Incentive Compensation and Sales Performance Management Survey

Tag Archive for 'Incentive Compensation Management'

Tips for SaaS Contract Negotiations, and Knowledge Transfer

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on February 9, 2009
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I came across an article this weekend which I found very interesting. “In SaaS contract negotiations, focus on customization, future pricing” offers a few tips on negotiating SaaS contracts.

Tip 1: Before investing in a lot of customization work, figure out how to take it with you if you switch providers
Tip 2: When writing the terms of your initial contract, negotiate renewal terms
Tip 3: Make sure there is room for renegotiation in your exit clause
Tip 4: Write in compensation terms for use of your data
Tip 5: Work with your legal team on the terms that will allow you to break the contract

I think that the most useful piece of advice is part of tip # 1. If you read the article, it says to document the customization made, and to ensure that the third party system integrator helps you with the transition.

Knowledge transfer is not something that happens near or around go-live. Knowledge transfer is not something that takes place when the implementation partner is about to leave. Knowledge transfer is not something that is done only in case that you need to switch to another solution.

For a project to be successful once it is deployed, knowledge transfer should take place throughout the project lifecycle. Most Sales Performance Management solution implementations rely on the vendor or on a 3rd party system integrator to configure the solution. This is the perfect opportunity to work WITH the experts, and learn as much as possible on how to implement and maintain your SPM solution.

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On-Demand SPM Solutions Compatibility with Corporate Standards

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on January 21, 2009
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Platform compatibility is a big item for an on-premise SPM deployment. Which operating system will be used? And which database? How about the business intelligence package? And many more questions… With an on-demand solution, all of these questions are already answered for you, and you don’t even need to know. There is nothing to worry about… or is there?

With an on-demand deployment, the only thing that really matters is that the solution can run on the computer of your administrators, and on the computer of your sales reps. Considering that the application is usually accessed via a web browser, that’s typically not an issue.

But there are a few things to watch out for…

The main issue I have encountered is the web browser used. Maybe I was a bit slow to adopt it, but I became a Firefox guy. Well… not all SaaS solutions will run on Firefox. And even if they do, they are not necessarily tested on it, so some strange bugs could happen. I’ve never tried to use another browser like Netscape or Opera for an SPM solution, but I wouldn’t recommend it.  Even when sticking to Internet Explorer, the version of the browser matters.

If the browser version is too new, there will [probably] be unexpected errors.  On the other hand, every solution will also require a minimum version of a browser to support its technology. Is it a neat Adobe Flex application, or maybe it was built with AJAX? No matter, the case, make sure your browser is “new enough”.

Other applications require to have Java installed on your computer. For my non-techie readers, Java is a programming language that needs a small application running in the background of the computer to interpret (understand) the code. This is not usually a big deal either since most computers have this already, and if not it can be downloaded for free… But again, sometimes a specific version of Java is required… So if your IT department like to keep a consistent version across the organization, make sure they don’t update your Java runtime environment to a version which is not supported by your sales performance management solution!

Maybe a specific Flash version is required too? I’m sure the list of required plugin versions can go on and on… The bottom line is: make sure you get this list from the vendor, and make sure you can comply with the list.

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SPM Delivery Model - Intro to Development Life Cycles

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on September 10, 2008
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The implementation of a sales performance compensation system requires several steps, which are often referred to as the “System Development Life Cycle” or SDLC.  These steps include project initiation, requirement gathering, design, building, testing, deploying and maintaining the application.  No question there.

Each company and often each client with whom I worked had a different flavor of such methodologies.  Some work better in some cases, some work better in others, and I feel like some work particularly well for SPM software integration.  Software vendors often also have some flavor of a development methodology which promises to deploy their solution more quickly, but often by taking shortcuts.

The “SPM Delivery Model”, is my own version of a methodology to deliver a sales performance management system on-time, on budget, and without any defects.  The idea is to follow a repeatable process to manage the system deployment. What drives the need for yet another delivery model is that with an SPM system, unlike other type of software applications, the input and outputs are usually well known; we have historical data, we have compensation plans, etc.  Using a linear “waterfall” model is the best way to run into problems too late in the process.  Following an agile methodology or a rapid prototyping methodology can result in poor design and re-usability issues.

At a high level, the SPM delivery model appears to follow the waterfall model for the requirement gathering and design phases, and then follows a an agile methodology and a test-driven methodology for the build and test phases, where each iteration is repeated for each compensation plan.  Once every iteration is done,  the waterfall flow resumes for UAT, deployment and change management.

I will describe this in more details in my next post.

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MarketScope for Sales Incentive Compensation Management Software 2008

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admin
on August 20, 2008
in Industry News, Sales Performance Management and Vendor / SPM Solution Review and Info
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Michael Dunne, the VP of research and sales incentive compensation analyst for Gartner, released the new marketscope research on July 30, 2008.

One of his key finding; the sales ICM market grew by 20% in 2007, up from 15% in 2006.  Another interesting fact: collectively, the vendor community only captured 300 million in revenue worldwide. Finally, less than 10% of sales organizations with more than 100 persons receiving variable compensation have deployed prepackaged sales applications, with North America representing more than 80% of the world market.

My interpretation of this is that the ICM market is still very small, still has a lot of room to grow, and has an accelerating growth.  That’s great news for me!

The biggest changes in the overall marketscope rating since 2007 is Varicent which moved up a position, from “promising” to “positive”, and Practique Associates (recently acquired by Merced Systems) which moved up from “Caution” to “Promising”.  This year, ACTEK and Westport Software (now Enterprise Incentive Software) did not meet the inclusion criterion for signing new customers.  There is also a new name on the list - ZS Associates.

I asked Gartner if I could share their ICM Vendor Matrix on this blog, but they refused.  However, I collected the related press releases:

I did not find publicly available information regarding Xactly, ZS Associates and SAP’s ranking.

The rating is based on overall viability, customer experience, products and services, market responsiveness, track record and geographic strategy.  Gartner’s definition for a positive rating is “Demonstrate strength in specific areas, but execution in one or more areas may still be developing or inconsistent with other areas of performance”.  A promising rating is defined as “Shows potential in specific areas; however, execution is inconsistent”.

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Webinar Summary: Insurance Industry Best Practices

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admin
on August 13, 2008
in Best Practices, Events, Performance Measurement, Research and Articles and Sales Performance Management
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Last week I attended the Sales Performance Accenture Webinar on Insurance Industry Best Practices by Jon Walheim, Partner – US Insurance Marketing, Sales and Service and Jason Angelos – Partner, Global Incentive Compensation Management.

Accenture performed a study with insurers and asked them which 3 topics were most important in the overall market place.  54% of the respondents selected “improve sales performance”, 49% selected “increase retention” and 36% selected “improve service performance”.  This says a lot on the focus on sales performance management solutions!

In this same study, Accenture also identified that the highest level of priority regarding customer acquisition and retention was to attract new customer and to focus on retention.  Insurance companies also hope to improve their performance through training, specialized tolls and sales support.

“Imagine if all 15,000 Exclusive Agents exhibit target behavior set XYZ for a customer situation XYZ.  No guessing.  No interpretation.”

Accenture’s framework for targeting value in sales transformation is to increase revenue, decrease cost and improve predictability.  Sales performance management solutions can assist with each of those “levers”.  ICM can impact each of those levers.  Revenues can be increased with increased flexibility in incentive plan design, more insight to data and self-service tools, and analytics.  Costs can be decreased with accurate incentive compensation and easy plan administration.  Predictability can be attained with plan modeling features.

Jon also mentioned that behavior is driven by only three factors: ability, motivation and context.  For an individual to exhibit the proper behavior, he must have the skills and knowledge for the job, and be the right person into the right role.  Performance objectives must be specified and measured, and the person must be motivated and encouraged to show target behaviors.  Finally they must have the right work assigned to them, have the right tolls, and have access to the right information.

Here is another attempt at justifying investing in incentive compensation from a return on investment perspective.  According to Accenture’s research, investments in programs to motivate and reward sales people, have the greatest potential to impact profits.  The impact on better motivating and rewarding people, and at attracting and retaining people could represent 23 $M on pre-tax profit for moving from average to high performance for a 1 billion dollar business unit.

Best practices for ICM Implementations
Accenture made several recommendations for ICM implementations:

  • Simplify operations
  • Optimize controls
  • Don’t try to gain efficiency if it compromises sales performance
  • Strive to develop new capabilities to deliver improved flexibility and speed to market
  • Optimize compensation plans and focus where it counts
  • Improve reporting to increase trust with the end users.
  • Provide single source of sales performance results
  • Manage software vendors to shape future product functionality
  • Enlist a deeply skilled integration partner to increase delivery capability and decrease risk.

I’m glad I took some notes during the presentation, because even if we were told that we could obtain the presentation from Accenture after the webinar, Accenture refused to share it with consulting companies!  You might have more luck than I did by contacting Jon by e-mail here:  jon.walheim@accenture.com

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Offshoring Sales Performance Management Implementation Components

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Julien Dionne
on July 16, 2008
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Based on my experience and on common sense, there are some project components which are easier to offshore than others.

Requirements and Functional Design
Early phases of a project are more challenging to offshore; these phases include the requirement gathering and the functional planning of the project. Offshoring these activities can be difficult because they require a lot of interaction with stakeholders, users and subject matter experts. This type of interaction usually works much better face-to-face than over the phone.
Technical Design, Implementation and Testing
Once the architecture of the project is established, components of the technical design, implementation and testing phases are good candidates to be offshored. Interaction with project stakeholders will obviously be necessary, but the “what” of what needs to be done should be obvious.
Sales Performance Management Implementation
There are many strategies to leverage an offshore team to implement a sales performance management application. Compensation plans can be divided between on-shore and offshore teams, or both teams can collaborate on all the plans. I prefer the collaboration approach; coordination will be a bit more complicated, but many of the risks will be mitigated. As a result, the onshore team will have a clear idea on the status of the offshore team at all time, and there will be less communication issues such as misunderstandings of the requirement and functional design documents.
Here is a list of several common SPM activities which in my experience are good candidates to be offshored. If the design documents are detailed enough, there is no reason why an offshore team could not work on everything. However, there is probably less risk in offshoring well defined activities.
  1. ETL: A large project will use an Extract, Transfer and Load (ETL) tool to move data where it can be used by the SPM solution. With proper access, an offshore team can make a significant contribution to this process.
  2. Configuration Management: An implementation is usually carried in different environments; development, various testing envionments, and production. Moving the latest files from one environment to the next can be very time consuming, and often can’t be performed while a team works in the environment.
  3. Reference Data: Loading all the reference data including participants, titles, positions, relationships, territories, etc are activities which will not impact the building of plans, until required for testing.
  4. Quotas, rate tables and lookup tables: Creating and updating these objects can be a very time consuming activity.
  5. Formulas and rules: Sometimes, several formulas and rules which are almost identical to each other are required. Not all SPM solutions have an easy “clone” feature, making this activity very tedious.
  6. Processing: Also called pipeline in Callidus TrueComp, with a large number of participants and of transaction (in late testing phases), processing can take up to several hours. It can be very nice for the onshore team to work on the implementation during the day and come back the next morning to find the results ready and analysis of issues that occured.
  7. Testing: Testing can be a tedious job. As I discussed before, test scripts should exist which will be executed again and again… and again. Some of the first testing phases such as unit testing and system testing can be almost entirely offshored, but later phases such as integration testing and user acceptance testing are often kept onshore to be able to better monitor quality.
Note: Offshoring all the boring and repetitive activities could have negative impacts on the moral and efficiency of the offshore team, just as it would on any team.

Does anyone have other examples of SPM components which can be offshored easily?

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