Incentive Compensation and Sales Performance Management Survey

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SPM Vendor Selection Part 6: Getting Help!

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on November 25, 2008
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If you go shopping for a new car, and if you don’t know anything about cars, what do you do?  Trust the dealer?  Talk with a few dealers?   Read books and reviews about the cars being considered?  Bring a friend who DOES know something about cars to avoid getting ripped off?  In this last post about vendor selection, I will discuss a few ideas of where it is possible to get some help with the sales performance management vendor selection process.

Get help from a company experienced with vendor selection efforts
Getting help from an unbiased, experienced third party is the most obvious course of action.  This third party will be able to assist you with every step of the process we have discussed so far, from shortlisting the “best” vendors for your requirements, to writing an RFP doing a good job at describing your specific requirements, to helping out with the RFP evaluation and demo evaluation.  I’ll just add a note that I’m regularly involved on vendor selection projects with OpenSymmetry.

Pros: A consulting company with a lot of vendor selection experience will be able to guide you through the process and help you in making the best decision for your specific situation.  They will bring a lot of value by being able to answer your questions, create or review the vendor selection deliverable, provide additional insight about the various vendors/solutions considered and provide expert advice early on in the process.

Cons: Hiring a consultant / consulting company to help out with vendor selection will cost something; sometimes too much for a small budget implementation.  Not all consulting companies are as experienced or as unbiased as they claim they are, so it is important to verify the experience and the company’s reputation.  Checking references and ensuring that a company is not getting any “referral fee” from the vendor selected is also important to ensure there is no bias towards a specific vendor.

Get help from an SPM Vendors
Dean Thomas from Merced Systems discussed earlier this month how valuable it is to involve SPM vendors early in the RFP / requirement gathering process to get a good RFP.  Indeed, most vendors will usually be helpful in providing information and ideas when creating an RFP.

Pros: Vendors usually want to appear to be “good guys” and be on your side during the selection process.  There is much to be said about the importance of developing a good relationship between vendor and client, and helping you here is planting the first seed to what the vendors hope to be a long lasting relationship.

Cons: As I pointed out earlier in a blog comment, getting help from a vendor is a bit of a grey area.  When involving one vendor, other vendors should also be involved to be fair, and this can be complicated.  Involving vendors may also create a notion that some are favored more than others.  Finally, some vendors may also use this opportunity to recommend requirements which may give them an advantage over their competitors.  SPM vendors are familiar with their application, but sometimes they lack the knowledge of other solutions which makes it hard to think out of the box…  even with the best intention they may give an advantage to their solution.

Get help from the Internet
Just stating the obvious, but there is a LOT of information on the Internet about vendor selection, RFP writing, etc.  Good places to start looking for SPM specific information are the vendor’s websites and sales performance management blogs.  Looking at vendor selection deliverable for other software solutions more commonly used than SPM could also be valuable; CRM and ERP solutions are other applications which will share common requirements with a sales performance management solution including security, data, etc.

Pros: The information is free…

Cons: The quality and accuracy of the information can be biased.  For example, many vendors provide pros and cons of on-premise versus on-demand solutions; usually these studies are heavily biased towards influencing customers to select an on-demand solution which is usually more lucrative for the vendor.  Be wary of vendors who require you to share contact and project information before sharing white papers, templates, studies, etc with you.  This is only a sales stunt and you may have a hard time to get rid of their sales team.

Get help from me
If you have any questions or if you would like to brainstorm a few ideas, I would be pleased to talk with you and help out… for free.  The only catch is that I hope you will share this blog around in exchange for the help, and keep me in mind if you ever need help with “real” work.  I promise you won’t be constantly harassed after contacting me :-)  You can reach me by e-mail at julien.dionne@opensymmetry.com or by phone at 613-482-2556.

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SPM Vendor Selection Part 5: Reference Calls

SPM Vendor Selection Part 4: Vendor Demos / Interviews

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on November 18, 2008
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In my opinion, this is the most important and valuable part of the sales performance management vendor selection process.  The demos can take different forms; for a small on-demand project, these demos are often performed online.  For a large implementation, the remaining competing vendors will usually send a team on-site to present.  This is the first opportunity to really see the look and feel of the solution. The RFP scores of the invited vendors could be very close, so this is where they get the chance to distinguish themselves.  A job candidate is rarely hired without a face-to-face interview; this is it!

How long should the demo last?
A small SaaS solution such as Xactly or Centive could be presented in a few hours, but it really depends on the complexity of the solution.  The length of the demo also depends on how much time you have and how much time the vendor is willing to invest in trying to win the bid.  My advice is that for a large implementation (Callidus, Varicent, Merced, etc) half a day could be enough for an overview of the application, and a full day is not too much to go a bit more in details.

What questions should be asked?
SPM Vendor should be given specific instructions on what they should be demonstrating, which could vary depending on the audience.  Ask yourself what is of interest to the evaluators; the plan configuration and administration?  Reports?  Analytics?  If the evaluators are managers / directors, showing how the configuration plan elements is done may not be necessary.

Demo Scripts
The best way to find out that an SPM solution can do what you would like it to do, is to ask the vendors to configure a few plans.  Don’t only provide the plan details, also provide some sample data.  The sample data only needs to be a few transactions, there is no point in providing hundreds of them.  When the vendors walk you through their solution and results, it will provide a good overview of how their solution works.  If you choose to ask the vendors to implement a few things for the demo, provide them with at least a week to work on them to ensure they have the time to complete the activity.  It’s fair to ask them to create simple rules “on the spot”, or to modify some of their plans, but if you ask them to implement several plans during the demo, valuable time will be wasted.  Also, keep in mind that the goal is to review the solution, and not the ability of the sales engineer to work under high pressure.

Demo Evaluation
Just like for the RFP, a scoring grid should be created ahead of time and distributed to all the evaluators.  Another tip; leave a lot of space for comments.  If the evaluators have laptops, they could even fill the evaluation in a spreadsheet.  It’s never fun to do manual data entry if it can be avoided.  A question I often get is how much should the demo evaluation be worth compared to the RFP.  This is another “it depends” answer.  Typically, I recommend that the evaluation be worth at least 50% of the total score; if it’s a full day demonstration, probably more…  for a short online demonstration, probably less.

When evaluating the different demos, beware of evaluating the quality of the presentation rather than the quality of the solution.  As we know, some people are very good at presenting, and some are not quite as good.  You would think that sales engineers have all mastered the art of the presentation, but they are not all made equal and some can be better than others.  Try to evaluate the actual solution and not how good the SE is (and that can be hard to do!).

One last note about the demo evaluation:  if the vendor is now showing you what you want to see (even if this should have been made clear before the presentation begins), make sure to let them know, and they can probably adjust the focus of their presentation.

Logistics
If the vendors are coming for an on-site visit, find out of they need an Internet connection.  Also make sure you have a working projector!

A Note for the Vendors Reading This
Don’t rely on the internet connection mentioned above.  Bring your solution installed on a laptop, or even bring a server with you if you need it, but don’t count on this connection to work or to be stable!

Adding the Scores
We now have scores for the RFPs and the demos.  Adding them should reflect who the winner should be.  There are a few more steps before selecting this winner, but once the demos are completed, you should have a good idea of who the preferred vendor is.  Just as with the RFP, I would recommend a debrief following the demos to discuss impressions, strengths, weaknesses, likes, dislikes, etc.  If you had more than 2 vendors presenting, I would recommend selecting the top two vendors for the next steps.

Next Steps
We’re almost there…  we still have to do our due diligence and perform reference checks before we start contract negotiations. I will discuss this in my next post.

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SPM Vendor Selection Part 5: Reference Calls

SPM Vendor Selection Part 3: Evaluating RFP Responses

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on November 12, 2008
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I hope you were not thinking that all the hard work was over when the RFP was completed; evaluating the responses to the RFP (the proposals) is another big task with many challenges.

  • The proposals are usually fairly thick, and it takes time to go through them. That’s why I recommended doing good upfront work at shortlisting the right vendors. RFP evaluation is a big time commitment, but after putting so much time in writing the RFP, it’s not time to cut corners here.
  • Just as with the actual RFP creation, many people need to be involved in the evaluation process. For example, maybe someone on the “technical side” added a question regarding information security. Each vendor is now listing several measures by how they protect information and how the application was architected with security in mind. This person is likely to be required to evaluate this question because the business team may not know which answer is the best.
  • As with my example above, it is often hard to rate an answer without some knowledge of what these incentive compensation applications can do. Answers can all look very similar.

The goal of the proposal evaluation is to further reduce the number of vendors in the race. The next step is usually the vendor’s demos, but these are time consuming and it’s not practical to have all 3-5 shortlisted vendors selected. A good number of vendors is usually 2 or 3.

Evaluation Methodology
Each proposal evaluator should know ahead of time what is expected from them, and when they should expect to receive the proposals. Along with the proposals, an evaluation grid should be provided. Everyone can try to evaluate every question, but it often makes sense to separate business and technical questions. Each evaluator evaluates the relevant questions and returns the evaluation grid for each proposal to a certain person responsible for consolidating the scores. When every evaluation is received, that person will aggregate all the scores for each question, and create an average. A meeting to discuss the scores can then be scheduled, where any large discrepancy in scores can be discussed (person A gave a low score on a certain question, and person B gave a very high score). As a result, there should be 2 or 3 proposals ahead of the others.

Alternative Evaluation Methods

  • Every evaluator can meet in person and discuss each question. The goal is to come up with a consensus on what the score should be. This method also works, but seems to be more time consuming. Scheduling a meeting with a large group of people often seems to be a challenge.
  • I have seen many proposal evaluations being outsourced entirely, especially on government contracts. I think this is generally a bad idea since this 3rd party does not have a very good knowledge of your requirements, and potentially does not have any knowledge of the sales performance industry. It can be beneficial to get help from a 3rd party when evaluating the proposals, but I wouldn’t recommend relying entirely on this 3rd party.

The key element to evaluate the proposals is to have a well defined evaluation grid. If everyone stick to the same format, it will be much easier and quicker to consolidate the scores, and there should be less ambiguity on how to evaluate each answer.

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SPM Vendor Selection Part 4: Vendor Demos / Interviews

SPM Vendor Selection Part 2: Shortlisting SPM Vendors

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on November 10, 2008
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Now that you realize how large the proposals are going to be, it is obvious we want to invite only certain companies; having to evaluate 20 different proposals would be a good waste of time. Usually, between 3 and 5 companies are shortlisted for this process.

So how do we pick the companies to be included in this list? It depends on many criteria and on the context. The most obvious criteria are the number of payees, the complexity of the compensation plans and the requirement for an on-premise versus an on-demand solution. Many vendors also focus on a specific industry and should be considered for the list.

The next step is to look at the company’s reputation. Some of them have been in the market for a long time, and some are pretty new; some of them have many live implementations, others are still trying to find clients; some of them are profitable, others are not; some win awards and make the Garners list, others are almost unheard of. What do others say about the applications being considered? The importance of these questions should help further refine the list.

The next big question remaining is, can the applications remaining on the list meet your high-level requirements. This can be hard to answer without knowing the vendors and their solution, but some of this information can be found on the web and on my blog. This is why it’s important to know what is important to you? Assuming every solution will give accurate results, what are you looking for beyond that? User friendliness of the administration interface? Reports? Analytics? Ease of maintenance? Modeling? Do you have any other technical requirements? Is support of a specific database required?

Finally, do you need a best-of-breed application, or would you consider a “lesser known” vendor if the price was significantly cheaper, or if they had a very strong focus in your industry? Obviously some solutions are very expensive, and others are… well not as pricy, some are very focused (often in the insurance industry), while others are generic.

After considering all of this, it should be possible to bring down the list to the 3 to 5 vendors we are looking for. Avoid making the common mistake of only considering the companies rated promising or positive on the Gartner ICM Marketscope… others are likely to have very viable solutions as well.

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SPM Vendor Selection Part 6: Getting Help!

SPM Vendor Selection Process

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on November 5, 2008
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A lot of my readers end up on LeapComp looking for information about various vendors. I presume this is because they are considering getting a sales performance management solution at some point. In the next few posts I will discuss the vendor selection process, and I will address the following topics:

  1. Creating a good Request for Proposal (RFP)
  2. Creating a shortlist of vendors to be considered
  3. Getting the most out of sales performance management vendor’s demos / Proof-Of-Concepts / Interviews
  4. Conducing reference calls
  5. Negotiation
  6. Getting help

Let’s look at the first topic; creating a good RFP.

Creating a Request for Proposal (RFP)
A Request for Proposal (RFP) is a document inviting companies, in this case SPM software vendors, to submit a proposal. The RFP includes many sections including the project definition, the project requirements (functional and technical), vendor questions, an explanation of the selection process, scoring process, etc. The quality and completeness of the proposals will only be as good as the information provided in the RFP, so it’s important to get this document right!

Before even starting to write an RFP, make sure you understand your business needs, business and technical requirements.  I wrote a scenario about the importance of getting the requirements right, which is relevant again.

Organizations often have an RFP template which they use for every RFP they send out. These templates will include common information such as a letter of invitation, instructions to bidders, a common glossary, and other forms. If you do not have such common template, you should look at various examples, and pick which sections you want. Many places on the web have “sample RFPs”.  Here is an RFP gold mine, containing all Canadian’s government issued RFPs.  They are not specific to SPM, but they can provide some good ideas.

Requirements and vendor’s questions

Formulating good requirements, and good questions for the vendors, is key to ensure the “winning solution” is the best fit for your organization.  After all, you don’t want this winner to not meet one of your “must-have” requirements which was left out of the RFP.  Secondly, what could be the best system for one company is not necessarily the best for yours.

Asking questions such as “The product must be able to calculate commissions accurately”, or “The product must be robust”, is bad.  Why?  Because this is the type of questions every vendor will answer “yes”.  Not only is it important to ask questions specific to your needs, it is important to ask questions which will distinguish vendors from each other.

Specific must-have yes-or-no questions could be “The solution must be able to support multiple calendars”, “the solution shall be hosted in a data center with a SAS 70 accreditation” or “the solution shall be able to integrate with SAP without significant configuration”, are examples of questions which may be important to you, and which not all vendors may be able to check “yes” so easily.  In general, most yes-no questions will be answered by “yes”.  That’s why RFP for packaged solutions often add other answer options such as Supported,Modifications, 3rd Party, Customization, In the future and not supported. I would also recommend leaving space for vendor’s to add comments on that spreadsheet.

When scoring the RFPs, relying on these answers will give very similar scores.  That’s why essay-type questions are often preferable, and can be a good complement to those questions.

Questions such as “Describe how your organization supports customers and resolves issues” will give a better picture of what the vendor has to offer compared to asking the question “can resolve issues in a timely manner”.  Essay questions will also make the scoring more time consuming and potentially more subjective.
When formulating questions, first think about major categories such as compensation, technical, organization, etc.  Keeping your specific needs, requirements and current challenges in mind, write questions related to each of those categories.

So you get the idea, the proposals will often be pretty large documents.  That’s why my next post will focus on short-listing SPM vendors.

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SPM Vendor Selection Part 6: Getting Help!

Merced Incentive Management (MIM) Review Part 2

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on October 19, 2008
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During the demo we logged in the application as an administrator.  As you can see, the top menu gives access to major application ‘areas’, and the left menu shows information which is relevant to the active area.  When we navigated to the “payees” area, we see the “most recently used” payees, and the related areas.  Most areas also include a search tool to easily find what we are looking for.  Finally, as expected, the payees are listed, grouped by title (which Merced Incentive Management calls “roles”).


Merced Incentive Management supports multiple hierarchies, called “sales structures”.  The company hierarchy can be displayed in a graphical way, and “drilled down” as required.

This is when I noticed what I think is one of the best feature of Merced Incentive Management.  It uses a “tab” navigation system which we have grown accustomed to in our web browsers, making the navigation from screen to screen (and back) very easy and convenient.

Clicking on a payee opens another tab, displaying that payee’s information.

Some of the information can be modified by updating the values in the text boxes or drown down menus, but others require to pick a value from a list and other settings.  For example, changing a role required to specify the new roles with the effective dates for that role.  These changes make a window “pop-up” on the screen while fading the information in the background.  That was another very nice eye-candy I have not seen in other solutions.  This concept of “pop-ups” is used throughout the application.

Building a Plan

Plans in Merced Incentive Management, are not what other applications call a plan.  In every other application I have seen, a payee can only be part of ONE plan, and the plan consists of all the rules including commissions and bonuses for the payees assigned to the plan.

In Merced, a plan is an object which contains all the logic to come up with a set of results, multiple plans are assigned to each payee.  So for example, if we have 4 different bonuses for an individual, each of those bonuses is considered a plan.  The first time I talked with Merced about their application, they mentioned the application supported several thousands of plans for some clients.  I did not understand why a sane (or even an insane) client would want that many plans.  This explains it.

If it’s still not clear, I hope it will make sense after I explain how the plans perform calculations.

Back to the plan screen; the screen is divided in a few sections.  The “plan summary” section shows the plan name, the plan group, the target and the effective dates.  The plan filter section shows specifies the data source and every filter applied to that data. Finally, the bulk of the logic takes place in the “plan calculation” section, using what Merced Incentive Compensation calls “calculators”.

Each plan (as is every other object in Merced Incentive Management) is effective dated.  A full audit trail allows to audit the various object versions and revert back to a previous version if required.

My next post will focus on the ‘calculators’ which contain the logic for all calculations performed my Merced Incentive Management.

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