Vue Software

Tag Archive for 'Incentive Compensation'

How Healthy is the Incentive Compensation Industry?

Published
by
admin
on January 22, 2009
in Industry News
. 0 Comments
1 Star2 Stars3 Stars4 Stars5 Stars (2 votes, average: 2.5 out of 5)
Loading ... Loading ...

We have looked at many survey results, but there is another indicator which I have not talked about for some time. The financial results and the number of deals signed by the various SPM vendors can give us a picture on how well the ICM industry is doing… And it’s that time of the year when vendors are starting to report their 2008 performance.

Merced Systems:
Merced Systems, the leading provider of Sales and Service Performance Management software and solutions, announced today that the company grew rapidly in 2008, posting record sales amidst the global economic slowdown. Highlights include the signing of multiple North American Incentive Compensation Management customers and over 100% growth in Software as a Service (SaaS) revenue. Merced Systems reached $40MM in annual sales for the first time in company history.

Varicent:
The full 2008 results are not available yet, but this press release shows Varicent’s performance up to and including Q3.

Revenue results were strong for both quarters driven by a number of new customer acquisitions and significantly larger orders for Varicent SPM. Q2 revenue was up 40% over Q1 2008 and in Q3, Varicent generated record revenues and a 35% revenue increase over Q2 2008 showing evidence of a growing market demand for Varicent solutions.

Xactly Corporation:
In the 12 months ending December 31, 2008, Xactly achieved more than 140 percent increase in recurring revenue and an 87 percent year-over-year increase in total revenue. The company also added to its customer base, with a third of existing customers adding new modules or subscribers, and increased its total number of subscribers by 84 percent.

Callidus Software:
Callidus’ Q4 earnings conference call is only scheduled for next Tuesday, Jan 27 at 4:30pm Eastern. I’ll add to this story when we get the details, but I think we will see some growth from them as well.

Other Vendors
And there are all the other vendors. All of these companies (with the exception of Callidus) are private, so there is no requirement to report on their performance. Some of them will probably release some news in the next few weeks, but I just wanted to reassure that if they are not listed here at the moment, it does not mean that they are not doing well.

To answer my question…
So, how healthy is the incentive compensation industry? 2008 was a good year; even Q4 was good despite the economy. Maybe the recession will catch up with some of the vendors eventually, but so far it looks like most vendors are doing well and have many good deals in the pipeline (no pun intended Callidus). And this confirms that there is still a strong demand for sales performance management solutions, at least up to now.

Tags: , , , , , , , , , ,

Related Posts:
Cafeteria Health Incentive Program or Fat Tax?
Salary Incentives and Strategies in Executive Recruitment in a Challenging Economy

2009 Sales Compensation Trends Survey

Published
by
admin
on January 20, 2009
in Industry News
. 1 Comment
1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 5 out of 5)
Loading ... Loading ...

I recently talked about a few salary and incentive compensation surveys, but here is another one from the Alexander Group that focuses on Sales Compensation.

The 2009 Sales Compensation Trends Survey found that 40.34% of the 180 participating companies use a desktop solution such as a spread sheet or data base and that 29% use a custom in-house solution to administer their sales compensation program. Outside solutions represent 27.27% of the respondents: Custom Purchase (9.66%), ERP/Data Base Component (5.68%), Dedicated Commercial Hosted Solution (5.68%), Dedicated Commercial Enterprise Package (4.55%), and Outsourced to a Third Party (1.7%). The remaining participants selected “Other” (3.41%).

The survey included many large companies like American Express, Microsoft, General Electric, DuPont, and Kraft Foods, but it also included many smaller companies with only 20 sales personnel (or more). I think that this is why 40% of the companies surveyed still use a spreadsheet / desktop solution.

What I think is particularly interesting is to compare the on-demand and on-premise solution usage; 5.68% of the companies used an on-demand solution, while 4.55% of the companies used an on-premise solution. In other words, only about 10% of the respondents use a dedicated commercial sales performance management solution. Over the next few years, I believe we will see many of the companies moving away from spreadsheets or custom solutions to move to a commercial application.

I’m also very curious about what “Other” solutions 3.41% of the respondents are using… hand-written incentive compensation statements? I’m assuming that these companies probably use some sort of application to manage this; maybe a payroll system or a talent management application with an incentive compensation module.

The survey also provides several other interesting results:

  • 3.0% was the average incentive payout increase in 2008.
  • 4.4% is the average incentive pay increase planned for 2009.
  • 5.6% is the expected median revenue growth for 2009; 6.0% occurred in 2008.
  • 30.72% will increase staff in 2009; 44.69% will not change staffing levels; 24.58% expect a decline.
  • 93.44% of the reporting companies will make changes to the 2009 sales compensation plan.
  • 53.30% made some type of mid-year change to their sales compensation plan design in 2008.
  • 78.14% of all companies use sales revenue as the primary performance measure.
  • 55.19% say correct goal setting is the toughest part of sales compensation.
  • 32.95% say the sales department is solely responsible for the sales compensation plan design.
  • 90.0% was the median of the average quota performance reported in 2008.
  • 45.39% of all companies made some mid-year quota changes during 2008.

I discussed how many organizations reacted to a recession by adjusting their sales compensation plans, but these results help back up this claim. About 50% of the respondents adjusted their compensation plan design and quota values during 2008, and more than 93% are planning to modify their plan for 2009!

As a side note, I recently contributed to the creation of OpenSymmetry’s Sales Performance Management survey, which will provide more insight about comp plan administration, SPM solutions, and challenges. Let me know if you would like to participate and I will let you know when it’s ready.

Tags: , , , , , , , , , , , , ,

Related Posts:
Sales Comp Administration Practices Survey
Survey on Sales Quota

Insurance Incentive Compensation Management Applications

Published
by
admin
on January 14, 2009
in Industry News and Planning and Selection
. 0 Comments
1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 5 out of 5)
Loading ... Loading ...

Insurance companies are often a world apart in incentive compensation. People are often being compensated differently than in other industries, hierarchies and contract structures are usually more complex, compliance requirements are often “crazy” and even the terminology is pretty different. Specific insurance-industry requirements have led many solutions to focus only on that vertical, and many other more generic solutions are adding insurance functionality and gaining more knowledge of that industry.

Earlier in December, Gartner released a MarketScope paper about Insurance ICM applications, profiling the 7 leading vendors in that industry.

Some interesting points mentioned in the paper:

  • 16 new ICM deals signed with life insurers globally, and 8 deals for property and casualty (P&C) insurers in 2008
  • Overall adoption of ICM solutions for insurance will remain steady through 2010, with 18 to 22 new deployments projected during the next 12 months for life insurers and P&C insurers globally
  • North America will continue to be the strongest geographic segment
  • When evaluating solutions, insurers should not discount the importance of the upgrade process.
  • Our rating for ICM applications for insurers remains Promising for another year

What’s interesting from this paper is that many of the solutions are so industry specific that I haven’t really talked about them on LeapComp. I talked a bit about some of them in the OpenSymmetry SPM Guide and I have an online demo recording for two of them, but I will probably try to review the missing solutions within the next few months.

So this year, 3 vendors got a positive rating: Callidus Software, SunGard, and Versata. The other companies profiled were CSC (Exceed), CSC (PerformancePlus), MajescoMastek, McCamish Systems, and SAP.

Another note in the report mentions “Varicent Software is the next likely entrant into the insurance vertical market, provided it has a successful 2Q09 implementation for a recently acquired Tier 1 insurer. Although Varicent did not meet the inclusion criteria for this year’s MarketScope, insurers should expect Varicent to build on its success and gain insurance market share.”  That’s another company which I have been talking quite a bit so far.

Just like with the “regular” incentive comp industry, with all the consolidation happening in the insurance industry in 08/09, with the increased level of interest in ICM solutions, the number of good options available and the forecasted upcoming major insurance ICM projects, it will be interesting to see how the vendors stack up next year.

Tags: , , , , , , , , , , , , , ,

Related Posts:
Accord/Loma Insurance Systems Forum
Insurance ICM Industry Market Overview

Adoption of Software-as-a-Service in the Sales Performance Management (SPM) Industry

Published
by
admin
on January 11, 2009
in Industry News and Planning and Selection
. 2 Comments
1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 5 out of 5)
Loading ... Loading ...

A question many of my clients wonder about is “should we get an on-demand Software-as-a-Service (SaaS) SPM solution, or an on-premise solution.” The popularity of SaaS solutions and of traditionally on-premise solution being offered on-demand surged last year. I will discuss the pros and cons of each model in more details in a separate post; for now I will focus on one of the biggest concern to adopt SaaS.

Availability and Control. Let’s define availability as the “up time” of the SPM application. In other words, high availability means that an application will be continuously operational for a long period of time. If the application is not available, no one can access it. What is the impact of such “down time”? If the outage is “only” affecting the sales reps that can no longer access their performance for a few hours, availability may not be such an issue. If you are in the implementation process, it is clear that an outage would paralyze the implementation efforts for that time (let’s hope that it’s not during deployment!). In the worst case, the outage could happen around the time the incentive compensation needs to be processed and submitted to payroll (ouch!).

Technology is not perfect, and we can expect it to fail once in a while. But what makes many companies think twice about adopting a mission critical SaaS solution is that they lose control any potential issues and over how quickly they can get resolved.

Let’s look at a recent example outside of Incentive Compensation. Last Tuesday, the web was buzzing with news about Salesforce.com being down. A network device failed, and the redundant systems did not kick in for some reason. This stopped all data from being processed in Japan, Europe, and North America. Why is this a big deal? Because SalesForce.com is considered to be the leader of the pack in the SaaS market. If SalesForce.com can be down, availability issues can (and will) happen to any SaaS vendor, no matter how much they brag about redundant systems, fail safes, power generators and secured data centers… But going back to the SalesForce.com example, “service disruption affected all areas from 20.39 to 21.17 GMT on 6 January… or only 38 minutes without service.

Some people have questioned whether such incidents could harm the adoption of SaaS. I think, maybe… but not for Sales Performance Management. I think that SaaS applications and their availability will only keep improving. And I think that as the SPM SaaS applications mature, it will become more and more difficult for even the most technologically capable companies to have the availability of their on-premise application competing with the availability of the on-demand applications.

So do I think SaaS applications is a good solution for everybody? Probably not. Is it an option worth at least considering?  I think so!

Tags: , , , , , , , , , ,

Related Posts:
Insurance Incentive Compensation Management Applications
Insurance ICM Industry Market Overview

Makana Motivator Pro Review

Published
by
admin
on January 8, 2009
in Vendor / SPM Solution Review and Info
. 0 Comments
1 Star2 Stars3 Stars4 Stars5 Stars (6 votes, average: 4 out of 5)
Loading ... Loading ...

Last November, I briefly talked about the newly released Makana Motivator Pro. Motivator Pro is an on-demand Sales Performance Management application which like Motivator Express helps with the design of compensation plans, but which also offers new payment and reporting modules. Unlike most SPM solutions, Motivator Pro is a self-serve solution (no additional implementation costs) designed for companies with a sales force with less than 100 payees.

I reviewed the planning features of Motivator (now called Motivator Express) already, so I will focus on reviewing the features that are new with Motivator Pro in this post.

Once logged in the administration interface, it is easy to see at a glance how to get started. We see 4 items in the top menu; Home, Planning, Payment, and Setup. The dashboard consists of 3 options; Take the Tour, Launch Plan Wizard, and Join Your Peers.

Planning
Creating a new plan using the step-by-step wizard is simple and straightforward. First, you select a category of positions which Motivator calls a job role. This will be the title of the plan document.

Step number 2 consists of specifying the target pay at 100% and the base salary. As with Motivator Express, some planning tips are provided during the configuration. Similarly, goals are defined in step 3 and goal payments are defined in step 4.

The design of the plans is very similar to how planning was performed in Makana Motivator Express. A green star in their top left corner indicates if the plans are in “production”.

Building the organization and hierarchy is done through the “Build Your Org” tab. Payee information can be uploaded, or created via the user interface.

Cost modeling is also straightforward. Projected payout is based on a percentage of historical attainment. and attainment assumptions can be changed globally, at the participant level, and even for each goal for an individual Projections are automatically rolled up to show total sales and incentive costs.

Many useful graphs can show information such as the quota attainment distribution.



Payment
The “Your Plans” tab in the Payment section displays all the plans currently designed. Each of the plan sections can be expanded to display more information (Measures, Formulas, and Payouts). The dates for which a plan is effective is displayed at the bottom of the plan. Once the plans are designed and ready to be used, it’s time to visit the “Assign Credit” tab and to import the orders. This is done via a simple file upload and the credits are automatically assigned based on the rules created during the planning phase. With another click, you can calculate the incentive payments for those credit assignments

Once payments are calculated, reports are automatically generated. These reports can be downloaded in an Excel or PDF format.

A web portal will also be available by the end of January, where payees will login and view their personal performance, their team’s performance, their ranking, and detailed reports on a dashboard.

The “Pro” in Motivator is a great addition which will benefit existing and new Makana customers alike. The main question, I was hoping to answer as a result of the demo was, is that solution really simple and intuitive enough for self-service. I think I can safely answer that yes it is, but it will take a bit of practice if the administrator is new to the comp world. However, the wizard and the online help, as well as the detailed “tips” displayed throughout the configuration should make it very quick to learn. Priced at $29 per month per payee with no implementation fee, this could be the right solution to finally replace those inaccurate spreadsheets and ineffective compensation plans.

For more information, click here to take a quick tour.

Tags: , , , , , , , , ,

Related Posts:
“New” Sales Compensation Solution – Makana Motivator Pro
Makana Motivator for Free!

Incentive Compensation and Total Reward Strategies During a Recession

Published
by
admin
on January 6, 2009
in Industry News
. 6 Comments
1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 4 out of 5)
Loading ... Loading ...

With the state of the economy, it is no surprise that most companies are rethinking their reward strategies. In a strong economy, one of the major arguments in favor of incentive compensation is employee retention. During a recession, the main argument is to keep employees motivated.

Many companies have different philosophies when it comes down to rewarding their employees. Some of them are currently looking at cutting costs, cutting incentive programs, cutting rewards, cutting travel, increasing quota amounts, etc. Others, on the contrary, are looking at reducing base pay, and to increase incentive compensation; they figure that if employees are only paid for performance, then they can afford to pay them. Then there are those who don’t currently pay commissions and start thinking that it could be a pretty good idea. Finally, there are many companies who are not necessarily looking at transforming their incentive compensation plans, but are looking at making them work better.

To have a better idea of how various companies are reacting to the economy, let’s look at some survey results.

Ann Bares posted about many studies conducted by Hewitt (411 organizations), Watson Wyatt (248 organizations), Mercer (190 organizations, based on yesterday’s WSJ article), WorldatWork (members only, 698 members responding to a Quick Poll) and BLR (Business & Legal Reports) (518 organizations).

Paul Hebert also posted about changes in the incentive industry, commenting on a few surveys from the Incentive Research Foundation.

I think the most interesting survey is the one from Towers Perrin. With over 450 companies participating to the survey in October, it shows how 39% of the participants were somewhat likely to very likely to reduce annual incentive/bonuses and how 18% were planning to reduce the number of participants receiving long-term incentives.

One of the big questions is, why would companies cut into their variable compensation programs in a down economy, when it is such a great tool to control payouts against actual performance.

As Ann pointed out, the only good reason to take “take a hatchet to their plans” is to get rid of discretionary plans not tied to measurable performance results, or to get rid of poorly designed compensation plans.

How should all these surveys be interespreted from technology perspective?  My interpretation is that companies may have less budget for new large IT projects, but on the other hand, it could be easier to justify the need for effective sales performance tools…  so while I don’t expect there will be a huge growth in the industry in 2009, I think it will maintain itself.  From an implementation perspective…  there should be a lot of work from implementing new plans, enhancing existing compensation plans, integrating systems from all the larger mergers that took place in 2008, etc.

I often get asked about if I think the SPM vendors will survive this economy, and I don’t see why not… if the company fundamentals are strong enough to re-assure people considering them.  One thing is for sure, it will be an interesting year!

Tags: , , , , , , , , , , , , , , ,

Related Posts:
World at Work Total Rewards Conference & Exhibition
Woohoo! Some companies are starting to get it!