Friday, May 30, 2008

Xactly Incent 4.0 - Effective Dating and Other New Features

Xactly will be releasing the new version of its On-Demand Sales Compensation Management application in the next week or two.

The main changes in Incent 4.0 will include an improved user interface and reports, "effective dating", improved organizational management and advanced searches.

User Interface and Reports:
The interface looks good and most of the changes were made around the new functionalities for effective dating. The reports look prettier and also have new security/privacy features. More reports are available and they work "out-of-the-box". As far as I know these reports are still not very customizable, so it will be important to make sure they satisfy the reporting needs.

Effective dating:
This is a feature I described earlier when discussing versioning. Effective dating allows to give a certain value to an object between certain dates, and a different value between other dates. This can be used to track changes to teams and reporting releationships, job or role changes, promotions, name changes, targets, etc.

For example, if a person's salary goes up from $50,000 to $60,000 on March 31st, the original version will show a salary of $50,000 and a new version will be created with an effective date of March 31st and a salary of $60,000.

Effective dating is extremely useful because rather than scrambling to make changes before a payroll date, changes can be done at anytime. Since these changes can be tracked, effective dating also improves auditability (it is easy to see how historical commissions were calculated).

Note: Effective dating in Xactly is currently limited to people, positions, hierarchy and relationships. Hopefully a future version of Incent will allow effective dating of other objects such as plans, rules, quotas, etc.

Organizational Management:
Without effective dating, organizational management was a bit tricky in previous versions. Changes in hierarchy and relationships are now much simpler and much cleaner.

Advanced Search:
Advanced searching makes the process of finding the right object or result much quicker. It was also a needed add-on to be able to search for effective dated objects.



I have seen a few minor upgrades of Xactly (3.x) and with the scope of these changes, this new release (version 4) clearly deserves it's own number. Lets just hope that effective dating will be applicable to all objects in the near future.

Enterprise Incentive Management News

Xactly
Xactly Wins Coveted 2008 CODiE Award
Sales performance management leader takes home software industry's top honor for best financial software solution

XACTLY NAMED TOP FINALIST FOR 2008 AMERICAN BUSINESS AWARDS(SM)
Leading on-demand sales performance management vendor chosen from among 2,600 entries for prestigious Stevie® Awards

Callidus
Sierra Atlantic Partners With Callidus Software to Advance Software-as-a-Service (SaaS) Delivery
Provides Global Delivery Model to Achieve Sales Performance Management Growth

Centive
Centive Named to JMP Securities' Hot 100 Software Companies
"We are pleased to be honored with inclusion in the Hot 100 report by JMPSecurities," said Michael Torto, president and CEO, Centive.

Centive Named as Finalist in 2008 American Business Awards
On-Demand Sales Compensation Management Leader Recognized for Providing Exceptional Customer Service

Tuesday, May 27, 2008

Networking 2.0 - The Art of Making Connections

I'm deviating a bit from the incentive, compensation and sales performance management topics to talk about professional networking. I was invited by a Canadian Heritage Network (Generaction) to be a keynote speaker at an event next Thursday (May 29, 2008) in Ottawa. The topic of my presentation is "Networking 2.0 - The Art of Making Connections". You can download my Power Point presentation here.

The main areas I will address include how to build, maintain and use a professional network. It sounds simple, but I will provide many useful tips and best practices on networking strategies and networking mistakes to avoid. I will also discuss how online social networking can be used to stay connected with your network.

I listed 3 good books about networking in my presentation deck. Here are the links to their author's website:
I hope to see you on Thursday.

Monday, May 26, 2008

For Love or Money: Social vs Monetary Reward

Social Status and cash activate the same reward centre in the brain. That's what two papers in the latest Neuron journal (Volume 58, Issue 2) are saying. I'm always very interested by cognitive research attempting to explain how certain activities can affect human behavior.

The article "Know Your Place: Neural Processing of Social Hierarchy in Humans" by Dr. Caroline Zink and colleagues explains how information about social status activated the same brain regions.

The second article "Processing of Social and Monetary Rewards in the Human Striatum" by Dr. Norihiro Sadato supports how reputation affects people in the same way as money does.

A subscription is required to read those articles, but they were summarized in ABC Science article "Praise or Cash? Your brain doesn't care".

Personal Story:

These studies support my own view on the topic. Last month I discussed the impact of the size of a money bonus on performance. It would be very interesting to see a similar experiment where some a group receive a lot of encouragement and the other group receives no praise at all, to compare their performance.

One of my previous employers, as many employers do, offered an annual performance bonus. This bonus was a percentage of the annual salary, but every employee received a very similar bonus. Employees developed a sense of entitlement to this bonus, and always thought they had met all their performance objectives and deserved the full amount. I'm just giving this context to illustrate how the cash incentive most likely did not have a positive impact on performance.

The employer, aware of this problem, introduced a "praise" program, consisting of recognizing employees who had made a significant contribution. Managers were encouraged to simply give a "Thank You" card to exceptional employees. I have no idea how this program affected performance... But it's impact on motivation was priceless.

Employees receiving these "praises" would shine for weeks. Common sense tells me that motivation can easily be correlated to performance. I can safely say that the thank you notes I received from colleagues I had helped during evenings and weekends really motivated me to keep working hard - there is nothing like feeling appreciated!

Another Story on Social Status

A few weeks ago I read an article about how job titles could be used to motivate employees, even if no pay increase is associated with the new title. I have a friend who had his job title changed from "Business Dev Manager" to "Manager, Entrepreneurship and Innovation Development". He's been jumping up and down since he got this "promotion". His reasons for being so happy: the title is unique, distinguishes him from his peers, and sounds better from his perspective.

Thursday, May 22, 2008

SPM Testing Template - Part 5

Incentive Compensation Management test results can be recorded in several ways. One of the approach I like to use groups all plan names, rule names, conditions, expected results and testing status on the same spreadsheet. I find that by keeping all this information together, it is easier to quickly get the picture of the overall testing progress. It also allows to keep all the information on the same spreadsheet instead of having to maintain 2 spreadsheets with identical information.

Here is an example to get started:


Other benefits of using an Excel spreadsheet to record test results instead of a Word document include:
  • Ability to quickly highlight failing tests in red
  • Ability to filter information displayed (e.g. display only failing tests)
  • Test results can be printed on fewer pages
  • Ability to create macros to perform more "fancy" features such as displaying the number of days a certain issue has been opened.
Other columns could be added to add additional information such as the date at which the test was performed, the name of the tester, how critical the test is, the actual result when different from the expected result, and comments.

Wednesday, May 21, 2008

PlanIt: Another On-Demand Sales Performance Solution

I received an e-mail some time ago from Matt Tyre, a Sales Compensation Consultant working at Sales Resource Group (SRG).
Sales Resource Group Inc. is an industry leading sales compensation professional services organization that provides world class software, consulting and outsourcing services, with expertise in sales incentive programs and sales force effectiveness.
I had heard about their president David Johnston before, from his articles in the Canadian Professional Sales Association (CPSA) Contact magazine. David has over 20 years experience consulting for various organizations and teaches sales compensation for WorldatWork.

What distinguishes Sales Resource Group from many other small sales compensation management companies is that they offer their own sales compensation solution called "PlanIt".

PlanIt is an On-Demand Sales Performance Management solution offering the same functionalities as other applications in its category (incentive calculations, reporting, analytics, etc). In addition, PlanIt also has a module providing guidance to optimize compensation programs and align these programs to business needs, and allows to route relevant documentation to its users.

User Interface
Similar to other applications, PlanIt displays some high level compensation information to the payees when they login. From this screen they can easily review their current revenues, the top 10 performers and their ranking compared to their peers. What I particularly like about the main screen is the News /Announcements which occupies an important position at the top center of the screen. This ensures payees don't miss out on important news.


Reporting
The reporting section is also very important for the payees. Most of the reports are available "out-of-the-box" and illustrate all the information in different level of details. Payees can drill down to the order level, or see high level summary of their compensation and ranking. Custom reports can also be created easily.


Implementation
Overall the user interface was very nice, but the big question remaining was, how easy is it to implement and maintain solutions built with PlanIt. Not surprisingly the answer was, the implementation is user friendly. It is all done through a user interface and does not require any deep technical skills.

What I particularly liked about the Plan Design interface is its ability have approved plans and plans awaiting approval. I have not seen this functionality in other applications I am familiar with.
Mobility Feature
Only a week ago I discussed Varicent's mobility feature and I said I hadn't seen this anywhere else; PlanIt is actually available for use on PDA's including Blackberry handsets an Palm devices since April 18th. I haven't seen PlanIt mobile or Varicent mobile, but I wouldn't be surprised if most vendors followed with a similar feature.

Stevie Award for Sales Compensation Program of the Year
In 2006 and 2007, major clients of SRG won the prestigious Stevie Award for Sales Compensation Program of the Year.

Conclusion
In conclusion, I was a bit surprised I hadn't heard about Sales Resource Group before being contacted by Matt. However, with the level of maturity I noticed from their application, I would not be surprised if we started to hear more about them.

Monday, May 19, 2008

ICM Testing - Reviewing Results - Part 4

When test scenarios for an SPM application are defined properly, reviewing the results should be straightforward. However because of the volume of results typically generated, finding the correct result can be a very time consuming process without the proper skills (finding output of rule A in the 1 million results generated can be like looking for a needle in a hay stack, except that during testing, there are several needles that need to be found!).

Every ICM application I have implemented offer an interface to browse through the results. This is usually a GREAT tool to troubleshoot and to resolve issues, but it's rarely the best and quickest tool to analyze results in bulk. Fortunately, every ICM application I have seen also have a functionality to export the results. Exporting the results will create a file locally which can then be opened by a program such as Excel or Access for further analysis. I will discuss how to use Excel to review the results, and later I will create another quick tutorial on using Access.

Step 1) Export the Results from your ICM System
Every system has its own way of doing this, but generally this should be doable from the interface and not requiring a database administrator to pull the data from the database (although this can also be done if required).

Step 2) Import the Data in Excel
First, open Excel and click on File->Open. Click on the dropdown menu beside "Files of type" and click on "All Files".
Find the location where you saved the exported file of step 1 and click on "Open".

If the file is a .CSV file, Excel will automatically place the data in columns. If the file is a .TXT file, more steps are required (see step 3).

Step 3: Opening a Delimited Text File in Excel
In the first Wizard step, choose "Delimited" and click on "Next". In Step 2, select the character used to delimit each column (Xactly uses semi-colons). Click "Next" twice and the data will be imported in columns.


Step 4: Filtering the Result Data
At this point we have a worksheet with all of our result set displayed. Each of the column can be sorted and the search feature can be used to quickly find a specific order. However there is another trick which allows to quickly display data for a specific rule, result name, person, date, etc.

Click on Date->Filter->AutoFilter

This will make the first row (usually column names) dropdown menus which will contain all the values contained within the column. In the example below, the drop-down for column "Currency" allows to choose "USD" and "YEN". Choosing USD will filter out all the other currency types.

Filtering can be done in this manner for multiple columns at the same time. For example you could filter a certain position (Julien Dionne), and further filter to display only the USD currency.

Quick Summation
Summing credit and commission amounts is one of the most frequent activity I perform when testing.

Excel has a built in feature which allows to quickly find out the sum of selected cells. By simply highlighting the cells containing a number or a dollar amount, the total value of these cells will be displayed in the bottom-right corner of the window.


Additional Notes

Excel offers more advanced functionalities such as Pivot Tables. They can be useful when reviewing a large volume of results. I will discuss this in more details in the future.

Excel Limitations

Excel cannot have more than 65536 rows. If the result set exceeds this, it will not get imported. It is possible to "workaround" this issue by only importing a subset of data (maybe by restricting the incentive period). MS Access could also be used instead of Excel and would not be subject to this limit. I will discuss using Access to review results in the near future.

Saturday, May 17, 2008

ICM News This Week

Centive Named as Finalist in 2008 American Business Awards
On-Demand Sales Compensation Management Leader Recognized for Providing Exceptional Customer Service

Xactly Analytics: Look at Sales Compensation On-Demand
Xactly, a sales performance management company, recently released Xactly Analytics, an on-demand application designed to provide analysis, metrics, ad-hoc reports and dashboards based on aggregated post-sales data.

Skin in the Game
Centive smoothes away the calluses for a dermatology-product vendor. Thanks to implementing Centive Compel, Obagi Medical:
- increased net sales by 32 percent;
- increased operating income by 56 percent;
- increased net income by 149 percent; and
- added 200 new active physician accounts, an 18 percent increase.

Thursday, May 15, 2008

ICM Test Planning, Scenarios and Templates - Part 3

In my last post about testing I said that ICM / SPM systems should be tested in phases; the reason for this is that discovering issues late in the development life-cycle could add unexpected delays and ultimately make the budget run over-budget.

It is surprising how often I have seen the business users and stakeholders not agree with the results and the development team exclaim, "Oh, that's how it's supposed to work!" or "That's what you meant!". Without proper planning, it is possible that during UAT the users will try to perform various activities and "break" the system - to which the development team usually answers "You're not supposed to do that", or "That's not how it's supposed to work". Often, shortly before the payroll date, business users often ask questions such as "What about the draws?" or "What if orders have negative amounts" (good requirement documentation is also important!). Proper planning should eliminate all those nasty surprises.
There is an excellent article on Wikipedia regarding creating a test plan based on the IEEE 829 format. The test plan describes what will be tested, how it will be tested, what will be the deliverables, who will be responsible for what, etc.

Creating Test Scenarios for a Sales Performance Management System

I believe the most important aspect of testing is the test scenario preparation. I briefly mentioned how creating good test scenarios was particularly difficult with an ICM application because of the volume of test cases it will typically generate. This is unavoidable, but proper planning is required to ensure that tests are not testing the same conditions twice (wasting time) and that all conditions are being tested (not cutting corners).

A test scenario should have a name, a scenario ID and a description. This will help quickly refer to them during meetings. The test scenario should include the initial conditions, input (such as the order type), and the outcome or expected results. Finally, it is a good practice to list the business requirement ID that the scenario is testing. It is important for the test scenarios cover each plan, each rule, and each formula used within the rules. To test an ICM system, I like to group the scenarios, by Plan and by Rule:

1. Plan A
1.1 Rule A
1.1.1 Scenario 1
1.1.2 Scenario 2
1.1.3 Scenario 3

1.2 Rule B
...

Creating Test Data
The test data is the data that will be "staged" to test the scenarios. Typically, an order or a combination of orders will be required to test different scenarios. These orders should be created in the appropriate format to be staged and it should be documented which orders test which scenarios. Because of the different testing phases and because test data is often altered or corrupted during testing, it is important for the test data files to be kept together and be readily available to be re-staged when required.

After processing all the test data, all the test scenarios should be tested. That should cover the entire system, and in theory, after completing these steps, the system should have no outstanding defect.

Wednesday, May 14, 2008

The Sales Manager and the Bear

Once in a while I review the statistics for this blog to find out which keywords people use to find me. Surprisingly, people often find this blog when looking for funny sales compensation jokes. Here is a good one for your enjoyment.

The Sales Manager and the Bear
A sales manager and an operation manager went bear hunting. While the operation manager stayed in the cabin, the sales manager went out looking for a bear. He soon found a huge bear, shot at it but only wounded it.

The enraged bear charged toward the sales manager, who started running for the cabin as fast as he could. He ran pretty fast but the bear was just a little faster and gained on him with every step. Just as he reached the open cabin door, he tripped and fell flat.

Too close behind to stop, the bear jumped over him and went rolling into the cabin. The sales manager jumped up, closed the cabin door and yelled to his friend inside, "You skin this one while I go and get another!"

Source: http://www.workjoke.com/projoke60.htm (Not all jokes here are politically correct)

Tuesday, May 13, 2008

Common Pitfalls in Sales Compensation Design

Today I attended the "Common Pitfalls in Sales Compensation Design" webinar, hosted by Makana Solutions, featuring guest speaker Donya Rose, Founding Partner of the Cygnal Group, a sales compensation consulting company.
I did not manage to get the audio working (the toll-free number was only for Americans and the International number was out-of-service). However I will quickly recap the major pitfalls identified, based on the presentation deck.

Pitfall 1: Sales Credit Wars
Symptom: Time is spent fighting over who is supposed to get credit
Cause: Lack of documentation, rules not formalized
Cost: Lost sales, management distraction, potentially double crediting, morale issues
Solution: Document the policies and credit-sharing criteria

My comment: Another cost which must be considered is the waste of time for the comp team trying to resolve issues and conflicts. In large organizations this can be a huge time burden. However it is generally fairly easy to minimize this situation by having well established rules.


Pitfall 2: Too many Measures
Symptom: Sales people ignore some of the required results and only focus on what makes them earn the biggest commission
Cause: Too many measures...
Cost: Lack of focus, compensation hard relate to actual results
Solution: Only use a few measures.

My Comment: This is a topic I addressed a few times on this blog. Consultants generally agree that there should be no more than 3 independent measures.


Pitfall 3: Commissions Rates only go up
Symptom: Sales people can earn too much money compared to the value they bring
Cause: Commission rates are related to the level of sales even if those sales are attributable to windfalls.
Cost: Comp cost is not in line with sales contribution
Solution: The commission rate should diminish passed a certain performance level

My Comment: A "regressive" commission can protect against an unexpected windfall, but can also avoid an excessive payout caused by a quota set too low.
I often see different rules, formulas and quotas used for orders exceeding a certain mount to avoid a windfall scenario.


Pitfall 4: Extraordinary Performance is Over-Rewarded
Symptom: Dependence on over-achiever sales people
Cause: Over-performance is too attractive to sales people
Cost: Sales people developed entitlement and demanding attitude, more risks
Solution: Use appropriate deceleration in commission rates

My Comment: Deceleration does not necessarily needs to be applied as soon as the initial target is reached. I have often seen cases where the rate increased once the target was reached, and decelerated after another performance level was attained.


Pitfall 5: Unattainable Goals
Symptom: Sales people give-up because goals are too high
Cause: Goal setting issue
Cost: Lack of motivation and engagement, results below expectations
Solution: Set goals appropriately

My Comment: Goal setting should be based on historical data if possible to be "just right". Making goals too easy to attain can lead to other problems such as a lack of motivation to exceed goals if rate decreases after, or an excessive commission payout.


Pitfall 6: "Phantom Base"
Symptom: Sales People whose salary largely depends on commissions act like they are salaried and under-achieve.
Cause: Compensation plans that pay too much for prior-year sales
Cost: Sub-optimal level of performance, losing account acquisition and penetration skills
Solution: Pay more for new business and less for prior-year sales


Pitfall 7: First Dollar Commission + Base
Symptom: Sales people are too comfortable with below-target earnings
Cause: Sales people are paid a significant base salary and earn commission on sales from first dollar
Cost: Income+Commission too high for actual productivity
Solution: Only pay commission after a threshold level of sales is achieved

My Comment: Other alternatives are possible to fix this situation. The entire compensation mix could be re-evaluated and the base salary could be lowered. It would also be possible to adjust the commission rate before a threshold to minimize the impact of removing commission completely before a certain threshold.

Monday, May 12, 2008

Measuring Sales Force Performance (KPI)

Google "Key Performance Indicator" and you will find enough KPI information to feel dizzy. It is important to know the difference between a performance indicator - some metric that we want to track - and the "key Performance Indicators" - or the most crucial performance indicators, those on which people are generally compensated on.

A recent article “Measuring Sales Force Performance” at gulfnews.com gives a few examples of performance indicators.

Customer and product related Measures:
- Number of new customers acquired
- Sales by product
- Sales by customer segment
- New product sales

Process Measures:
- Productivity
- Channel mix
- Turn-around time
- Number of calls made
- Number of prospects generated

Financial Measures:
- Sales value by geography
- Profitability
- Cost of acquisition
- Attrition
- Book growth
- Fee Income

Measuring metrics is one thing, but interpreting all the data collected is essential and usually the biggest challenge. There are a lot of industry benchmarks that can be used as indicators of how the company is performing compared to their competitors. Measures can also be compared against some framework, analyst point of view or analytics.

However I think the author of the article is entirely correct when he says that internal benchmarks are better because “they tell you what the best team can do in the same situation”. I think that performance indicator’s most valuable insight comes from comparing the metrics against historical data.

Saturday, May 10, 2008

In the News this Week...

ForceLogix Announces the Release of New Sales Performance Management Coaching Solution
ForceLogix, the leading provider of sales performance management optimization solutions, has released a best in class sales coaching module designed to support all sales methodologies worldwide.

Callidus Software Inc (NASDAQ:CALD) to Present at Wedbush Morgan Securities Management Access Conference for Micro-Small-Mid-Cap Companies
Callidus Software Inc (NASDAQ:CALD) will present at the Wedbush Morgan Securities Management Access Conference for Micro-Small-Mid-Cap Companies on Wednesday, May 21 at 12:00 pm. Interested parties may access the presentation by registering for the event at wsw.com/webcast/wedbush6/register.aspx.

Xactly Wins 2008 CRM Excellence Award
Xactly Corporation, the leader in on-demand sales performance management, today announced that Technology Marketing Corporation (TMC)'s Customer Interaction Solutions(R) magazine has named Xactly's flagship application, Xactly Incent, a recipient of the 2008 CRM Excellence Award.

Dreamforce Europe: Benioff, Cloudy CIOs and sophisticated Europeans
Salesforce.com's inaugural European user summit landed in London this week. It was an important gig for the software as a service firm and attracted over 2,000 attendees. So how did it fare?

Upcoming Webinar:
Ventana Research: Sales Performance Management: Improving the Performance of Sales Organizations to Maximize Strategic Value
Here are some key questions that will be addressed in the research:
• What helps organizations improve maturity of their sales organizations and processes.
• Where organizations are investing into information and metrics to improve sales performance.
• Why the reliance on spreadsheets in 47% of companies are a problem and 51% rank scattered information as top impediment to improving sales performance.
• What are the top systems that are required to integrate with sales compensation and operations.
• What is the role of finance and executives for adopting sales performance management.

New Blog:
The Management Curve - How Technilogy is Changing the Way Sales is Managed
The Management Curve is a blog by Paul McCord about technology and the change it is currently and will continue to bring about in how salespeople and the sales function are managed.

Thursday, May 8, 2008

ICM Testing – Part 2: Test Phases and Traps

ICM systems, as every other software system, should be tested in phases. Here are the major test phases (there can be more or less depending on the complexity and size of the project)

Unit Test: Performed by the developer to ensure a specific component performs as per the requirements. Unit tests should be performed as the system is being built.

System Test (ST): While unit testing was performed with only a single rule, system testing tests entire plans. It ensures the entire system performs as expected and as defined.

System Integration Test (SIT): An ICM system often relies on receiving data from other existing systems. For example, it may expect a file received via FTP, from an ETL process or fetch data directly from a CRM system such as SAP or Peoplesoft. SIT will ensure the systems interact the way they should.

User Acceptance Testing (UAT): Once the ICM system is fully tested by the implementers, UAT is when the business user or owner of the system test and review the results of the system. UAT should be performed on the production system, with production-like data.

Other very important tests which should be performed during ST, SIT and UAT include:

Performance Testing: This test confirms if the processing of commissions can be performed within the required window.

Stress Testing: This test verifies how the system behaves if the data load is higher than expected. For example, the compensation data may increase year over year, or may be higher during quarter end, year end.

Regression Testing: Every time a system is altered, there is a risk for a defect to be introduced. Relevant tests should be performed again to ensure the system still works as expected.



Each of those test phases are usually done in parellel to major development life cycle activities - the "V-model" above illustrates this. I will have to keep the development phases discussion for the future but yes, the left part of the "V" is also necessary.

When working with an implementation partner or vendor, the client is usually mostly responsible for the User Acceptance Testing which I will discuss in more details later.

What I must stress as being extremely important is that it cannot be taken for granted that the implementer will necessarily have a rigorous testing methodology and ethics. To avoid having big surprises when reaching UAT, the client should keep an eye on other testing activities and ask for regular status updates.

Another common trap is that getting regular status updates may not be enough. It is important for the project team to design and agree on the test cases and test plan early on. In larger implementations this is often a step which should get a sign-off. This will ensure the implementers know what the expected results should be, which is very different than the implementers assuming they know what these results should be.

Wednesday, May 7, 2008

YAWN… ICM Testing – Part 1: Introduction

Testing is a quality assurance process required to ensure the system works as expected and as defined. I never met anyone who found testing “sexy”, fun, or even interesting. However, it is essential!

No matter how well designed the compensation plans are, if the commission and bonus results are not correct, the implementation will be a failure. We discussed that it is important for payees to be able to correlate their rewards to their performance, but mistakes could prevent them from doing this efficiently. Another result of “bugs” or system defects will be an increased number of complaints from the payees which will consume the compensation team’s time. These errors will also add confusion, making sales people unhappy and ultimatly lead to a lost of confidence in the system.

Traditionally, testing was a task done only once the entire implementation was completed; you built the system, you tested it and you rolled it out. This is one of the best recipes for failure. Test planning should be done at the very beginning of the project and testing performed throughout the development of the system, until it is rolled out.

Testing an ICM system is particularly challenging because of the volume of different cases. A “standard” software system testing may have a test that if a button is clicked, an action will be performed. With an ICM system, every plan, every rule, and every formula should be tested. For example, if there are four quarters, each quarter using its own rate table, each rate table having 8 tiers, and each tier corresponding to a formula, there will be 32 individual formulas to test – 32 test cases.

In my next posts I will discuss many testing related topics including the different test phases, how to create proper test cases and test plans, and how to review results in Excel and in Access.

Tuesday, May 6, 2008

Varicent SPM 5.0 - Interview with Varicent

I know I said I would only present industry news once a week, but I wanted to take a moment to discuss the availability of Varicent’s SPM solution - SPM 5.0. I want to talk about this because I’ve received a few questions about it, and especially because following a good conversation with Kelley Kassa, Director of Corporate Communications and Rod Radojevic, Vice President Product Marketing I can offer a bit more information.

Varicent SPM 5.0 is its flagship solution managing incentive compensation and sales performance. As with every other SPM solutions on the market, the value proposition is clear; Varicent SPM can predict costs associated with new plans, reduce errors, save time, reduce dispute resolution and administrative time of sales professionals, etc. More importantly, it can help out addressing the gaps existing between different business areas and departments.
I had never seen Varicent SPM solution before this overview. It seems like most of the changes were done with the business user in mind.

One of the major changes in release 5.0 was the complete redesign of the user interface. The interface is very clean and has a non-technical feel. As you can see in the screen capture below, the bar graph almost looks as if it was hand-drawn. The menu also consists of well designed 3D icons which are pretty self-explanatory. The visual appearance of the interface gives it a very pleasing and non-intimidating look-and-feel.

A new module called Composer was also introduced to this release. Rod pointed out that this module makes it easy for business users to set-up, manage and show rules and data flows. This workspace can give insight over calculations, territory assignments, credits, adjustments, overlays and exceptions. Rod added that the workflow appearance of this workspace makes it non-intimidating for anyone to jump-in and review the system.


Composer is not the only module using workflows; a new workflow module can be used to represent plans, reports, web forms, and document signoff and inquiries.


I asked Rod what makes Varicent SPM different from its competitors. We talked about its open architecture, its web analytics and reporting capabilities, its flexibility, scalability, and robustness. Rod also mentioned how Varicent was the first product to be a complete SPM solution, but I've seen this claim made by most other companies.

In my opinion, one of the features of Varicent which I have not seen elsewhere (and maybe it does exist and I'm just not aware of it), is Varicent's mobility feature. Business users or comp professionals can access information such as the Payee Ledger and Inquiries via a mobile device such as a BlackBerry. This seems like something that could be useful for professionals and consultants who are frequently on-the-road, in meetings, or for those who must be available 24/7 to resolve issues. I can see a particular benefit for a feature like this, for companies choosing an on-premise solution (Varicent is available on-premise as well as on-demand). It seems like it's the start of a new trend, just last Friday I read an article about how SAP and RIM teamed up to bring native CRM to the BlackBerry.

Overall, Varicent SPM 5.0 appeared to be very user-friendly and flexible, and seems to offer everything I would expect from an SPM solution.

If you have any other questions, please send them to me and I will gladly get an answer for them.

Monday, May 5, 2008

ICM Solution Return on Investment - Ask the Expert #4

Many companies often wonder what the Return on Investment (ROI) of incentive compensation system is. Most articles and research on the Internet are either sponsored or written by vendors and it is hard in most cases to truly measure the savings and improved performance as a result of that new system. I asked David Cichelli about his thoughts on the return expectations of a well designed and well implemented compensation system.

David's Answer:
It’s a mystery. Since no one can conduct a double-blind test to confirm the value of sales compensation, we live in the world of anecdotes and observable behavior changes. My test of program effectiveness is the degree of “alignment” between product divisions and buyer/sales segments. The sales compensation program should ensure alignment of field efforts between these two moving parties.

What I have to say:
I talked about ICM ROI for the first time here, and discussed another story here. I agree with David that it is hard to assess if the new system is responsible for new behaviors. Taking this further, it is hard to assess whether a compensation program improves behaviors period.

However, assuming that a company does see benefits in an incentive program, the question is, will an ICM/SPM solution pay for itself. Presumably, positive behaviors are already encouraged by more labour incentive variable compensation. Real-time information, dashboards, accurate reporting and advanced analytics may help out sales people and management, but other factors are easier to quantify.

These factors are likely to depend a lot from one company to another. As I pointed out in the previous posts, some of the factors to consider are the implementation, licensing and upkeep costs, the quality of the existing system (how accurate it is), and the potential time saving to be realized with a new system (time spent calculating commissions, reviewing data, resolving issues, etc).

Friday, May 2, 2008

In the News this Week...

I'm trying out a new strategy; instead of cluttering this blog with industry news, I will try to post news, press releases, and upcoming events once a week. Let me know if I miss any important news, but please note that I'm intentionally excluding specific news about new clients, deployments and stock movements - there would just be too many to keep track!

In the News this Week:
Xactly Corporation Secures $30 Million to Cement Leadership Position in Sales Performance Management

Varicent Reduces Costs of Managing and Maintaining Sales Performance Management and Incentive Compensation Management With Latest Release of Varicent SPM

Upcoming Events:
Common Pitfalls in Sales Compensation Plan Design (by Makana Solutions)

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Ottawa, Ontario, Canada
Julien Dionne is a well-rounded consultant with global business management experience and outstanding technical, business and leadership skills. He earned a Bachelor of Applied Science in Software Engineering from the University of Ottawa, Canada, and he is a member of the Canadian Professional Sales Association. The views posted within this blog do not reflect the views of Julien’s current or previous employers and clients. Julien can be reached at julien.dionne@gmail.com
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