate between each other despite the rules and potential repercussions of being caught. More importantly, while the goal of solitary confinement and harsh punishments was reform, the unexpected result was to drive many inmates crazy, and turn petty thieves into dangerous criminals. Solitary confinement was abandoned by 1880 and was considered a large failure due to its lack of results.

The incentive compensation take away: A certain incentive program is not necessarily a good idea until it is proven to be, and one cannot discount the impact of unintended consequences. A small oversight could end up being a very expensive mistake!

I reached out to two experts in the incentive compensation field to get their opinion.

Donya Rose from the Cygnal Group replied on her blog that ‘most people should achieve or exceed quota’. More specifically, she says, more than half of the people should hit or exceed their goal.   She notes that the ideal performance distribution should be as follows:

• Not more than 5% of the sales people “out of the money” (earning no variable pay), and the these people should generally not be “keepers”
• About 40% of the sales people earning some variable pay, but less than the target amount
• About 45% of the sales people earning more than the target amount, but less than the fully leveraged upside (fully leveraged upside is generally 2 to 3 times the target incentive)
• About 10% of the sales people earning the fully leveraged upside or more.

So the 51.8% of people making quota in 2008 is low, but still acceptable according to Donya’s point of view.

I also asked the question to David Cichelli from the Alexander Group. His answer was that companies should shoot for 65 to 70 percent of all sales people to achieve quota. He notes that this performance distribution should create an on-goal performance of at least 100% of company sales goal. Through their own survey, the Alexander Group also noticed a significant reduction in quota attainment in 2009, with a median quota performance of 85%… a historically low number.

I reviewed two books: Talk Less, Say More and Covert Persuasion.  In today’s post, I will provide additional details about Talk Less, Say More by Connie Dieken, which I haven’t had enough time to cover in details during the show.

If you are like me, you probably have a short attention span [for boring content].  The premise of the book, as the title suggests, is that for effective communication, less can be better.  Through a 3 step process - Connect, Convey and Convince - the author provides a strategy to engage others to receive your message.

Connect:
This first step is about managing attention and making sure that people will actually listen to what you have to say.  Dieken says that we often fail to engage people because we take too long getting to the point and do not focus on the person.  We can connect by nailing the big idea, adapting the message to the audience and choosing the right level of candor.

Convey:
Once we master how to manage attention, we must also learn to manage information and communicate it clearly.  The author provides many tips on how to use visuals effectively, on the importance of body language (which is a major component of communicating), and how to make your message stick (by telling stories and appearing spontaneous).

Convince:
If it wasn’t for this last step, Talk Less Say More would be a good book about effective communication.  However, the purpose of the book is not only to help us become better communicators; it is about helping us to become better at influencing and at ‘making things happen’.  Dieken provides many tricks to influence people; some of these tips include sounding decisive, displaying confidence, being direct and sincere, creating commitment by sharing ownership of ideas and involving key influencers.

Many of the concepts in the book are not new - as it is the case in most influence and communication books.  However, it is information worth being repeated and the author does a great job at presenting strategies in a very simple and practical ways.  For example, I particularly enjoyed several self-assessment quiz which helped me think about personal areas for improvement.

If you feel that sometimes people don’t always listen to your great ideas, or that even when they listen, things don’t always happen, you should benefit from reading Talk Less, Say More .

Super Bowl XLIV:
I wrote my first Super Bowl post last year with an analysis of how much football players participating to the Super Bowl received in bonus ever since the first Super Bowl. With yesterday’s great performance of the New Orleans Saints against the Indianapolis Colds, many people are intrigued by the player’s bonus once again.

Oscars:
But the Super Bowl was not the only thing on my reader’s mind. With the Oscar season quickly approaching, and with great movies in 2010 such as Avatar, District 9, Inglourious Basterds, and Up, my article about how much Oscars are worth is also seeing a surge in popularity.

2010 Winter Olympics
And that’s not all the excitement. On top of the Oscars and the Super Bowl, the 2010 Winter Olympics in Vancouver are starting in a few days on February 12. My article “Olympics Pay-for-Performance, Cash-for-Medals” was a hit when I wrote it two years ago, and it is still a hit this week.

What led to that point where I felt like I was self-sufficient enough to a lead a deep dive that requires somewhat complex navigation? One that can have unpredictable currents and no signs or markers on the surface to indicate a starting point? Experience – the fact that I have done hundreds of dives and in particular have done the Palancar cave dive numerous times in a wide variety of conditions.

If it had been my first time in the water, I might have been able to get down to a reef, swim around, and surface hopefully without doing harm to myself. There is little to no chance, even with a map, that I could have found the right reef, found the caves, utilized my air efficiently, controlled my buoyancy and understood my dive charts well enough to have a safe dive. And ultimately that’s why you pay for a dive master or a guide – experience, knowledge and to minimize risk.

When it comes to selecting a software vendor, this holds true as well. There are numerous methodologies or “maps” that can be found with Google to give you some idea of how to do it yourself. If anyone would like to see the selection methodology that I utilize for my clients, please send me an email and I would be happy to share it with you. However, even with your vendor selection map in hand, quite quickly as you start to do research on the vendors in the space you will realize that there are a large number of companies that appear to have solutions to your business problem. A little farther on in the process, you might realize that there are vast differences in the vendor’s solutions. As an example - they all have some form of reporting but some are partnered with best-in-class third parties, some are integrated, some are very good at pixel-perfect static reports, while other are good at ad-hoc reporting or perhaps executive dashboards. How to interpret the cost to implement and maintain, the improvement or value-gap to current state, the trades offs between solutions, the ease of use and how others have used that particular reporting solution to add economic value to their companies are all questions that beg to be answered. This same analysis should happen across multiple dimensions of functionality and once you find a good match of functionality to prioritized requirements, the process has just begun. To go back to the diving analogy, you have only “found the reef.” So far I have just scratched the surface of the complexity and nuances of successful vendor selection, but at the end of the road your company needs to make a costly decision between multiple complex solutions to meet your complex business needs –sound risky to do without a guide?

If you are thinking about embarking on a vendor selection process that can be fraught with pitfalls, the first question you might want to ask is – “Based on experience can I lead this myself?” Next summer, I would love to be on a boat off the coast of an island that I haven’t been to before (Truk anyone?), chatting with an experienced dive master about a dive I have never done, and feel comfortable in the success and safety of the dive.

Justin Lane is a Sales Performance Management veteran and a colleague of mine at OpenSymmetry. He helps clients develop best in class Compensation Management Program processes and implement the underlying technology to support those processes.

This year, 85% of the firms surveyed have raised their sales rep quotas again.

Without seeing the entire survey, it’s hard to come up with good conclusions, but this seems to indicate that many companies failed to adjust their quotas mid-year. I am convinced that the 8% of the sales reps not achieving their quotas because of the economy was not the most motivating experience.

The press release concludes by saying: “higher quotas need to be accompanied by increased investments in sales in 2010 or we may be looking at even worse sales performance numbers next year”.