Incentive, Compensation and Sales Performance Management

New Blog Destination - LeapComp.com

2008-08-10T07:48:00.004-04:00

Dear readers,

When I started this blog in January, I never expected to gain such a large readership so quickly. It was now time to move my blog to a more permanent destination. I am in the process of improving the new home for this blog at: leapcomp.com.

It may take a few more days to get it to work perfectly, and in the meantime I will appreciate your feedback. I migrated all the content, so please update your bookmarks and Feed Readers to point to this new location.

Many thanks,

Julien

Offshoring SPM - Communication Challenges

2008-07-29T21:00:00.000-04:00

One of the most important challenges in leverage an offshore team for an IT implementation is to communicate effectively. If this is not taken seriously, all the efforts surrounding making the offshore strategy successful could be wasted.

Communication can be difficult because:

The offshore team is often in a different time zone. Meetings are often very early in the morning, or very late at night (often both).

Meetings are usually virtual - often onshore and offshore team members never meet.

The onshore and offshore team don't always share the same first language. Even in a situation where they share the same first language, accents can be a problem. (Although it can also be a problem between onshore resources). I think people get used to by French-Canadian accent fairly quickly, but it took me a long time to get use to the Indian accent. Expressions also vary from country to country.

There can be cultural differences leading in communication failure.

Cultural Differences
Erran Carmel and Paul Tjia wrote a great book called "Offshoring Information Technology - Sourcing and Outsourcing to a Global Workforce" in which they list examples of such communication failures with Indian offshore teams. Among their observations, they say that Indians are less likely to engage in small talk than most of their Western counterparts and that they tend to be too optimistic about times and schedules (referred to as the "Indian factor"). Indians are also reluctant to say "no"; they may say "yes" even when they mean "no" to avoid having to give bad news.

Their book also lists many expressions used in English which can be interpreted in a bad way by an offshore team. For example, when an English speaker says "Not bad", he means the work is good; the offshore resource could interpret that as the work being of poor quality. Another example is when an English speaker says "Interesting!", it can mean he or she does not agree or believe what the other person is saying; this could be understood as "they are impressed" by the offshore resource.

Improving Communication

Avoid slang, idioms and acronyms, and speak slowly. Ensure your message is well understood
When giving a task, ask probing question to ensure the task is well understand.
Keep written communication short
"Offshoring Information Technology" mentions six "R" rules: Repeat, Reduce, Rephrase, Reiterate, Review and Recap.
Have regular meetings (usually daily)
Use collaborative tools such as Wiki's when possible
Be patient - you may have problems understanding them and vice-versa, but treating each other with respect is they key to develop a solid working relationship.
Read more about the cultural differences with the country in which the offshore team is located.
If the project is big enough and the offshore contribution significant enough, it may be worth it to meet the offshore team in person. This should create stronger bonds between the onshore and offshore team.
If most of the meetings are held over the phone (video conferencing not available), sharing pictures of the team members can also help out in creating bonds.

Makana Motivator for Free!

2008-07-28T21:54:00.007-04:00

I talked about Makana Solutions' product - Motivator - before. Makana offers a solution to build really good compensation plans and help you out in the process every step of the way.

The usual cost for Makana Motivator is $49 per month for up to 20 participants, $69 for 21 to 100 participants, and $149 for more than 100 participants. A yearly subscription will even cut that cost by 2 months.

Game Plan
Makana just launched a new program called "Game Plan". Game Plan is a free program to help out with your 2009 Sales Compensation planning. It offers a free year's subscription to Makana Motivator and strategic advice with sales compensation experts.

The catch? You have to take a training in July or August to receive your free one year subscription. That probably doesn't sound too bad, so there is no reason why you shouldn't check it out.

Note: Makana didn't ask me to promote this "deal". I don't usually promote any Sales Performance solution, but... it's free!

Webinar Galore - 2 SPM Webinars Tomorrow

2008-07-28T16:41:00.003-04:00

I will try to provide coverage on this blog for these 2 webinars taking place tomorrow. The webinar hosted by Callidus features an Accenture partner discussing the insurance industry, and the Xactly webinar features Jeff Kaplan discussing on-demand sales performance analytics. Follow the links to register.

Callidus 7/29 @ 9A CST - Best Practices from Accenture - Align producer and advisor behavior, maximize mindshare - and effectively manage compensation
https://callidussoftware.webex.com/callidussoftware/onstage/g.php?d=570992696&t=a

Learn about insurance industry best practices from Jon Walheim - Accenture Partner - North America Insurance Marketing, Sales, and Service Lead. You’ll learn about key trends in the insurance industry, challenges that organizations are facing, and what insurance leaders are doing to gain competitive advantage.

Xactly 7/29 @ noon CST - The Business Case for On-Demand Sales Performance Management Analytics
https://www1.gotomeeting.com/register/415893690

In this Webinar, Xactly’s Karen Steele and THINKStrategies’ Jeff Kaplan will discuss how post-sales analytics can provide new and strategic insight into an organization’s selling patterns, commission spend, product performance, sales rep and team performance, and sales plan effectiveness. They will examine how post-sales data – traditionally scattered across a variety of disparate systems including ERP, HR, and Payroll – can be now be integrated and analyzed with an eye towards enhancing business strategies, changing sales rep behaviors, and super-charging sales organizations.

Topgrading for Sales Book Review

2008-07-26T16:04:00.003-04:00

The Topgrading team sent me a copy of their newest book “Topgrading for Sales” to review. The book focuses on recruitment, an area in which I have very little experience. However, I think the book is relevant to this blog; incentive compensation is one way to increase your workforce performance, but at the root, it is important to hire top sales representatives.

When I first picked up the book, my first thought was - wow, this book is only 57 pages, 113 pages counting the appendix. However, when I opened the book I quickly realize that while it is small in size, it is heavy in content.

Topgrading for Sales promotes the Topgrading philosophy, to only hire “A Players” A definition of top performers and an explanation of the general concept is provided in the first chapter, and the following chapters detail methods to interview, hire and coach top sales reps. The appendix includes practical templates to topgrade your sales force.

Here is a quick summary of the proposed steps to increase hiring success:

Construct a sales rep score card to know which skills and attributes are required (what needs to be done)
Analyse your sales team and determine what your top performers have in common, as well as what your bottom performers have in common.
Create a list of prospects
Ask good phone screening questions (many good examples are provided in the book)
Screen finalist candidates rigorously
Perform a reference check after the interview and contact all supervisors in the past 10 years
Coach your sales reps regularly

This book is extremely practical. It provides many great tools and ideas to hire top sales representatives and the general concept can be taken beyond the “sales world”.

However if you don’t have prior experience in recruitment, other books will be required to build a solid foundation in some of the many areas touched by this book such as interviewing and coaching.

New web forum for the EIM Community - Get your Answers Now!

2008-07-24T11:11:00.003-04:00

Today I came across a web forum called "Ask Jon!" by OpenSymmetry. It's a great knowledge exchange platform where anyone can submit questions and answers.

Most posts are currently related to Callidus TrueComp, but there are new categories to discuss solutions by many other SPM vendors such as nGenera, Oracle, Practique & Merced, Sungard, Varicent, Xactly, etc.

Such forums are only as good as the content being posted, so I encourage everyone to visit and contribute in making this forum a one-stop shop for Sales Performance related information.

Of course my blog is still THE number one source of SPM information, but I may not [always] be able to answer all your questions, about every product on the market.

Don't wait, go have a look and sign-up.

SPM Analytics Webinar Tomorrow, 1PM Central

2008-07-21T14:17:00.006-04:00

Remember to join the free Webinar: 5 Best Practices with Analyzing Sales Performance, hosted by OpenSymmetry and presented by Greg Livengood.

When? Tuesday, July 22nd 1pm (Central).

Find out more about the presenter here.

Offshore Outsourcing - Humor of the Week

2008-07-18T23:00:00.001-04:00

Here is one of my favorite Dilbert strip:

A friend also sent me this funny conversation between a consultant and an offshore resource:

Consultant: So, today is the checkpoint for the designs, status should be on 90% completed, meaning everything’s done and waiting for final review. Are you finished?
Inder: Yes, I put the status on 90% completed
Consultant: Ok, let’s have a quick look at the document. Well… the document is basically empty? How can you put it on 90% completed?
Inder: Yes, document is empty – but it’s all in my head!

In Summary:

The communication infrastructure in some countries can be unreliable.
Risks associated to offshoring should be identified early.
Expectations need to be set and communicated clearly.

Compensation Architect: The New Blog on the Block

2008-07-16T21:00:00.002-04:00

I mentioned Santorini Consulting a few times in previous posts and they just told me they had started their own blog called "Compensation Architect – Your guide to designing, implementing and managing effective compensation solutions".

So far, David Kelly, a fellow compensation management expert, is the main contributor. Sheryl Friesz, Founder and VP of Partnerships, and Brian Silverman, President and CEO of Santorini Consulting, are also planning to contribute their perspective on related topics. Each have acquired years of experience working at Callidus Software before joining Santorini.

Their 3 first posts which have been published at a frequency I hope they will be able to maintain, provide insightful information about sales compensation, policies versus procedures and the difference between reports, queries, feeds and analytics.

Hopefully, over the next few weeks we'll see some synergy between our blogs, and rather than creating redundant entries, we will each be able to provide fresh perspectives and information to our readers. Even in a field as specialized as incentive compensation, there should always be a place for blogs from product vendors, consulting companies and especially from independent guys.

Go on, take a few minutes for a visit.

Offshoring Sales Performance Management Implementation Components

2008-07-15T22:53:00.001-04:00

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.

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.

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.

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.

Quotas, rate tables and lookup tables: Creating and updating these objects can be a very time consuming activity.

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.

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.

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?

Incentive Compensation Industry News

2008-07-11T09:11:00.004-04:00

Callidus Software Reports Preliminary Financial Results for the Second Quarter 2008

Subscription and support revenues for the second quarter are expected to be approximately $10.0 million, an increase of 68% over the second quarter of 2007.
Callidus On-Demand (subscription) gross margins for the second quarter are expected to be within the range of 45 to 50%, up from 22% in Q1 2008.

WageWorks Selects Centive Compel(R) to Automate Sales Compensation Management

Centive, the leader in on-demandsolutions for sales compensation and sales performance management, todayannounced that WageWorks, the leading provider of tax-advantaged benefitsprograms, has selected Centive Compel to automate sales compensation and drivesales performance. Here is another related article.

Xactly Named World's Best New Company by 2008 International Business Awards(SM)

Xactly Corporation took home theprestigious International Stevie(R) Award in The 2008 International BusinessAwards.

Sales Resource Group's PlanIt solution earns finalist award at 2008 International Business Awards and for for Microsoft Bluesky Finalist.

Popularity Burst

2008-07-10T16:20:00.005-04:00

I'm not sure what is happening to my search engine ranking on Google, but it has been climbing very quickly over the past few weeks! Here are a few examples as of this afternoon:

Incentive Compensation: 10 (1st page!)
Sales Performance: 17
Enterprise Incentive Management: 20
Incentive On-Demand: 7
Incentive Offshoring: 2
Incentive Compensation Implementation: 1 (woohoo!)

And that's not including all the vendor-specific keywords where I'm also ranking very well.

Thanks to everyone who kindly link to this blog. Your help in making it more visible is very appreciated. Please keep the comments, topic ideas and questions coming.

Julien

Upcoming Sales Performance Analytics Webinar, July 22nd 1pm Central

2008-07-10T14:49:00.006-04:00

There is a very promising webinar coming up, hosted by OpenSymmetry and presented by Greg Livengood.

I particularly wanted to promote this event because I worked with Greg for several months on an Accenture project, and I know that when it comes to Sales Performance Analytics, he REALLY knows what he is talking about. Expect a very insightful presentation by a friendly, dynamic and easy-going individual who built a world-class reputation as a sales performance analytics leader and pioneer.

Event Description:

With the economy in a downward slope, sales leaders more than ever need 'Sales Performance Analytics' and efficient ways to proactively identify potential problems and opportunities.

Most companies have the information they need to improve sales performance, however, many sales managers are challenged with accessing and correctly interpreting the data.

Greg Livengood, Senior Business Analyst with Livengood Consulting Group, will discuss how to leverage the 5 best practices in sales performance analytics that can boost your sales force performance.

• Visualize Sales Performance
• Develop Corporate Alignment
• Simplicity
• Build a Self-Sufficient Solution
• Engagement at the Executive Level

Click here to register.

ICM Implementation Offshoring Pros and Cons

2008-07-08T09:00:00.000-04:00

Projects can be partially or completely outsourced. The outsourcing can be done partially or entirely offshore. The most common scenario I usually encounter is when a company outsources a project to a consulting company. The consulting team usually works on-site, and often have several resources located offshore. There seems to be a trend for consultant who used to work on-site, to be allowed to work remotely.

As I pointed out, many EIM/SPM solution vendors and consulting companies will discuss the benefits which can be achieved by outsourcing parts of an Incentive Compensation Management implementation. I agree with these benefits, but there are also many challenges which must be carefully managed to be successful.

Working with an offshore team through a consulting company reduces a lot of the risk; you don't have to worry about contracts, quality, infrastructure, intellectual properties, etc. Furthermore, consulting companies usually have a good relationship with their offshore arm.

Setting aside all ethical and macro-economics discussions about offshoring, here are some of the main pros and cons.

Main offshoring benefits:

Labor: Skilled labor can be very expensive, but it can especially be very difficult to find. Even a large consulting company may have problems finding an available consultant with the right skill set.

Cost: Offshore locations are usually developing countries where labor is significantly cheaper.

Speed: When a project is well managed, more people usually mean a more aggressive schedule.

Work 24/7: For North-American people, working with a country such as India makes it "easy" to work around the clock.

Some of the challenges to be managed

Communication and language barriers: Most of us have some experience working with team members who are located somewhere else, and have faced communication challenges related to this. Offshoring brings another layer to the communication challenges, a topic to which I will dedicate another article.

Coordination: Because of all the communication challenges, complex coordination activities become even more complex.

Cultures: Each culture have their own principles and values. Not being mindful of cultural differences can lead to big problems.

Cost: Savings could be only marginal, especially with rising labor costs in some countries (especially in India)

Quality: This is a challenge for on-site and offshore team alike. Offshore teams are usually very good at achieving very high quality standards. However, quality is still perceived as a higher risk with offshore teams.

Security: Quality is another concern most companies have, especially when dealing with confidential employment information. There are very secure mechanisms to collaborate, even across continents, but security is a topic which requires particular attention.

Key to Success

In my opinion, the key to successfully leveraging an offshore team is in:

Having a good manager and team leads experienced with offshore projects
Having A good [formalized] communication strategy, "hand-off" mechanism between onshore and offshore teams and processes in place
Having a good understanding of which project components can be tackled "at night" by the offshore team and handed to the onshore team "in the morning", and vice-versa.

Outsourcing and Offshoring your SPM Implementation

2008-07-06T09:26:00.006-04:00

I'm planning to write several articles related to sales performance management outsourcing and offshoring. Let me first define what outsourcing and offshoring means.

Outsourcing: This is when you subcontract the design and implementation of your compensation plans.

Offshoring: This is when you subcontract (typically parts of the implementation) to another country. India and China are well known IT offshoring destinations, but there are many others.

One of my first post on the blog was about in-house development versus outsourcing. Most SPM implementations I see follow one of these patterns:

Pattern 1:

An implementation partner is selected - this can be a vendor agnostic implementer, or the product vendor. As part of their submission, they propose the use of an offshore team to reduce the cost of their bid, or to be able to "go-live" more quickly.

Pattern 2:

An implementation partner is also selected. There are no upfront discussions about offshoring any work. The concept of an offshore team is brought up if the project falls behind schedule.

Upcoming Topics

The reality is that most vendors and consulting companies use offshore teams. I will write about the pros and cons of offshoring, the associated risks, the challenges it will add, the importance of communication strategies, and a few personal stories of managing offshore teams.

I will also write about which aspects of the implementation can be "offshored" more easily. The good news is that with an SPM implementation, once the design phase is completed, there are different way to "break-out" work in different components which are not on a critical-path to each other.

Finally I will answer several questions I have received on this topic. If you have any questions, please don't hesitate to send them to me.

Six Disciplines Execution Revolution Book Review

2008-07-02T10:33:00.005-04:00

I spend quite a bit of time every week reading books; technical books, business books, compensation books… But over the last few weeks I have mostly been catching up on classics. This is the only “excuse” I have for not blogging about a new book called Six Disciplines Execution Revolution, by Gary Harpst which was released just yesterday.

Gary is the founder and CEO of Six Disciplines, offering small to mid-size companies a business excellence program based on six business disciplines: strategizing, planning, organizing, executing, measuring and learning. Gary’s previous book, Six Disciplines for Excellence, focused on those disciplines and strategy. His latest, Execution Revolution focuses on the biggest business challenge: strategy execution in the real world.

Gary told me how business leaders often try to solve the wrong problem rather than addressing the root cause issues. He said that by fixing the right problem, the solution to every other problem will be more obvious. Without execution, strategy is useless. This book provides a concrete framework to put the plan in action. This is particularly challenging because strategy only relies on a few people for a short period of time every year. On the other hand, execution relies on everyone in an organization, all the time.

Achieving excellence is also tricky. Gary said that by solving current issues, an organization will grow, which will cause even bigger challenges. “Excellence is a journey – not a destination.”

Gary explained to me how business methodology was comparable to IT methodology; you have to be able to repeat a process consistently over the long term to be successful. In my experience, many book in this category read like a text book. Execution Revolution distils concepts, frameworks and real-life examples which can be applied by small businesses.

I was particularly interested by this book because not only does it talk about how a business can achieve excellence, it also focuses a lot on performance management. Throughout the book Gary acknowledges the importance of performance measurement, performance measurement, business intelligence and analytics, and performance management systems.

Overall, this book is straight to the point, well-organized, and as the title suggests, focused on execution. Order it today.

SPM News - Big News for Callidus, Varicent and OpenSymmetry

2008-06-26T10:41:00.008-04:00

Varicent Software Announces Strategic Partnership with OpenSymmetry
Varicent Software, an innovator and provider of the only comprehensive application for sales performance management (SPM), recently announced a strategic partnership with OpenSymmetry, a largest independent consultancy specializing in sales performance management.

Other partners of OpenSymmetry include Actuate, Callidus Software, nGenera, Oracle, Sungard, TerrAlign and Xactly.

Callidus Software Broadens Performance Management Capabilities with Introduction of TrueTarget
The new SaaS-based software module, TrueTarget™, combines SPM and Employee Performance Management (EPM) capabilities to deliver Pervasive Performance Management (PPM) across the entire enterprise. The concept of PPM offers a single, business-wide, pay-for-performance solution for companies.

Pervasive Performance Management goes beyond standard incentive compensation management and includes objectives alignment, goal management, bonus allocation and employee evaluation.

I could be wrong, but as far as I know the only other major vendor currently offering a similar end-to-end solution is SuccessFactors. [Disclaimer: I have not seen Callidus TrueTarget or any of SuccessFactors' solutions yet]

Don’t Automate Chaos

2008-06-25T11:33:00.003-04:00

I came across an interesting article by Roy Altman: Avoiding "Gotcha's" - Tips and Techniques that Drive Successful Implementation Projects.

Roy describes some of the common pitfalls that can undermine an HR System implementation project, including the importance of getting buy-in, of planning early, of knowing your organization, of not reinventing the wheel, etc.

There is one point which I haven't talked about on this blog so far: Don't Automate Chaos.

If your processes currently result in chaos, and you automate them, you end up with automated chaos.

That's something a lot of companies implementing EIM solutions don't always seem to understand. Many Compensation System implementations are subject to delay, budget issues or even failure because processes are not re-examined. Implementing a new large-scale system should be seen as an opportunity to redefine and improve these processes.

In a typical Customer Relationship Management (CRM) implementation such as SAP or PeopleSoft, business processes generally have to change to be in line with the application. However in the case of an EIM solution, it is easy to make the mistake to try to implement the system in the same way it is currently working... and that can result in automated chaos.

When planning your implementation, set some time aside to map out existing processes and logic to assess if/how they can be improved. Better processes should result in a higher quality implementation which will fulfills business requirements.

Sales Performance Management Glossary

2008-06-24T17:17:00.000-04:00

There is a lot of very specific terminology used in the world of sales performance management. Different vendors may use different terms, so it is important when starting a project to make sure everybody understands what is what to avoid any confusion.

Callidus has an excellent lexicon of incentive compensation terminology. Here are some important terms used frequently:

Bonus: A performance-based reward or payment to an individual, team, business unit, or work force, made in cash, stock, options, or other form.

Calendar: A set of continuous, non-overlapping periods that define when a compensation plan is in use.

Commission: One type of incentive, often expressed as a percentage of sales, gross margin or dollar amounts per unit sold.

Credit: The amount of credit received for making a sale, where revenue is usually the measure for sales credit, although sometimes the number of units or some other measure is used.

Draw: Cash payment advanced against future income. There are two types: non-recoverable and recoverable.

Formula: A method of calculating compensation that relates pay opportunity to performance achievement, generally falling into one of three categories: 1) Unlinked incentive formula; 2) Adjusted-value incentive formula; and 3) Linked-incentive formula.

Lookup Table: Multi-dimensional: Created by the user to store values for use in rules and formulas.

Participant / Payee: Person participating in your company's variable compensation program.

Plan: A collection of rules that specify how to compensate the participants assigned to that plan.

Position: Defines a specific, unique job.

Quota: A predetermined sales performance goal, expressed as a percentage, percentage change, in absolute numbers, or in units sold.

Quota Attainment: The percentage calculated from dividing the amount of sales credit earned (represented by a performance measure amount) and the quota for a performance period and participant.

Rate Table: One-dimensional: A lookup table used for calculating commissions. The first column in the table represents ranges of quota attainment. The second column represents the pay-out rate for transactions within that range.

Rule: A way to filter and calculate in the form of an "if-then" statement. The "if" contains a Boolean expression that selects objects from the database (for example, which transactions to use). The "then" part contains formulas that calculate and save new values.

SPIF: Acronym that stands for "Sales Promotion Incentive Fund." SPIF is a loose term referring to an on-the-fly addition to the compensation plan used to motivate the sales force in a particular way by providing additional sales credit or payment for certain types of sales.

Territory: A way of defining which transactions a participant should be credited with. It is usually a geographic area, but could also be an industry or a specific set of customers.

Title: Occupational grouping, such as engineers, systems analysts, etc. Titles are used to group similar positions related by job function across the organization.

Transaction: The original sales data, wich includes sub-line data on an order.

Variable: A placeholder in a rule or formula for a fixed value, rate table, or territory.

Stick to a Naming Convention - It's not Rocket Science!

2008-06-23T18:30:00.000-04:00

Wikipedia has one of the best definitions on the net for a "naming convention": A naming convention is a convention for naming things. Awesome!

In the Enterprise Incentive Management and Sales Performance Management world, this means naming all plan objects in a consistent way. Naming will vary from tool to tool and there is not a single set of best practices that can be followed. Most vendors provide some recommendations, but it's up to the implementers to decide which naming format will be used. Since there is no generally accepted "convention", it may be more accurate to call this a naming strategy.

Why is sticking to a naming strategy important:

Incentive Compensation Management is not difficult. What makes ICM systems complex is the volume of plan elements (plans, rules, formulas, tables, variables, etc..) A large implementation can quickly become a jungle if not everybody agrees on a common way of naming different objects. Not only will it make building and testing the system easier, a good naming strategy will especially be important once the original implementation team is gone and others have to understand the logic of the system. Finally, aside from clarity, a naming strategy will also help search for plan components more efficiently.

Choosing a naming strategy

As I said, since all applications do not share the same objects, and also because each application works differently, I cannot provide a silver bullet for all situations.

Generally, I try to stick to these principles:

Make the name descriptive
Use abbreviations to identify object type
Begin object name with its object type abbreviation

For example, a credit rule could be called CR_AE_description. Some systems could have a direct credit rule and an indirect credit rule; in such case my abbreviation could be DC and IC instead. In some systems I may want to prefix a formula with F (if all objects can be displayed in the same view), if not, then it would not be necessary to explicitly say that a formula is a formula.

Naming of output is also important: The importance of naming an object may be obvious, but in the case of rules, the output of such rule should also be named carefully. A result name that makes sense can often by "Rule name _ result" or something similar.

Getting Started...

It is important to define a naming strategy early on in the project - before any detailed / technical design documents are created. The strategy should be illustrated on one page to enable the implementers to quickly see how to name the different objects. This "page" should be distributed to everyone involved in the implementation and be given to new joiners as well.

The first steps in defining the naming strategy is to find out if the application being used has a set of best naming practices or standards. In the case of an upgrade, it is important to stick to previously used naming strategy.

Happy Naming!

Incentive Compensation News

2008-06-16T09:59:00.005-04:00

Julien Dionne (Me), Receives the "Hot" Nomination on Popular HR Blog
Thanks HR Wench :-)

Merced Systems, Inc. Acquires Practique Associates Europe’s Leading Sales Performance Management Vendor
Merced Systems, the leader in Sales and Service Performance Management software, today announced that it has acquired Practique Associates, a privately held, UK-based company, and European market leader in Incentive Compensation Management (ICM) solutions. Practique Associates will operate in Europe as a wholly owned subsidiary of Merced Systems, allowing the company to continue its impressive track record of growth and profitability.

Callidus Software Ranks 4th on CIOZone's "Surging 60" List of Fastest-Growing Software Companies
Sales Performance Management Leader Ranks Among Top Five on Prestigious List of "20 Fastest-Growing Small Software Companies"

Xactly Appoints William J. Sudlow as Senior Vice President of Engineering
Formerly withIntuit Inc., Sudlow will be responsible for all product development,engineering and quality-assurance activities as Xactly scales its product-development efforts to deliver the market's broadest portfolio of salesperformance management applications.

SuccessFactors Announces Support for Global Organizations With Simultaneous Product Updates Across 22 Languages
SuccessFactors, Inc. (NASDAQ:SFSF), the global leader in on-demand performance and talent management solutions, today announced that it has made available a number of international enhancements to support simultaneous product updates of its monthly releases in 22 languages.

Success Factors to sell 7.5M shares
SuccessFactors Inc. said Tuesday it plans an offering of about 7.5 million shares of its common stock.

Incentive Compensation Meets HR at The Super Sexy HR Carnival

2008-06-11T23:00:00.004-04:00

After missing 34 HR carnivals, I finally contributed an article for the 35th, hosted on Jon Ingham's Strategic Human Capital Management (HCM) Blog.

My featured article is the recent story "The Saga of Purchasing an ICM System", describing some of the common issues faced when purchasing and starting the implementation of an incentive compensation management solution.

Visit the carnival on Jon's blog - it's filled with very interesting and insightful topics from every area of HR.

EIM Solution Maintainability - Should you care about this?

2008-06-10T21:00:00.000-04:00

People often consider buying an Enterprise Incentive Management (EIM) solution based on several criteria including cost, performance, ease of implementation, support, etc. One factor that if often overlooked in my opinion is the system's maintainability.

What is Maintainability?

ISO 9126 defines maintainability as the ease with which a software product can be modified in order to:

correct defects
meet new requirements
make future maintenance easier, or
cope with a changed environment

Why is Maintainability important?

The ability to modify a software system is obviously important for any type of system, but it is particularly important for an EIM solution. Why? Because compensation plans, organizational data, quotas, etc typically change at least once a year. Modifying this information is not a task equally easy to perform in all software packages.

How to find out if a EIM solution is maintainable?

Any vendor will say their solution is maintainable... only an opinion from an unbiased person with experience implementing the particular EIM solution will be able to give a true account of how easy it is to maintain the application.

Effective dating plays a big role in maintainability. Being able to modify the information at anytime, but with changes effective only at a certain date, is critical to maintain a system.

Another key aspect of maintainability to consider the impact of year end on the plans. Some of the important information to find out is:

Are the plans still going to work at year end?
If plans need to be modified, how big of a change is it?
How easy is it to modify the quotas?
What about the rate / lookup tables?
If formulas are embeded within the tables, do those need to be modified as well?
How easy is it to move people in different positions?
What do I do when people leave the company?

It is not atypical to see a somewhat complex logic which could be impacted by a simple change. For example, a formula referencing a table which contains another formula pointing to a quota. If the quota values can just be updated, it's not a big deal. If a new quota needs to be created, then the formula will also need to be updated to reflect the new quota.

Another example is when an EIM solution needs to be able to handle last year's orders at last year's rates. Depending on the system, this could mean creating new rules, new formulas, new tables, new quotas, etc.

It may not all be about the Product

Implementing a software package is a bit like custom development. A quality architecture results in the possibility to re-use components. Some programming languages are easier to maintain than others; as we discussed, the same goes for EIM solutions. However, no matter how good a programming language, a bad programmer can make the maintenance a nightmare. A bad EIM implementation team can also make the system's maintenance very hard, no matter how good the product is.

The bottom line:

Finding out the details about how maintainable an EIM solution is, is as important as finding out other characteristics such as how easy it is to implement it. You do not want to have to re-implement every plan every year; not only because it is time consuming, but also because major changes imply bigger risks.

The first part of the battle is to select an EIM solution which will make maintenance as painless as possible, but the battle is not won until the solution has been implemented properly.

Review of Centive Compel On-Demand EIM Solution

2008-06-09T20:22:00.002-04:00

It has been a few weeks already since Sarah Carlisle, Director of Product Management and Bob Conlin, Chief Marketing Officer at Centive agreed to give me a detailed demonstration of Centive's on-demand Sales Performance Management solution called Compel.

About Centive
Let's talk about Centive for a moment: Centive has been around for a while; the company was founded in 1997 and originally focused on delivering on-premise Enterprise Incentive Management (EIM) solutions for very large companies. By 2004, Centive saw an opportunity to leverage the growing on-demand market and began developing the first on-demand sales compensation management solution – this time targeting mid-market companies. In May 2005, Centive released Compel. Shortly thereafter, they divested their original on-premise application business to ensure a focus on the on-demand market.

Compel Review
Compel is another leading on-demand EIM/SPM application with a value proposition almost identical to other applications and companies I have reviewed including Callidus, Varicent and Xactly. One nice aspect of Compel is that all its functionalities are bundled within the core application (no additional modules are required for reporting, modeling, analytics, etc.). Compel is a SAS70 Type II attested application and offers AppExchange-certified integration with SalesForce.com. Centive also has an OEM reseller agreement with ADP where Compel is sold as “ADP-ICM powered by Compel.”

Many companies like Adobe, Salary.com, McKesson, Cars.com and Sterling Commerce selected Compel to automate their sales compensation.

Compel Interface
There are 3 main "views" for Compel, each for a different type of user: the sales user view, the manager/executive view and the compensation administrator view. All views have one attribute in common: they are all very interactive. Any report or charts displayed will provide additional information when the cursor hovers over them. Clicking generally results in drilling down to get more detailed information.

Sales User
The main screen for the sales user displays at a glance all the information the salesperson needs to know. On the left portion of the dashboard they can see their total compensation, along with some details of how the total was derived. Clicking on the underlined amounts will result in showing more details.

The central portion of the screen represents in a graphical format their year-to-date total compensation, and analytics showing earnings and performance (sales vs. target) for each of their plan measures.

The bottom portion of the screen show alerts which can be either system generated or input by a business user, and more details on measure results.

Hovering over a graph displays additional information:

Drilling down from the Incentive Payment section shows information at the transaction level:

Another very interesting feature of the salesperson dashboard is the ability to display sale opportunities (from salesforce.com or other CRM/SFA systems) and the effect they have on the rep’s total compensation:

Manager View
The manager view has a very similar look and feel to the salesperson view, but displays information for the entire team:

Results can also be expanded to easily find details about how a transaction was commissioned:

Comp Admin View

This is where plans are created and configured.. Unlike other systems I have worked with, Compel abstracts the process of creating calculation and crediting rules through their Plan Builder wizard. Plans are created by defining and grouping the "Measures"by which reps will be compensated. First, the measure name, description, period, and type of measure is specified.

The next step consists in specifying what is being measured, and defining any filters (for example, exclude sales to existing customers):

The administrator just needs to choose the appropriate option and click on "Next" to the next configuration window.

Other systems have a component approach, and maintain a component library. In Compel you build measures. You can clone measures or plans, so if you need to build a new plan it is easy to clone an existing measure and re-use it as is or modify it using the plan builder wizard

Effective Dating:
I described effective dating when reviewing the latest version of Xactly Incent and discussed how critical effective dating is in my opinion. Centive uses effective dating for everything: people records, quotas, measures, plans, transactions, results, reports, etc . which makes its maintenance much easier. It also solves the difficult problem of handling prior period adjustments – Compel recognizes the crediting rules, roll-ups and structures that were in place at the time of the original transaction, and trues-up the adjustment to the current period.

The following plan builder screen capture shows how each plan uses effective dating:

Conclusion
I would probably need to work with Compel to make-up my mind about if I like the concept of how plans are built, since it is so different from the other applications I have seen. It's very exciting to see a different way of thinking.

What I can say is that configuring a plan seems to be a very user-friendly step-by-step task. The user interfaces for sales people and managers are also very clean and display all the required information at a sight. Compel also seems to offer all the functionalities anyone could be looking for, and does so without the need to purchase additional modules.

The Moral to the ICM Saga

2008-06-08T22:00:00.004-04:00

Read Part 1 and Part 2 of this story first.

The blame cannot be put on one person. ABC Corp, the ICM vendor and the consultant all own some of the responsibility for the issue.

The entire situation could have been avoided if the requirements had been better designed. Requirements could have been better designed if the compensation plans had been completed with enough details. The vendor would probably have done a better job at scoping out the work initially or in certain situations may even have not submitted a proposal.

What can we take away from this story?

Requirements cannot be fully defined unless the compensation plans are finalized. Requirements may be inaccurate or incomplete unless compensation plans show sufficient details and examples.

An ICM solution cannot be selected unless the requirements are fully defined.

Not all ICM solutions can handle very complex compensation plans (no matter what the vendor's rep says). Some solutions are better suited for certain situations.

Good requirements are the foundation for any IT project, mess up the requirements and the entire project will be shaky.

Using an experienced consultant to help out with the requirements design, RFP writing and solution selection could be a good idea to select the ideal solution.

Consultants and vendors alike cannot "always" guess client's intentions.

Mentioning or emailing a requirement is not enough, this requirement must find its way to the requirement document to ensure it is met by the implementation and properly tested.

The ICM Saga Continues...

2008-06-05T19:00:00.001-04:00

It's Thursday; meeting time. The vendor explains the requirements from the RFP did not accurately reflect what needed to be performed by the ICM solution. "Because the scope of the project did not include all this additional work, it will cost more and take more time to complete", says the vendor calmly. "But your sales rep said it would not be a problem!", exclaims the comp director of ABC Corp. "We specifically asked about this during the presentation and your rep said it you could do it!".

The vendor finally agrees that because the relationship between their companies is valuable and because of their strong work ethics, they will honor the agreed cost and do everything they can to meet the deadlines.

However, problems keep piling up. The ICM solution is not intended to perform what would be required for the compensation plans to work how they are supposed to work. Data integration, workarounds and clever tweaking pushes the ICM solution to its limit. The client is asked to only include what is absolutely necessary in this release and push out the rest. The deadline is missed. The solution is finally implemented, but User Acceptance Testing keeps revealing new issues. The second pay-roll date is approaching but there is still no solution in sight.

Does this sound like a familiar situation?

Who should be blamed?

The vendor's implementation team for not working harder, their sales rep for having mis-represented their solution or not asked for more detailed requirements, or the ICM solution for not being powerful enough? ABC Corp's team or their consultant for not having defined the requirements properly?

[Read Part 3: The Moral to the ICM Saga]

The Saga of Purchasing an ICM System

2008-06-03T20:00:00.001-04:00

ABC Corp hired a consultant with extensive Incentive Compensation Management (ICM) experience to scope the requirements to be included in the Request for Proposal (RFP) for the purchase of a new ICM solution. The consultant diligently researched the latest industry trends, ICM best practices, client needs and leveraged his experience to create an outstanding requirement document. Weeks later the RFP is born, after having spent countless hours being sent back and forth between the sales, finance, contract and legal departments.

The RFP is finally posted and it takes a few more weeks before all the proposals are in. The consultant is called again to help out evaluating the best proposal. A few solutions are short-listed, and vendors are called in to demonstrate their product. The vendor's sales reps all claim their solution is the only end-to-end ICM solution, that it is the "best-of-breed", and that it has the best analytics and reporting capabilities.

After thoughtful consideration, a solution is chosen. It was a hard decision, but everyone at ABC Corp are happy that this long procurement process is finally over. ABC Corp's management is particularly happy that according to the timelines illustrated in the selected proposal, the solution will be in place to process this quarter's commissions and bonuses. After all, this was one of the major criteria in the evaluation process.

A kick-off meeting between the vendor's implementation team and ABC Corp's employees is scheduled. The vendor requests to see all the existing documentation about the plans to be implemented including the requirements document, to start working on the functional design documents and solution architecture. The next meeting is scheduled for Thursday.

[Read Part 2 - The ICM Saga Continues]

Tweak your Sales Compensation Plan - A Tale of Diverging Opinions

2008-06-02T19:00:00.001-04:00

In case you are not familiar with it, the Canadian Professional Sales Association (CPSA) has an excellent magazine called "Contact". The best part is that this magazine is entirely available online, for free, and without any registration. Today I wanted to bring your attention to an article by Jay Somerset called "The Compensation Challenge" which appeared in the Contact Spring 2008 edition.

"It may be time to change - or tweak - your sales compensation plan to better compete in today's employee-driven market, but if it is done incorrectly you could send your sales team packing. "

Indeed, tweaking a sales plan is tricky business. Stats mentioned in the article back this up: Less than 10% of North American sales organizations redesign their comp plans in a given year, while the other 90 percent only perform minor tweaks. I think ideally, closer to 100% organizations should only perform minor tweaks. Redesigning a plan could be a sign that it had not been planned out properly, and sometimes organizations are compulsive about trying new plans rather than improving their existing plans by tweaking them.

Diverging Opinions
Greg Blysniuk, president of TopLine Sales Compensation Solutions in Toronto advocates simplicity. He says that sales managers often believe their compensation plans must be sophisticated and complex to compete; Greg believes one or two quantitative measures is all what is required to incent people and to ensure the plans are easy to understand.

David Johnston, president of Sales Resource Group Inc in Oakville, Ontario believes compensation plans should factor in qualitative metrics. "Qualitative metrics can be measured according to milestones or key events".

ICM Applications:
Greg says the main barrier to adopt an ICM application is their cost. He is in favor of using Excel spreadsheets for compensation data collection and analysis. He says that "Spreadsheets are simple to use, inexpensive and they do the basic job".

David does not agree; he says that spreadsheets are "too basic and error-prone". He also says that "sales is much too complex for a spreadsheet". He concludes that there is a middle ground with smaller-scale on-demand ICM applications such as PlanIt (which I reviewed previously), that do not require a large upfront cost.

The Bottom Line:

No matter which approach is used, I'm sure we can all agree that the goal is to make the compensation plans as straightforward as possible. If there is a valid reason for a plan to use some "complex" measurement, fine... as long as it's easy to understand and clearly communicated to the payees.

As for the need for an ICM application; if an organization is small enough with a low enough order volume and is happy with their current spreadsheet, and if they don't see any benefits in real-time analytics and dashboards, auditability, modeling, forecasting, and all the other benefits provided by an ICM solution, then there probably no incentive to replace the spreadsheet by such an application.

I agree with Greg that spreadsheets do the "basic job", but in my experience it does not take very long even for small organizations to realize that the "basic job" is not enough anymore to keep a competitive advantage.

Last Minute Deal for Enterprise 2.0 Conference

2008-06-01T20:45:00.006-04:00

nGenera, is a sponsor of the Enterprise 2.0 conference taking place in Boston between June 9-12, 2008. You can save 100$ from the registration cost by registering here.

Community.
Let’s learn from each other’s successes and challenges, through networking and stimulating case studies from surprising pioneers.

Education.
Tutorials and sessions led by top minds show you how to make your business more agile, connected and responsive.

Leadership.
Industry visionaries give you a glimpse of the future at the keynote and plenary program.

Solutions.
See the latest technologies from established leaders and hot start-ups in the Demo Pavilion.

Xactly Incent 4.0 - Effective Dating and Other New Features

2008-05-30T22:46:00.009-04:00

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

2008-05-30T22:12:00.000-04:00

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

Networking 2.0 - The Art of Making Connections

2008-05-27T13:52:00.008-04:00

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.

For Love or Money: Social vs Monetary Reward

2008-05-26T13:29:00.010-04:00

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.

SPM Testing Template - Part 5

2008-05-22T23:50:00.000-04:00

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:

[download the spreadsheet]

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.

PlanIt: Another On-Demand Sales Performance Solution

2008-05-21T09:25:00.000-04:00

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.

ICM Testing - Reviewing Results - Part 4

2008-05-19T20:30:00.000-04:00

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.

ICM News This Week

2008-05-17T14:31:00.002-04:00

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.

ICM Test Planning, Scenarios and Templates - Part 3

2008-05-15T20:27:00.000-04:00

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.

The Sales Manager and the Bear

2008-05-14T23:48:00.004-04:00

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)

Common Pitfalls in Sales Compensation Design

2008-05-13T15:42:00.007-04:00

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.

Measuring Sales Force Performance (KPI)

2008-05-12T13:00:00.000-04:00

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.

In the News this Week...

2008-05-10T12:44:00.003-04:00

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.

ICM Testing – Part 2: Test Phases and Traps

2008-05-08T20:20:00.004-04:00

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.

YAWN… ICM Testing – Part 1: Introduction

2008-05-07T20:03:00.000-04:00

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.

Varicent SPM 5.0 - Interview with Varicent

2008-05-06T18:40:00.002-04:00

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.

ICM Solution Return on Investment - Ask the Expert #4

2008-05-05T22:13:00.004-04:00

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).

In the News this Week...

2008-05-02T18:12:00.003-04:00

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)

How to get an ICM / SPM Job?

2008-04-30T21:55:00.007-04:00

Many readers and friends have been asking me about how to get a consulting job in the field of Incentive Compensation Management / Sales Performance Management. There are several ways to achieve this.

Get a job with a large Management/IT consulting company (such as IBM or Accenture) working in that area and have them train you. That's how I got there.
Get a job with a consulting company specializing in these areas (either a large firm like Towers Perrin or a smaller firm like nGenera). This may be harder to do if you have no experience.
Look at job boards for interesting jobs. There are often good opportunities posted on dice.com, and monster.com, etc. There are also specialized job boards such as the career opportunities page of World at Work and the Canadian Professional Sales Association's job board.
If you have business or technical skills, you could look for any job with an SPM Solution Vendor and move into a consulting job.
Get a related position in the industry; once you have a bit of experience, you can move on to a consulting company.
Get some experience! Most vendors offer free Webinars, giving a good overview of their products. There are also dozens of books on the topic! If you can afford it, World at Work offer many courses and certifications. SPM software vendors also usually offer training on their products.
If you are interested with the implementation aspect of ICM/SPM you could learn a Customer Relationship Management package such as SugarCRM. You may never use SugarCRM ever again, but at least it will be something to add on your resume (experience implementing an on-demand CRM software package).
Participate to my blog, ask questions, build your knowledge.
Click on my adds (just kidding)
The most important recommendation last: Network, make contacts. Join a local professional chapter of World at Work or the CPSA... Attend all the conferences you can afford and introduce yourself to everyone you meet and have plenty of business cards to hand out.
Contact me, I often hear about openings but I don't always have someone in mind to recommend. I may be able to help out and share your resume...

Sales Compensation Best Practices in the Banking Industry

2008-04-29T18:57:00.004-04:00

Last week I attended the Accenture/Callidus Webinar "Industry Banking Best Practices for Maximizing Your Customer Value and Sales Behavior". Below is a summary of some of the information that was discussed. I will leave out Callidus Wachovia's case study for another post and focus on Accenture's point of view.

Kirk Coleman, senior executive at Accenture discussed how the Banking industry was facing many issues and challenges. Regardless of the current market situation, customer expectations keep rising. Those who can exceed these expectations will have an opportunity to distinguish themselves from the competition.

Best Practices

Drive an incentive culture, not a bonus culture
Focus on the right employees
Timely delivery of rewards
Support capability development
Plan for a journey - not a "project"

Tests that banks should perform regularly to check and maintain their effectiveness:

Top performer's pay relative to the market
Pay dispersion between top and average performers
Pay and performance correlation
Alignment of payouts with key financial/marketing objectives
Variability of incentive compensation year-over-year
Speads of quota attainment versus plan spread
Relevance and controllability of performance measures
Time spend correcting payouts

Kirk noted that behavior of customer facing employees is increasingly important in the banking industry. Developing capabilities across channels is important to avoid improving in one while losing in another.

Another point that Kirk stressed is the importance of timely delivery of rewards. Many banks have quarterly and annual bonus, but in these cases it is difficult for payees to see the relationship between their incentive pay and their behavior. In many cases a monthly incentive strategy would be more appropriate to be able to re-enforce the desired behaviour.

Kirk concluded by saying that Sales Compensation is essential for banks to effectively align sales force behavior with their goals.

I found an additional paper by Accenture "Sales Performance Management: Enterprise Incentive Management from Accenture" which adds some details to the topics covered by Kirk during the presentation.

My Own Press Release: 1000 Unique Visitors this Month!

2008-04-28T22:05:00.003-04:00

Dear Reader,

I would like to take this opportunity to thank you for reading my blog. This is really the only incentive I need to keep writing! The number of unique readers grew pretty consistently since I started blogging in late December and I hope the trend will go on in the months to come.

As some of you reminded me, I will make an effort to keep writing original posts that will hopefully be useful and interesting, rather than regurgitating press releases and PR pitches.

Please keep sending me feedback and ideas of topics which you would find interesting.

Sincerely,

Julien

Callidus Software Launches Operations Center in India

2008-04-28T18:36:00.000-04:00

Sales Performance Management Leader Partners With Sierra Atlantic to Support Aggressive SaaS Product Strategy and International Growth

Callidus Software Inc. (NASDAQ: CALD), the leader in Sales Performance Management (SPM), today announced it has opened a new operations center in Hyderabad, India. The center enables Callidus Software to add capacity in the critical areas of product development, consulting services, and technical support through a strategic alliance with Sierra Atlantic, the leader in offshoring enterprise applications and outsourced product development.

Xactly On-Demand Analytics

2008-04-28T18:02:00.004-04:00

Xactly Analytics is a new application from Xactly which delivers strong data mining and analytics capabilities, which are easy to leverage by business users and are available through dashboards and reports. It is currently in Beta release and is scheduled for general availability in June 2008.

[Disclaimer: I have not seen Xactly Analytics in action yet and will provide more information when I can]

Xactly Changes the Game in Sales Performance Visibility With On-Demand Analytics

Xactly Analytics stands out as market's first on-demand application enabling visibility into reliable post-sales data to better measure and maximize sales performance.
Xactly Analytics is a fully on-demand, Web-based application delivering a complete range of data exploration and analysis capabilities that would ordinarily require significant time and IT resources to develop. Xactly Analytics provides unified, authoritative views of key sales performance management metrics, including sales incentive analysis, product performance analysis, and sales performance analysis by sales team, product or region. It includes automated data-workflow processes that transform and aggregate business data brought together by Xactly Incent to provide executives, sales managers and finance managers with better visibility into incentive spend that has not previously been possible with traditional Incentive Compensation Management (ICM) products.

nGenera - The Birth of a new nGen Company

2008-04-26T00:27:00.007-04:00

I blogged about BSG Alliance when they purchased Iconixx 2 months ago. Today BSG Alliance was reborn as nGenera, a business innovation platform for Next-Generation Enterprises.

Another news which did not get much attention is that BSG Alliance/nGenera recently acquired Ncent, a fully integrated Sales Performance, Bonus and Salary Management software company. The cached version of Ncent website can be found here.

Mark Hall wrote a bit more about nGenera on his blog at ComputerWorld.

Here is more information about nGenera, straight from their website:

We're a different kind of company - built to enable our customers' journeys toward becoming a Next Generation Enterprise - and our innovative core is made of three distinctive capabilities:
A business platform and components that create an agile mechanism for identifying, creating and configuring our assets
Collaboration software that enables community-driven innovation (Wikinomics) and interconnects the new global workforce
An on demand framework that turns Big Ideas into reality for leaders, employees and customers 10x faster than traditional means
Our customers plug-and-play into our platform to enable:
Revenue growth without additional costs
Significantly greater utilization of employees and resources
Breakthrough responsiveness to opportunities & threats
The agility of our platform enables us to configure product offerings directed at our customers' most pressing challenges and opportunities. Currently, nGenera offers three core products:
nGen Leadership gives companies the tools to understand, orient, define and plan their company's transformation into a Next Generation Enterprise. Capabilities include Enterprise 2.0 training, leadership development, management chain automation, strategy on demand and simulation on demand, all powered by Web-based software.
nGen Talent enables enterprises to identify, source and retain key resources anywhere in the world, and to provide an attractive, compelling work environment for the new workforce. Major capabilities include recruiting and on-boarding, learning and development, performance management, total compensation and collaborative culture.
nGen Customer gives companies the means to turn customer insight into compelling, differentiated products and services - to co-create complete customer experiences. Key capabilities include customer experience assessment, emotion mining, community-driven innovation, customer experience design on demand, multi-channel interaction, knowledgebase management, and Web monitoring and analytics.

Towers Perrin Announced the Launch of New Compensation Administration Tool

2008-04-23T18:21:00.001-04:00

Towers Perrin today announced the launch of an industry-leading, next-generation compensation administration tool with built-in talent management capability, Comp Agility.

Towers Perrin is a global professional services firm that helps organizations improve their performance through effective people, risk and financial management.

Web-based Comp Agility is a complete solution and allows for users around the world to utilize and customize the tool’s content and applications to meet their needs. Job descriptions and competency models can be adjusted to address market and internal considerations, and compensation design can easily be analyzed with region specific data.

The Comp Agility Suite consists of two modules:

Market Analyzer: This Web-based compensation analysis module provides a range of solutions and capabilities, including data storage and review, online benchmarking, a survey data browser, a market-pricing function, a survey submission function and a reporting tool.

Role Analyzer: This Web-based module lets you design and manage information about jobs and job evaluation, manage employee competency assessments, manage your organizational and functional competency models, and produce various workforce distribution reports.

I haven't seen Comp Agility in action nor have I heard feedback from any client yet, but I will provide more information as soon as I do.

Read the full Press Release.

More information about Comp Agility can be found here.

Sales Compensation Planning Made Easy - Interview with Makana Solutions

2008-04-22T19:02:00.000-04:00

I recently had the opportunity to spend an hour with Liz Cobb, Founder and CEO of Makana Solutions, and with Arthur Gehring, Director of Marketing.

Makana is a relatively new company (founded in 2004) offering a very good on-demand application, called Makana Motivator, which helps build effective and clear compensation plans. Makana Motivator is very easy to use and allows its users to quickly create a plan either based on other sample plans, or from the ground up. It also has the capability to “test” your plan.

As I mentioned several times, one of the biggest challenges faced by sales management or consultants when implementing a sales compensation system is the “complexity” of the compensation plans. Sometimes compensation plans are quickly described in a e-mail or over the phone, or almost handed over written on a napkin. In other scenarios, they are can be well documented but may still lack clarity, key aspects, or examples, or may be lengthy. Finally, even if a compensation plan is well documented, it does not mean that the plan is effective and well aligned with the objectives and budget of the company.

The Makana Motivator application is very intuitive to use. Companies using the application typically receive a 1-hour live tutorial from Makana, after which they are able to model plans on their own. The main components of the application consist of the space in which the plans are built, where the organization is built with assignments and territories (participants can be imported from SalesForce.com), a section for cost modeling the plans, and finally, a section that generates a plan and gives the option to save it as a PDF.

In my opinion, one of the most powerful aspects of Makana Motivator is that it allows users to choose templates from a best-practice library and to adapt them to meet individual circumstances. The application then guides the user following a “wizard” step-by-step approach to ensure nothing is overlooked. The application is very interactive; hovering over most of the application components provides additional feedback . “Blue-ribbon advice” offering expert tips and help is also available throughout the process.

Another important feature of this application is the ability to display and compare plans side by side. Such a graphical representation quickly helps identify the major differences between plans.

Plans are not only displayed side-by-side; they can also be designed and modified side-by-side. Plans consist of measures and formulas which can be edited by expanding their respective section.

The cost modeling section can show costs for the entire company or byany sub-set such as product group or geography. Projected attainment can be modified to gain an idea of the impact of those variables on the overall incentive costs. Many sales performance management applications offer modeling and analytics capabilities, but Makana Motivator allows its users to model the plans BEFORE they are implemented rather than after, which can save a lot of time, money and headaches.

Once the plans are fully designed, and since the application is on-demand; they can easily be circulated and feedback can be gathered directly in the application. Upon acceptance of the plans, plan documents can be individualized and generated. The resulting plans are very clear and easy to understand by consultants, comp teams and sales reps alike, and are visually pleasing.

Motivator adds a lot of value over the spreadsheets used for planning today by streamlining the process, providing best practice guidance, easy cost modeling, clear plans and an audit trail. Makana Motivator also provides Salesforce.com users Apexchange certified integration.

Do Big Money Bonuses Really Increase Job Performance?

2008-04-21T20:34:00.004-04:00

I came across an interesting study in the “PsyBlog” about the impact of large bonuses on job performance. In this experiment, professor Dan Ariely went to India and recruited [poor] local people to accomplish several tasks, offering a performance bonus equivalent to up to a month’s salary. In 8 of the 9 tasks, the promise of a large bonus significantly decreased people’s performance.

The summary of the paper on the PsyBlog seemed a bit counter-intuitive. Most companies around the world would most likely not have some flavor of a pay-for-performance program if a bonus was actually decreasing performance.

So what is happening? On one hand, I think that if the bonus is very high, participants could have been really stressed out about the task and not performing as well because of that pressure. It is also possible that performance decreased because participants did not actually believe they would receive the bonus for a variety of reasons – sometimes when only a certain number of people can receive the max bonus, participants feel they don’t have a chance to perform at the required level and behave accordingly. Even if there is no maximum number of participants who can receive the largest bonus, the performance required to get the bonus could be perceived as being unattainable or not worth it.

The relative value of bonuses versus the effort required to obtain them is another factor which could affect the participant’s behavior. If working exceedingly hard is required to get the max bonus but that only a moderate amount of work is required to get a bonus which is only slightly inferior, many participants could be settling for the smaller bonus.

I spent some time looking for other papers on this topic and found a few other possible explanations. The “crowding out” theory supports the hypothesis that incentive pay decreases employees’ motivation to perform up to abilities. The explanation generally given for this is that the introduction of an obligatory amount of output to produce is often considered by employees as a signal of distrust. The papers I found discussing the crowding theory are: Titmuss (1970), Rothe(1970), Gneezy and Rustichini (2000), and McNabb and Whitfield (2003). Papers by Kruse (1992), and Ichniowski and Shaw (2003) “prove” that incentive pay positively affects employees’ effort.

As for me, based on my own observations and “empirical evidence”, I will side with Kruse, Ichniowski and Shaw to say that incentive pay (if used properly) can positively affect employees’ performance.

Upcoming Free Webinar: Industry Banking Best Practices for Maximizing Your Customer Value and Sales Behavior

2008-04-18T18:57:00.004-04:00

A free webinar "Industry Banking Best Practices for Maximizing Your Customer Value and Sales Behavior" will be hosted by Callidus Software and Accenture on Wednesday April 23rd at 11:00 EDT.

Learn about banking industry best practices from Accenture to ensure that your front line sales people are selling efficiently and effectively - and selling the right products to the right customers. Together with strategies and best practices, you'll also learn how other financial services organizations are using the latest solutions and technologies to optimize these processes, and achieve competitive advantage.

For additional information and to register for the event go to: http://www.callidussoftware.com/go/08/banking-best-practices-to-maximize-sales/

Spiffs, Bonuses and Contests - Ask the Expert #3

2008-04-17T19:16:00.008-04:00

In this 3rd installment of David Cichelli's "Ask the Expert" series on this blog, I asked David about his thoughts on spiffs. I asked him if it was possible to use spiffs while avoiding encouraging employees to push a certain product upon a customer at his or her expenses. I also asked David if there was such a thing as too many spiffs. Previous posts of this series are here and here.

Before going into David's answer, I want to give a bit of background regarding what is a spiff.

SPIF (or SPIFF) may stand for "Sales Performance Incentive Fund", "Special Performance Incentive Fund" or " Special Performance Incentives for Field Force". The exact origin of the term is open for debate. Wikipedia defines a spiff as a small, immediate bonus for a sale. They can be paid by a munufacturer or the employer, to the salesperson who sold a specific product.

I have seen spiffs used in several scenarios such as when a manufacturer wants to gain market adoption with a new product, when a retailer wants to liquidate some of its inventory, to incent sales people to sale certain combinations of widgets, etc. The goal is always to have an immediate impact on sales force behavior. Of course, spiffs are not without their own pros and cons, but they can fit nicely within a compensation strategy.

Here is what David had to say about spiffs:

Julien, you might want to check the spelling of “spiff.” I spell it with one “f.” It means Special Performance Incentive Fund. Check Wikipedia for a nice discussion on the spelling. [Sorry David - I'm sticking to spiff for now, so far I've seen it spelled this way more often than "spif"].

First of all, I consider spifs, contests and campaigns an integral part of the sales management’s tool kit. Here are the rules for appropriate use of these programs:

Budget of all programs should not exceed the total earnings of the sales force by 3% .
Spifs should be used for “doing something new for the first time.”
They should not be used to spike performance during a period.
They are narcotic in nature: the more you use them the more you need to use them. Moderation of use with healthy hoopla is the best prescription for success.
Avoid the use of “chance” to determine winners and payouts--it 's unethical to do so: this is an employment relationship, not Las Vegas.

Can Performance be Measured?

2008-04-16T22:39:00.007-04:00

John Fletcher posted an interesting article "Why Quantitative Measures Often Make Performance Worse, not Better" on the Slow Leadership Blog about how quantifiable objectives is more about office politics than performance.

The article takes the point of view that performance measurement does not work well because typically what is measured is not what matters the most, and that performance often delines when it is measured because once people reach their target there is no incentive to exceed it.

I previously shared some information on performance measurement as well as some personal stories. I agree with John that sometimes quantifiable objectives can be more about office politics and that they can have undesirable effects and he raises a several good points. However, I will say that performance cannot be evaluated without well defined criteria. The article also seems to say that any quantifiable objectives are not as good as less tangible measures, a statement which I can't agree with.

The example of setting set targets also shows what to avoid; In the example, the goal is to answer 90% of inquiries - answer less than 90% and the employee does not get a bonus, answer more than 90% and the employee receives a bonus. This strategy could lead to employees doing the bare minimum of work to reach 90%, but not strive to achieve 100%. If the department's goal was to answer as many queries as possible, a better solution would be to use a quota approach: achieve target and receive a bonus, answer between 90 and 95% of inquiries and receive a bigger bonus, answer between 96 and 99% of inquires and receive an even bigger bonus, and answer 100% of inquiries and get the max bonus. This way, at least in theory, employees will always be motivated to exceed the target.

Choosing "good" performance measures and metrics is one of the most critical aspects of designing an incentive plan, while"bad" measures could result in encouraging undesired behaviors. It is important to know exactly what the desired behaviors and goals are before choosing any measurement. Also, as David Cichelli from The Alexander Group and Liz Cobb from Makana Solutions pointed out earlier, too many measures can ruin a compensation plan by making it overly complex and confusing the payees.

Ready... Set... Go-Live!

2008-04-15T18:22:00.004-04:00

Before an ICM implementation can be deployed, there are a number of things that need to be done. "Go-Live" refers to an implementation being transitioned from being developed and tested, to being used in production. An application that is "in production" means that it is now used with real data, to pay real people, and bugs, errors and overpayments are not an option.

Meeting the go-live date when building an ICM solution is particularly important because those dates are often related to pay-roll cycles and are often less flexible than other type of systems.
With tight deadlines and little tolerance for mistakes, go-lives are the most stressful moment for anyone involved on the project. No matter how good the relationship with the client and how well the implementation went, if go-live is not successful, executives can get bitter, people can get fired, and all the hard work put in the project can be forgotten.

Implementing different applications require different steps to go live. An on-premise application will have more steps such as migrating the application from the development hardware onto the production hardware and making sure this hardware conforms to the development/test environment. For a SaaS solution there are less steps, migration is usually easier and there is no need to worry about hardware.

What is most stressful for a consultant during the go-live phase is that it's the ultimate milestone; the system must be rolled-out, and the implementation must be completed and functional. The User Acceptance Test (UAT) must be performed on the system and signed-off. UAT is essential to capture the client's agreement that the implementation performs as desired.
With all that is involved in the go-live phase, consultants will work 80-100 hours a week to make it happen; it’s "crunch-time"!

Here are a few ideas of items to include on your ICM go-live check list:

Setup and test all relevant hardware (if on-premise)
Ensure updated documentation exists and that users are trained.
Ensure a roll-back strategy is in place in case there is a ‘show stopper’
Ensure vendors and consultants are available during go-live period
Backup any existing configuration
Install, test and configure all required software, including the creation of a production database
Migrate all reference data such as order types, credit types, calendars, business groups, users, rolls, etc.
Migrate all organization data such as positions, titles, hierarchy, territories, customers, relationships, etc.
Migrate all plan artifacts such as plans, rules, formulas, tables, quotas, etc.
Migrate any other objects such as reports, draws, documents.
Ensure any script or data integration items are migrated / updated to reflect the environment change
Migrate all the required data to the new database
Test new system rigorously
Obtain sign-off on results (same results as user testing)

I haven't written on my blog in the past 2 weeks because I am just in the process of going live with 2 projects at the same time, for 2 different clients. Please be patient, I will start writing again soon.

7 Problems in Sales Compensation Management

2008-03-31T21:01:00.008-04:00

On March 5th, Synygy hosted a live online expert panel discussion called "Ensuring Alignment of Strategy and Sales Compensation Plans: Assessing the Impact of Strategic Misalignment". I promised I would discuss about what I learned in the Webcast, so here it is at last!

Synygy identified 7 areas affecting sales compensation management:

Strategic Misalignment
Limited Modeling
Misunderstood Plans
Errors in Results
Lack of Information
Inability to Adapt
Process Inconsistency

The focus of the Webcast was on the "Strategic Misalignment" aspect, with future Webcasts to cover the remaining six problem areas.

So what is the impact of Strategic Misalignment?

Poor sales force effectiveness
Inefficient resource use
Confusion
Low morale
Sales force turnover
Etc.

Some of the symptoms...

Poor line-of-sight to corporate objectives
Over-simplified plans
Top sales people underpaid or leaving
Increasing commission cost
Undesirable behaviors
Many contests / spiffs.

US Cellular:
US Cellular faced many of the problems above. They are the 6th largest US wireless provider with 6 million customers, 8100 associates, 32 billion dollars in annual revenues and an inventive budget of 200 million dollars.

Sales associates were dissatisfied for several reasons including targets that were too generalized, a lack of consideration to location potential, a soft sale environment, lack of accountability, inconsistent process, inconsistent quotas and inconsistent payouts.

By adopting an incentive compensation management solution, US Cellular was successful in aligning quotas with corporate goals.

The key challenges identified by US Cellular were to get a buy-in from executives, facing the 'fear of the unknown', and getting standardized data.

Some of the lessons learned include: understanding the objectives, understanding data, and getting support from executives from the very beginning.

Wyett:
Wyett (Pharmaceutical) has a sales force of 4000, with annual revenues of approximately 16 billion dollars.

Their old strategy involved having multiple specialists bothering the same physician. The strategy was driven from the HQ and the focus was on the market share.

The new strategy involved having an assigned specialist for a physician, and a focus on external competition instead of internal competition.

Their sales performance management solution was implemented in only 75 days and did a tremendous job at helping to better align the new strategy with objectives and improve sales force productivity and effectiveness.

Ask the Expert - Biggest Challenges in Sales Compensation

2008-03-20T20:19:00.006-04:00

Here is the second installment in David Cichelli's "Ask the Expert" series on this blog. The first post and David's background information are here.

Question: What are in your opinion the biggest challenges in sales compensation. Is there a key to success?

Answer: Well, I could write a book on this subject. Sales compensation is a very noisy device. It is hard to establish, keep current and administer effectively. We find that sales compensation programs tend to fail due to:

1) Obsolescence. Sales compensation plans must be continually updated to help maintain strategic alignment with the company's goals. Most sales compensation specialists consider an unchanging sales compensation plan as a failure of sales management.

2) Complexity. The sales compensation plans are an easy “mark” when sales management is looking to get the attention of the sales force. However, too many measures—more than 3—doom a sales compensation program as it becomes overly complex.

Callidus On-Demand as a Solution for SMBs – Part III of III of my Interview with Callidus

2008-03-18T20:11:00.005-04:00

In this last part of my interview with Paul Turner and Jock Breitwieser from Callidus Software, we discussed about the suitability of Callidus as a solution for small to medium-sized enterprises.

Are Callidus Solutions / TrueComp only for Big Enterprises?
"Absolutely not!" exclaimed Paul. It's true that Callidus offerings were traditionally on-premise complex solutions for large clients, but with the On-Demand solutions this is not the case anymore. Several small companies have chosen Callidus as their Sales Performance Solution and are very satisfied.

Pauls also comments that the small to medium sized enterprises is still a very un-tapped market. "SMBs present great challenges, but also the greatest opportunities for Callidus Software".

Are On-Demand and On-Premise Solutions Identical?
On-demand and On-premise versions of TrueComp, the "core" compensation tool from Callidus are identical to each other. However there are add-ons and packaged elements which helps speed-up the On-demand deployment, such as packaged reporting elements and spreadsheets to facilite data integration.

So how Long does it Take to Deploy the Callidus On-Demand Solution?
It is hard to say as it depends on so many factors such as the complexity of the implementation, the number of plans, the number of rules, etc. However, Paul noted that a recent small client completed the entire implementation cycle - from design to integration - under only 90 days, others in as little as 60 days.

SalesForce.com
Sales Managers and Account Executives can access reports directly through SalesForce.com. Sales person can access their up-to-date compensation statement and other reports directly as well, and drill-down on key elements when required. Below are a few screen captures illustrating some of the dashboards available for Callidus On-Demand through SalesForce.com.

More information about SalesForce.com and Callidus integration is also available on the Callidus website.

With emerging On-Demand solutions geared towards small to medium sized enterprises, perhaps they will all drop their archaic Excel spreadsheets to adopt such a solution... much like they adopted the web as an essential element of their marketing campaigns 10 years ago.

[Part I of my interview with Callidus]

[Part II of my interview with Callidus]

Thanks again Paul and Jock for your time and for sharing your insight.

Callidus On-Demand as an Enterprise Solution – Part II of III of my Interview with Callidus

2008-03-16T23:30:00.003-04:00

Traditionally, On-Demand, or Software as a Service (SaaS), was geared towards smaller enterprises. Recently there has been a strong and growing interest in On-Demand solution as an enterprise solution for large businesses.

Major Concerns to adopting an On-Demand Solution
There are several concerns shared by clients when considering a SaaS solution. The two main concerns which I have heard repeated time and time again are scalability and security.

Scalability
A typical concern for large enterprises to adopting an on-demand solution is its scalability. How well can it really work with 5000+ sales people today, how well could it scale up to 20,000+ sales people tomorrow. When I asked this question to Paul Turner, Director Product Marketing, and Jock Breitwieser, Director Public and Analyst Relations at Callidus, the answer was that their on-demand solutions could be considered MORE scalable than their traditional on-premise solution.

How so? Callidus On-Demand solutions use Sun grid computing to extend the hardware as much as required by the clients. This means that an enterprise does not need to maintain their own grid computing facility, nor do they need to purchase expensive servers to anticipate future growth. The service is ‘on-demand’ and so is the hardware.

Security
Another major concern shared by large enterprises is security. Large enterprises rightfully do not want their sensitive data at risk of being exploited.

The Callidus On-Demand solution was architected with security in mind. From secure FTP data staging, to the use of state-of-the-art data centers to host the data, to individual database instances and dedicated hardware to meet specific security requirements, the Callidus On-Demand is a security fortress. Paul and Jock also noted that security has not been a deterrent for many large clients to adopt Callidus On-Demand offerings.

Other Benefits of On-Demand Applications

Lower Cost of Ownership
With an On-Demand solution, after the initial fee to configure the application, the cost is typically determined per payee; there is no need to purchase expensive hardware and software licenses. Not only is the cost lower upfront, but when considering the overall cost associated to an on-premise solution including upgrades, license renewal, maintenance, support, etc, an on-demand solution may be the most economical solution period.

Availability of Resources
With On-demand solutions, the Vendor is responsible for managing the software and the hardware and any related issues. Clients can focus in their business core focus rather than having to deploy and support the application and hardware.

Accessibility
On-demand applications can be accessed from anywhere in the world, at any time, from a web browser. This not only enables compensation consultants and executives to view sales performance data; it also enables individual sales people to login the application and monitor their own performance.

Paul concluded that with all the benefits of On-Demand solutions, it is easy to see why large customers are so interested by these offerings

[Part I of III of my Interview with Callidus]

[Part III of III of my Interview with Callidus]

Ask the Expert - Pros and Cons of Variable Compensation

2008-03-14T00:08:00.007-04:00

I recently asked several sales performance related questions to David Cichelli, author of the popular book "Compensating the Sales Force", a national expert in sales compensation and the sales compensation practice manager at The Alexander Group. He was kind enough to share his expertise with me, and to allow me to share his insight on this blog. Thanks again David for your time.

Question: Several readers end up on my blog by trying to find an answer to the pros and cons of variable compensation. You begin your book with an affirmation that 'sales compensation works'. What are your thoughts on the pros and cons - the rewards and benefits versus the risks. If it is a fact that pay for performance works, why are not all companies adopting such a system.

Answer: Companies use a wide variety of incentive compensation programs for a diverse array of jobs. Incentive compensation continues to be a mainstay of contemporary management practices. Sales compensation holds an almost legendary status as an expected part of the employment equation. However, sales compensation is a management choice. It’s neither a birthright nor a requirement. In fact, in my view, sales compensation programs are cross elastic with supervisory practices. Frankly, a well-supervised work force does not need an incentive program to be effective, and that observation is true of sales compensation. But, its use is widespread and prevalent. Almost 85% of all companies with sales personnel provide a reward program tied to sales results. A famous—if somewhat inelegant—argument was made against incentives by the author Alfie Kohn in his book “Punishment By Rewards.” But, generally, most sales management teams believe that incentives help bring focus to the efforts of a dispersed workforce...the sellers of the company.

Xactly's Perspective on Recession and Sales Performance Management

2008-03-10T21:14:00.007-04:00

Early last week, I received an e-mail from Christopher Cabrera, the founder & CEO of Xactly Corporation. I'm sharing it now because it goes well with my last post regarding the impact of a slow-down in the economy on the sales performance management and SaaS markets.

Hello Julien,

I hope this message finds you well. With recession alarm bells going off all over the world, it got me to thinking about the effects it might have on my company and the overall software industry. And an interesting point struck me…Software-as-a-Service (SaaS) wasn’t an option during the last recession. So, why does that matter?SaaS has established a strong track record over the past several years, proving its value in cutting costs and increasing flexibility. And what’s valuable in the best of times can prove priceless in the worst of times.

You know the litany. In contrast to on-premise enterprise software, SaaS means no upfront hardware and software costs, no worrying about costly ongoing software maintenance, and no vendor lock-in. Instead of being tied to an expensive software infrastructure, you’re free to quickly implement changes. And if a SaaS vendor doesn’t perform, you’re free to immediately choose one that will and be up and running in a matter of weeks. Believe me, savvy SaaS vendors know this! Subscriber retention is one of our key success metrics, along with speedy initial implementation and the ability to quickly deliver new functionality.

So, while SaaS delivers lower costs and enhanced flexibility, where does that leave employee and business productivity? Obviously, not all software applications—SaaS or on-premise—deliver equal boosts to productivity, at least not of the kind that directly impacts the bottom line.

Yet some categories excel in their ability to do so, including Sales Performance Management (SPM) applications. In a recession, businesses need to invest in getting the most profit possible out of their front-line employees. SPM applications do this by helping align sales behaviors to corporate objectives, focusing reps on the most strategic sales, maximizing agility in the face of market change, and providing visibility into key sales-success drivers. The last recession was a boom time for early-generation SPM applications—and that was even before the advent of SaaS. Today, thanks to the SaaS model, the SPM arena is expanding in scope like never before, and SPM functionality such as on-demand sales compensation management is finally affordable to companies of any size.

In short, SaaS plus SPM delivers a double whammy in the face of recession: SaaS economic value combined with SPM strategic business value. It just makes good business sense, whether you are managing in a recession or in a vibrant, high-growth economy.

If you’re interested in discussing this topic further, please let me know.

Cheers,
Chris

Christopher W. Cabrera
Founder & CEO
Xactly Corporation
35 S. Market Street
San Jose, CA 95113

Recession is Brewing... Impact on Sales Performance Efforts: Part I of III of my Interview with Callidus

2008-03-07T17:31:00.009-05:00

I had a very insightful conversation yesterday with Paul Turner and Jock Breitwieser from Callidus Software. We talked about several topics and I will share their insight in my next few posts.

Paul Turner is Director of Product Marketing at Callidus Software. He has over 13 years experience in enterprise software focusing on sales and business performance management, business intelligence and incentive compensation. Prior to joining Callidus, Paul was Director of Product Marketing at Hyperion Solutions. Paul holds a BSc in Computer Science from Lancaster University, England.

Jock Breitwieser is the Director Public and Analyst Relations at Callidus Software. He has extensive experience in public relations with a strong international background and expertise. Before joining Callidus, Jock was an account manager at The Hoffman Agency.

I recently read several articles talking about the impact of a slow-down in economy on sales performance efforts, both from a SaaS and CRM/On-premise perspective. I used this occasion to bombard my two guests with questions on this topic and several good arguments came out of the conversation.

General Thoughts on the ICM Market:

The selling point of ICM solutions is to achieve a good return on investment.
Measuring the actual return on investment can be hard to do, but looking at the potential cost savings alone can justify a sales performance system.
With a proven Return on Investment, ICM solutions can be justified regardless of market conditions.
A slower market can actually contribute to an expansion of the Sales Performance Management market.

Market outlook for Callidus SaaS Offerings:

While Forrester predicted a slow down in the SaaS market, Callidus has seen phenomenal growth in this area - In Q4 of 2007, Callidus On-Demand annual contract value (ACV) increased 150% to $.6 million.
Callidus has also seen a much greater adoption of their on-demand solutions by enterprises of all sizes including Incentra and Lenovo.
The integration of key Callidus components with SalesForce.com is also an aspect which encourages small to medium-sized businesses to adopt Callidus as their Sales Performance Management system.

Market Outlook for Callidus On-Premise Offerings

Callidus continues signing on new clients and growing in this area.
In 2007, overall revenues were up 35% vs. 2006 ($100 million versus $76 million).
License revenues were also up by 3% to 28.6 million.
With the acquisition of Compensation Technolgies, Callidus will generate additional consulting revenues from Callidus implementations and adds new offerings for strategic services.

Additional Thoughts

Callidus recently announced more growth in the European market. They have increased their headcount to 50 employees in the Europe, Middle East and Africa (EMEA) region.
Callidus has also opened a new EMEA headquarters in London.
Getting more clients in Europe offsets the lower US dollar.
One notable new client is npower, a leading UK energy company.

Overall, Paul and Jock were very upbeat about what is coming up in 2008, both from a Callidus perspective and for the Sales Performance industry in general.

[Part II of III of my Interview with Callidus]
[Part III of III of my Interview with Callidus]

BSG Alliance Acquires Iconixx Corporation

2008-03-05T19:00:00.003-05:00

We have seen extensive market convergence over the past 2 years... Oracle purchased Siebel, Hyperion and more recently BEA. IBM also purchased many companies including Cognos.

Less than 2 months ago, Callidus Software acquired Compensation Technologies, an incentive compensation consulting company.

Today it’s BSG Alliance who purchased Iconixx. Iconixx was a major competitor of Compensation Technologies and offered consulting services in the areas of sales compensation, variable compensation, and performance management.

BSG Alliance is an Austin Startup who have also purchased several other companies in 2007 and 2008 after securing $20 million in funding.
• Industrial Science, a business simulation frameworks and technology company
• The Concours Group, a strategic consulting company
• Kalivo, a collaboration software company
• New Paradigm (Don Tapscott’s Company), a business innovation group

Potty training and sales compensation

2008-03-04T23:00:00.001-05:00

Potty training and sales compensation is a blog post in which Matt Asay, father of 3, describes how he used chocolate as an incentive to convince Lily to visit the restroom.

In his post, Matt raises an interesting topic: When does compensating multiple people on the same deal make sense? According to him it makes sense especially early in a company's life when cooperation is more important that competition. He also mentions that rewarding team effort is more important than rewarding a short-term hit due to excess commission.

I posted articles on the topic of group competition and group rewards here and here. Like I said, it's a very interesting topic for which there is no clear-cut answer... it really depends on individual situations. It is true that it would seem logical to try to tie an incentive to the person 'most responsible' for the sale, but this usually does not reflect reality where multiple people, teams, channel sales people, direct sales people, etc, all collaborate [in harmony].

Live Online Expert Panel Discussion Coming Up

2008-02-29T20:44:00.006-05:00

Synygy is hosting a free Webcast "Ensuring Alignment of Strategy and Sales Compensation Plans: Assessing the Impact of Strategic Misalignment" on March 5th at 2:00pm EST. I will delay my lunch break by 2 hours to see what I can learn about Wyeth and U.S. Cellular's experiences and report back.

During this live, interactive panel discussion you will gain insight into:
how Wyeth and U.S. Cellular assessed the impact of strategic misalignment
key symptoms indicating lack of alignment of sales compensation plans
how to assess the impact of misalignment of sales compensation plans steps
to ensure alignment of plans when rolling out new plans or plan changes
best practices for ensuring alignment of sales compensation plans and
strategy
Panelists:
Mark Bernstein, Senior Director-Sales Planning,Wyeth Pharmaceuticals
Lisa Ziembiec, Manager-Sales Incentive Compensation and Effectiveness, U.S. Cellular
Jeff Evernham, Vice President, Client Services, Synygy

By registering you will be able to download two pretty good papers: "5 Tips for Ensuring Strategic Alignment of Sales Compensation Plans", and "Diagnosing Your Sales Compensation MAnagement Problems".

I found the later article a particularly good read. Rather than focusing on strategic alignment and best practices, it takes the other angle of the problems in sales compensation management. The article goes on describing 7 categories of problems resulting in ineffective design, implementation and management of sales compensation plans and their root causes.

No Version Control? Now what?!

2008-02-26T21:09:00.010-05:00

Some of the most important aspects of any software implementation are comments/definitions, documentation, and version control. I'm sure we say those are so important because they are often overlooked - they are boring, they are an overhead, they will save your life when you need them.

Most Commercial, off the shelf (COTS) incentive management and ETL solutions will have some form of version control built-in. Sometimes this is a functionality which must be enabled, sometimes "version control" is done via effective dating, and sometimes it can only be performed by a support team. Most applications will also let you export your project files to XML or some other type of file which you can then version control using your corporate application (configuration management).

Why is configuration management so important?
Without going into all the details, configuration management will let you deploy software in a consistent way across your environments (a large implementation will require several distinct environments for different phases of testing and for production). It is important to be able to control your code because it will save you to wonder why the application is working in a test environment and not in production.

Here is something you can do if you need to compare files:
In a previous post I discussed how Textpad could be used to perform vertical selections. This tool will also let you compare two text files, whether they are some SQL DDL files or some project XML files. It is helpful to figure out the difference between two files if they were not versioned.

For this example I created two files called Test1.txt and Test2.txt. In Test2.txt I edited the ID 00005 to 00004 and added row 00077

Test1.txt

Test2.txt

Click on Tools->Compare Files or Press CTRL+F9.

A box asking you for the location of the two files will appear:

You can browse for the location of the first file and of the second file before clicking on “OK”. A result report will be displayed, outlining the differences between each of the files. The following report shows how the file test1.txt has ID 00005 which is not in Test2.txt, and file Test2.txt has IDs 00004 and 00077 which are not in Test1.txt.

I hope this helps, and now you should really consider using a configuration management system.

The Most Important Aspect of a Compensation Plan

2008-02-21T00:07:00.004-05:00

When I got staffed on my first incentive compensation management system integration project, I knew virtually nothing about that industry. As any good consultant would do, I started to read as much as I could on the topic. One thing I realized is that there are so many books out there talking about how to design plans, formulas, frameworks, etc... But most of these books spend so little time actually discussing how the plan will look like.

That's probably one of the main reason I come across so many plans that are not completely defined. When I say not "completely define", I mean that some of its elements are left to interpretation... As a result, the implementers go with that plan, ask countless questions wasting everybody's time during long meetings, trying to find out who the subject matter expert with a certain piece of knowledge is, only to find out that he or she is on vacation, etc. Alternatively, the consultants could "think" they understand the plan, implement it and later during testing, realize that the results are not those expected by the client... oops! And that often happens around the go-live date and, what-do-you-know, the deadlines are pushed back, the project goes over budget, people are unhappy.

Fortunately, there is one small book called Compensating the Sales Force - A Practical Guide to Designing Winning Sales Compensation Plans by David Cichelli. There is a lot of good info in this book - I will talk about some of it in the future - but in my opinion the best part is only found at the end in Appendix A: Illustrative Sales Compensation Plan. If only all comp plans could look like this!

But that's not all... The best part of Appendix A is its last few pages; Sales Compensation Plan and Calculation Examples. And THAT's what I call the most important aspect of a compensation plan (from an implementer's perspective).

Having a few DETAILED examples in the plan will ensure the implementers knows exactly what the plan does. It will remove any ambiguities, it will save time and be a quick "at a glance" reference. It will also help out in the planning of unit and system tests to cover all scenarios.

A good example will include all the assumptions, sample data/rates/periods/etc and result. If a plan has any exceptions or special calculations, examples for those should be included as well.

That's it! Please include examples for us :-)

Harnessing the Power of Incentive Compensation Management

2008-02-19T20:52:00.005-05:00

Before joining my current company, I was a consultant at Accenture. Accenture is a large "global manaegment consulting, technology services and outsourcing company". I was in their Business Intelligence practice, where I first got involved with ICM projects.

I recently came across a 3 page article about Accenture's view and approach to incentive compensation management, and I thought it might be interesting to others.

The paper first gives a quick run-down of what effective incentive compensation can do. The main points are:

• Give companies the fl exibility to respond to rapidly changing
market demands and to quickly implement new sales
strategies and plans.
• Enhance the productivity of the sales force productivity
by increasing their confi dence in the incentive program.
• Support the most effective selling behaviors with leadingedge
technologies and tools.

They claim that their research suggests that a $1 billion business unit could boost their pre-tax profit by $13 million by using better motivational tools and incentives to increase performance of its sales people. That sounds impressive, but that's really only a 1.3% return - not bad, but very conservative compared to other estimates.

What I like most about the article is its framework to implementing an incentive compensation plan. However, this "framework" is not discussed at all, it is just a picture used as a space filler. The illustrated steps are:

Sales Force Design and Objectives Setting
Compensation Plan Design
Compensation Process Re-engineering
Compensation Organization Model Design
Compensation Plan and Hierarchies Setup
Compensation System Design, Build and Run
Enterprise Data and Systems Integration
Business Change Management

I'm not sure I understand how Data and Systems Integration can come before the "Run" phase, but it's a pretty graphic and it gives a good holistic view of building an incentive management system.

ICM World This Week

2008-02-19T20:41:00.005-05:00

Centive
Centive expanded their executive team with two new executives; Lisa Mastrangelo will be Centive's CFO and Carol Peo will be VP of engineering.

Xactly
Xactly were named top finalist in the 2008 Codie Awards; an award by the Software and Information Industry Association (SIIA) to recognize "outstanding achievement and vision in the software, digital information and education-technology industries".

It's Varicent's Turn to Report Record Revenues for 2007

2008-02-12T21:01:00.001-05:00

After finding several articles on how hot the sales performance management industry was in 2007, along with several press releases about how well some of the major SPM vendors were doing, today it is now Varicent's turn to report triple digit growth in 2007.

2007 has been a record year for Varicent; record-breaking revenues, record growth, record number of new clients...

At the risk of repeating what I said before, 2007 has been a very good year for sales performance management and 2008 looks very promising!

My Compensation Framework

2008-02-12T00:58:00.000-05:00

I received a few emails with recommendations to improve my blog - I have tried to implement them but however, I must say I ignored one of the most relevent comment I received.

It was recommended to me to try to streamline and "bucketize" my posts. There is so much to talk about, I must admit it could be hard to see the common thread between my posts. Today I finally sat down to think about what exactly I wanted talk in my blog, and came up with this high-level plan:

As you can see, the "niche" I found for this blog is for the following topics: Compensation fundamentals and theory, benefits of incentives and variable compensation, and how incentives can be correlated to performance and motivation. I also want to cover industry news and discuss success stories, write about different hurdles with respect to choosing a solution and implementing it. Finally I will write about some personal experiences and opinions, research done on these topics as well as anything else I find relevant.

I guess the target audience is probably whoever is reading this, most I think this will be most relevant to HR, Sales and Compensation pros or anyone with an interest in variable compensation. IT Pros and other employees may also find this useful...

Let me know what you think. When I get the chance I will reorganize my labels as per those categories I described.

More on Incentive Unexpected Behaviors and Group Competition

2008-02-09T14:10:00.001-05:00

Paul Hebert posted a great follow up post on his Incentive Intelligence blog regarding group competition. I contributed my own personal story:

Several years ago I was a programmer for a large telecom company. The project manager felt like the development team were not producing enough results and the project faced typical issues - deadlines were missed, the project was lagging, it was over budget... To fix the 'problem', a competition was organized. The 'lines of code', a typical software metric, were used to determine who was the 'best' programmer. This lead to big quality problems as employees were focusing on quantity instead of quality.

Realizing this, the manager decided to tweak the contest rules. The winner would have the best (lines of code) / defect ratio. This helped a bit with the quality, but employees were still focusing on writing code, disregarding some of their other tasks like documentation, mentoring junior employees, trying to fix existing defects, etc. Everyone was also trying to avoid any 'difficult code' to reduce the chances of creating defects.

The competition ended up being cancelled...

To this story, Paul answered with a very insightful comment:

... The solution for your project manager should have started with "root causes" not incentives. If he/she had gone through an analysis to find out "why" the problem existed the program could have been designed around that issue. Too often we measure results - not the steps to the results - which is where the issue lies.

Group Competition Incentive Pros and Cons

2008-02-07T15:13:00.002-05:00

A recent post here highlighted some of the pros and cons of a group competition incentive program. The article pointed to an interesting study which tries to demonstrate how relative rewards play a role in economic motivation.

I responded to the post explaining my reasons for disliking internal competition as a mean to incent employees, including some of the major pitfalls to workforce segmentation for incentive purposes. I also included a reference to a good organizational behavior article from Stanford University, also describing some the risks associated to internal competition.

The pros and cons to internal competition listed by Paul Hebert in his blog were the following:

Pros

Fixed (closed budget) - can't go over budget - the awards are fixed
Depending on industry and company culture highlighting standings reports on who's in which place in each group can create a real up-tick in performance
Cons

Depending on performance distribution it could be difficult or impossible to create fair competitive groups
There will be losers - people could double their performance but not earn an award since the outcome is a stack ranking of each person's performance.

To me, the biggest "Con" is that such contests go against the concept of developing the employee's ability to work cooperatively to reach corporate goals. As a matter of fact, it encourages a culture where employees try to outwit each other and loose sight of who the competition really is.

If the goal is to offer an incentive program on a fixed budget, I suggested some alternatives including:

1) Reward all (or a large group) of employees equally, and/or

2) Use the money to purchase some desirable widgets for everyone, great door prizes for quarterly meetings, and to sponsor milestone team events.

Paul replied to my comment saying that there was still a place for internal competition as a short-term adjunct to an entire reward and recognition strategy. I somewhat agree with that statement, but I think that the potential negative outweighs the positive in most situations.

Fix your Compensation Data in One Click

2008-02-06T21:57:00.001-05:00

No matter how good and sophisticated an Incentive Compensation Management application we implement, it looks like we always fall back on Excel for something, from data verification and validation to batch order staging.

A few weeks ago, I wrote a quick article on how to use TextPad to make vertical selections. From the comments I received, transforming raw data seems to be a major preoccupation shared by many. Several years ago I created an Excel Macro (a set of instructions to perform some task in Excel) to traverse a speadsheet, validate its data, and transform it into a certain format. Recently I had to dig it up to clean up some mainframe files. Today I modified it and applied it to the Xactly Order Upload Template to demonstrate how macros can be used.

First, download my order upload staging spreadsheet. When you open it, you will see something like the following image plus several columns. The data is intentionally incorrect.

After executing my Macro, the spreadsheet will look like this:

The macro validates one row at the time. When there are anomalies, the cell is highlighted in red. The content of some "incorrect" cells are originally in bold for you to look more closely at what will happen. You will also notice that some data will be corrected.

Here are the actions performed by the macro for each row:

First, position the active cell to the first row and check if the mandatory Order Code is present. If this is the case, if it is in the proper format (2 upper-case letters followed by 3 digits in this example).
Check if the Item Code is an alphanumerical value (only digits and letters allowed)
Verify that the "Quantity" field is not null.
Check to see if the "Amount" field only contains an amount (digits, "-" and ".") - I could write something more complex to make sure I don't get records like: "22-..2".
Verify that the Unit type is allowed. I hardcoded a check for "USD".
Check that the incentive date is actually in an Excel date format. Remember that it needs to be setup as mm/dd/yyyy for the Xactly upload.
Verify that the split amount sums up to 100%. I also make sure that if a 2nd split amount is entered, that the associated second employee ID is entered.
Lookup the "Amounts" column again, verify if there are numbers with the minus sign at the end of the number (2.0-), and transform it into the proper format (-2.0). I often get this problem when importing data from raw text files.
Finally, verify that the incentive date is unique for every row.

All these steps will only take a few seconds to execute for several hundred rows.

How to Run my Macro

Download this spreadsheet to your computer
Click on Tools->Macros->Macro (Alt-F8 to be quicker)
Select "editFile" (that's the name of my macro) and click on "Run"
Tada! Your errors should now be highlighted in red.
Correct the errors, remove the red-fill color and run the macro again if you want to verify your corrections.

How to Modify the Macro
If you are thinking that this spreadsheet is useless for your situation, you are right. The odds for your Order Codes to be exactly in the format xx999 are pretty slim. That's why I commented the code and made it as clear as possible.

To view the Macro, you only need to click on Tools->Macros->Visual Basic Editor. You will be able to see what code does what by reading my comments. You should be able to easily modify it, even without deep technical skills, and try out your changes. You just need to edit the code, save it, click on your spreadsheet, and run the new macro (Alt-F8). If you break it, you can re-download it.

In a few cases I use regular expressions (regex), which can be a bit complicated and tricky. Fortunatly they are popular and you may be able to find one online that does exactly what you want. If you are curious and want to learn more about regex, this website is a good place to get started.

I hope this example will be useful, and I will be glad to answer your specific questions if you have any.

SAS70 Audit for On-Demand Sales Performance Applications

2008-02-04T20:54:00.000-05:00

There are tons of resources about SAS70 and Sarbanes-Oxley on the web.

In a nutshell, SAS 70 is a Statement on Auditing Standards (SAS) for service organizations, developed by the American Institute of Certified Public Accountants (AICPA). It demonstrates that a firm has proper controls and processes to protect the data belonging to their customers (very important!). The SAS 70 report is issued by an independent auditing firm and includes the auditor’s opinion on the service organization’s controls. A SAS 70 report is particularly important since it is the preferred method of providing assurance for service organization clients subject to Sarbanes-Oxley Section 404.

These days, service organizations enjoy talking about their Type I and Type II SAS 70 reports when it comes to marketing their applications. A type I report includes the auditor’s opinion regarding to which extent the organization represents its controls, and their description. A type II report includes all the info in the type I report, plus the auditor's opinion on how effective the controls are during a defined period.

This being said, according to the SAS 70 website and other online resources, “SAS 70 does not specify a pre-determined set of control objectives or control activities that service organizations must achieve”. This means that customers need to review the disclosed controls and ensure they are sufficient to meet their objectives and their own auditor’s requirements. It also means that a SAS 70 report does not guarantee data security.

More detailed information about SAS70 can be found on the SAS 70 website, on Wikipedia and from Deloitte.

How do Sales Performance Management Systems Stack Up?
As I mentioned above, since SAS 70 does not prescribe which controls should be used, it is not possible to compare SPM / EIM vendors. However I tried to find as much information as possible with respect to SAS 70 certification for every vendor.

Callidus

SAS 70 Type:	“Meets SAS-70 compliance”
Controls:	N/A
Sources:	Link 1
Comments:

Centive

SAS 70 Type:	Type II
Controls:	N/A
Sources:	Link 1
Comments:	Completed January 2008

EIM Software

SAS 70 Type:	“Guaranteed SAS-70 compliance”
Controls:	N/A
Sources:	Link 1
Comments:

SalesForce.com

SAS 70 Type:	Type II
Controls:	N/A
Sources:	Link 1
Comments:	The article dates from 2004

Synygy

SAS 70 Type:	“Completed SAS Audit”
Controls:	N/A
Sources:	Link 1
Comments:

Varicent

SAS 70 Type:	N/A
Controls:	N/A
Sources:	Link 1
Comments:	SAS70 Type II data center

Xactly

SAS 70 Type:	Type I
Controls:	Full redundancy throughout the production infrastructure, regular security patch updates, on-going evaluation of potential security threats
Sources:	Link 1 Link 2
Comments:	SAS70 Type II data center

Tagged I was…

2008-01-30T23:41:00.001-05:00

I have been tagged by Ann Bares, who has a wonderful compensation related blog. Compensation Force is one of the first 'business related' blog I started to read regularly.

The rules:
• Link to the person who tagged you.
• Post the rules on your blog.
• Share six non-important things/habits/quirks about yourself.
• Tag at least three people at the end of your post and link to their blogs.
• Let each person know they have been tagged by leaving a comment on their blog.

So here are my 6 truths and no lie:
• My native language is French. I’m also fluent in English and Spanish. I’ve been studying Chinese/Mandarin on and off for the past 3 years but the wall is higher than I expected!
• I have a second degree black belt in karate. I have never had to use this skill in a business meeting… yet.
• I love to travel. Last year, while canoe camping in the middle of the jungle in Peru, I was attacked by two wild boars. In a prior jungle trip it’s an alligator that almost got me for breakfast.
• I play piano when I get to spend some time at home.
• My favorite book is the Count of Monte Cristo by Alexandre Dumas. I have read most of his books and enjoyed each of them, but this is my favorite.
• As my client figured out today, I can easily be bribed with donuts, chocolate and M&Ms…

Here are some blogs I read regularly, in no particular order:

Think IT Services by Jeff Kaplan
Passion, People and Principles by David Maister
The HR Capitali$t by Kris Dunn
Incentive Intelligence by Paul Hebert
The Happy Burro Blog by Joe Raasch

And of course, don't forget to visit Compensation Force.

Pay-for-Performance Pays off for Performance Management Software Companies

2008-01-30T21:20:00.001-05:00

It seems to be a good year for Enterprise Compensation Management application vendors, particularly in the on-demand/software-as-a-service (SaaS) fields. In my two previous posts I created links to press releases from Xactly, Synygy and Centive.

Today, it’s Callidus who reported their fourth-quarter results, exceeding Wall Street’s expectation. Their total fourth quarter revenues were up 4%, partly due to a 850% increase of on-demand bookings Annual Contract Value (ACV).

So far I have only talked about some of the major vendors previously identified in the 2007 Gartner Market Scope research. With the growth in the sector, it is no surprise that many software firms will try to enter this market.

A quick surfing on Google revealed several other players in this field. I have heard about a few of them and I’m sure there are many more, but here is a quick list in alphabetical order:

Authoria
EIM Software
GloCent
Halogen Software
LaserBeam Software
Salesforce.com
Strategix Performance
Success Factors
Vue Software

If you have experience with any of these offerings or any other ICM applications, please share your experience.

Xactly and Synygy achieve outstanding results in 2007

2008-01-29T00:30:00.000-05:00

Xactly Hits Triple-Digit Revenue Growth in 2007

In the 12 months ended December 31, 2007, Xactly achieved a triple-digit year-over-year increase in revenues. The company also doubled its customer base -- and in doing so, has tripled its subscriber base. During the same period, the company achieved an enviable 94.4 percent customer-renewal rate, surpassing the industry average of 90 percent and underscoring Xactly's ability to deliver sustained customer value. And in March, Xactly completed its third round of financing, raising an additional $15 million to fund further expansion.

Synygy Celebrates 17th Anniversary and Announces Strongest Financial Position in the Company's History

Synygy Inc., an authority on sales performance management, celebrated its Seventeeth year in business and announced that the company is in the strongest financial position in its history. [...] This marked the third anniversary of Synygy's strategy to shift its business model to focus on providing sales compensation and sales performance management solutions to companies with at least 1000 salespeople, brokers, or agents (rather than smaller-sized companies) for a fixed subscription fee (rather than an up-front software license fee).

Centive Expects to see Profit this Year

2008-01-24T23:16:00.000-05:00

There was an article in the Boston Globe today regarding how Centive, a provider of software that automates the payment of sales commissions, was expecting to be profitable this year. Centive managed to turn around by selling their old product in 2006 and building a web-based application instead.

Because of major product changes, the 11-year-old company is only now seeing the financial benefits of its restructuring, said chief executive Michael L. Torto. "We grew by 100 percent last year," he said.

On to Optimizing Business Rules, Territories/Regions, Filters, Conditions, etc.

2008-01-23T23:10:00.001-05:00

So you implemented this brand new ICM system, but the application takes forever to run the batch jobs. While you are waiting for the compensation results, you are pulling your hair out, trying to think about a way to make the system run more quickly.

There are many advanced tricks to optimize sales compensation system performance, but here is a very quick and easy way to (sometimes) make the transaction processing run more quickly. It’s far from being a ground-breaking method, but it is often overlooked.

Business logic uses Boolean logic; it consists of conditions, separated by “AND” and “OR”, with a few sprinkled brackets. The order in which the elements are being evaluated is critical for the batch performance. The application will usually “read’ the equation from left to right.

For example, if we check that CONDITION A OR CONDITION B are true, the application will try to find out if CONDITION A is true, and if it can’t find what it’s looking for, it will move on to see if CONDITION B is true.

Optimizing OR
This means that when using an OR expression, it is preferable to try to put the condition the most likely to be true first. In this example, if CONDITION A is true, the application will not even need to check if CONDITION B is true.

Optimizing AND
For an AND expression, it works the other way around. Since both conditions need to be true, it is much preferable to put the condition the most likely to be false first.

Of course, to be able to achieve good results with this method, it is important to know if each condition is more likely to be true or false… it is also important for this likelihood to be as disproportionate as possible.

And putting Or and And Together:
Here is a slightly more complex example just to put in practice what I’m describing. If we are checking that CONDITION A is true, or that CONDITION B AND CONDITION C are true.
A OR (B AND C)

I would write the logic in this way if A was very likely to be true. Otherwise I would write the rule as (B AND C) OR A. I would further tweak this formula if I knew the likelihood of B and C to be false.

This is a bit confusing at first, but it will make complete sense with some practice.

Performance Measurement and Incentives

2008-01-22T23:40:00.001-05:00

Sales performance incentives are relatively straightforward to figure out. At the simplest level, sales incentives are calculated by determining sales targets, measuring sales performance, and rewarding employee for their performance against the objectives.

However, performance-based incentives are harder to figure out in areas not involving sales. The key ingredient for incentives to work is to define MEASURABLE objectives.

There are other areas beside sales, where it is also possible to define quantifiable metrics. For example, for an employee working on an assembly line , we could measure the number of units manufactured in a certain period of time and the defect rate. We could measure the number of items shipped on time for a postal worker. We could also measure the response time and the number of complaints per call for a customer service associate.

The Harvard Business School created some of the best performance measurement articles and videos [UPDATED Apr 22, 08] I have found on the Internet. They focus more on enterprise performance measurement versus individual performance indicator, but some of the topics could offer good ideas for measurable goals.

Before implementing an incentive program, it is important to understand how affected employees feel about the planned metrics. In some cases, bad metrics could result in effects opposite to what was intended and lower moral!

In my next posts I will discuss some of my personal experiences with incentive compensation.

Incentive System Implementation Success Story

2008-01-21T22:01:00.001-05:00

I was trying to find out more quantifiable information regarding the Return on Investment achieved by Incentive Compensation Management systems and finally found an interesting story: Telus – How to achieve ROI.

The article is already a bit over a year old, but it describes how Telus, a major Canadian telecom company, achieved positive results with a new ICM solution. The benefits stated in the article include:

reduced incentive overpayments by 60 percent;
recovered 52,500 days of selling time;
cut incentive management administration costs by $560,000 annually;
reduced compensation error rates 53.6 percent; and
cut average dispute resolution time from 40 to eight hours.

Documentation for your new Sales Performance System Integration

2008-01-17T19:58:00.001-05:00

You have probably heard before how important it is to plan a software solution before beginning its implementation. If nobody told you, here it is: it is EXTREMELY important to plan before you implement. That’s a rule applying to every software development and integration. What do I mean by plan exactly; well one major facet of planning that is often overlooked is the documentation of the project. The biggest challenges with documentation is that the documents often get out of date, people often see documentation is an overhead and a waste of time and money, and project managers may lack experience in implementing applications and don’t know which documents are required.

I am including here a list of some of the documents you should be asking for if they are relevant to your project:

Business Requirements
This document defines all the requirements of the application; everything that the application needs to be able to perform. This is important because acceptance testing is based on how the application performs in relation to its requirements.

Technical Requirements
This document defines technical requirements for the application such as security, response time, etc.

External (functional) Design documents
These documents are probably the most important documents of all. They describe how the application works, what it does, the logic involved, flow charts, and all elements (rules, formulas, lookup tables, rate tables, hierarchies, etc) used to implement the compensation plan.

Internal (technical) Design documents
These documents elaborate on the functional design documents and describe technically how the application will work. Programmers use the technical designs to develop the application. The level of detail should be such that the programmer’s role is only to code what is specified in the document, leaving little for the imagination (i.e. variable names, database objects, etc should all be specified).

Change Request document
It is important to obtain all change requests since the initial requirements in order to understand the current state of the application.

Quality Assurance Plan
This document describes in detail how the application is being tested. It illustrates how different test phases will be performed. Some of these phases include unit testing, system testing, integration testing, and regression testing.

Test documents
Test documents consist of detailed test plans for each test phase described in the quality assurance plan. There should be detailed steps on how to perform every scenario being tested. Test data used for testing should also be provided and documented

Programming/Customization guidelines and standards
A set of guidelines, rules, standards and best practices used when developing the application should be provided.

Data models of databases
The data model shows the relationship between all database tables and attributes. In the case of the implementation of a packaged solution, all custom tables and custom fields should be documented.

Data Dictionary
The data dictionary should include a precise definition of data elements, user names, roles and privileges, Schema objects, Integrity constraints, stored procedures and triggers, and general database structure. In my opinion this is one of the most important document in a project with a heavy data integration component. The definition of the data elements should explain what the element is, where it comes from, how it is generated, what is its general structure and type, list exceptions, etc.

Deployment Procedures
The deployment procedures document describes the method for deploying the application. In the case of a packaged solution, it should list the correct files and versions to deploy, as well as any dependencies or order requirements.

Visa’s approach to Incentive Compensation

2008-01-16T21:10:00.001-05:00

In previous posts I have mostly discussed financial incentives to sales performance. Other firms use other non-cash incentives. As the title of this post suggests, this story is about Visa’s approach to Incentive Compensation.

Rather than talking about how it uses incentives to increase its employee’s performance, the article describes the methods used by Visa to accelerate the adoption of rules for credit card safety, to encourage merchants to stop storing credit card data.

Visa’s approach is to financially reward compliant merchants, while at the same time fining non-compliant merchants. They also offer better rates to compliant service providers.

The Visa article can be found here. MasterCard has its own programs, as do other credit card companies.

Return on Investment (ROI) of an Incentive Compensation Management System

2008-01-15T19:25:00.002-05:00

It is no secret that a Compensation Management System is a significant investment. In the case of a SaaS solution, a fee per payee will become an on-going operating cost. In the case of an on-premise solution, license purchase, hardware and system integration fees will consist of the bulk of the initial cost, followed by related operating costs to keep the system running.

I collected a fact from a Gartner research for which I have lost the reference: “On average, companies that don't use information technology to track payments from customers overpay their employees by 3 to 8 percent of their bonuses and commissions.”

One of the difficulties encountered when calculating commissions in some manual form or with an archaic system is that it is often challenging to process returns. When returning items, the commission for these returns should be taken back from the sales person. The task is even more complex when dealing with partial returns, where several items where purchased and only a fraction is returned; in such a case, only a part of the commission should be removed from the original sales person. A good Sales Performance Management application should be able to perform this type of calculation without too many difficulties.

The actual return on investment depends on the implementation cost, the quality of the existing system, time savings with the new system, the amount of commissions paid incorrectly (and above what they should be) without an ICM solution, as well as other factors.

From what I have seen, the Return on Investment promise is real and not just a marketing trick... But remember that when considering a sales performance solution, the ROI should also take into acount the sales performance improvements due to more accurate and timely incentives.

Here are a few articles related to Return on Investment in the ICM space:
ROI Study Report: Sales Performance Management Solutions
Building a Business Case for EIM
Gartner Survey

Callidus Software Acquires Compensation Technologies

2008-01-14T18:23:00.000-05:00

Callidus Software just acquired Compensation Technologies, a leading provider of services for planning, implementing and supporting incentive compensation processes and tools. This acquisition adds 9,000 payees to Callidus SaaS business; the cumulative number of payees is now 44,000, up from 4,900 a year ago.

Editing Fixed Field Length Compensation Text Files, Reports and Mainframe Files

2008-01-10T21:58:00.002-05:00

Today my client asked me if I could take the content of an Excel spreadsheet, and export it to a text file in a very specific format. It needed to follow this format to be imported and interpreted properly by other applications. I said the task would be done quickly, before realizing that the spreadsheet had about 10,000 rows, containing complex sales transaction and compensation information which would need to be edited significantly.

When dealing with fixed field length formatted text files, text reports and mainframe files, it seems common that we need to edit something. For example it could be an ID which changed format from 8 to 9 digits and requiring a leading '0'. It could also be fields need to be moved around in the file.

To avoid some headaches and save a lot of time, do yourself a favor and download TextPad. TextPad is a simple (FREE) text editor for Windows which allows you to perform simple but powerful tasks.

TextPad offers th TextPad allows you to do vertical selections.

The image below illustrates what I mean by vertical selection.

By holding down the "Alt" key, and performing a "Click and Drag" just like when selecting text from left to right, you can select text from top to bottom.

As I said, I could select the entire Last Name "column" in this fashion, cut it, and paste it before the First Name "column". I could also select the first character of the first column and delete them entirely. Finally, if I needed the ID here to be 8 digits intead of 5, I could add manually the missing zeros, copy a few rows of those zeros by using the vertical section, and paste them before the location in which you want them to appear.

Again just to illustrate this these would be the steps to insert characters before a column:

Insert manually the zeros for a few rows

Select the zeros using the vertical selection method

Click on copy or press "ctrl-c"
Place the cursor where the new "column" will appear (in this case just before ID 0070)
Click on paste or press "ctrl-v"

As you can see, the 2 following rows following 0000017 and 0000023 get the coped "000" appended to them.

That's all there is to this trick, but hopefully it can, as it did for me, save you countless hours of editing large compensation files row-by-row.

Centive Compel Funny Ice Breaker

2008-01-10T21:45:00.002-05:00

One of my reader sent me a link to a funny video clip created to market Centive Compel on YouTube. It's a song about a "sales guy" and a "finance guy" having... well some conflicts. It could be a good icebreaker before a dry ICM meeting. Click here to view this Compensation Management clip.

FeedBurner and Blog E-mail Delivery

2008-01-10T21:20:00.000-05:00

In case you haven't notice, I added FeedBurner to this blog; FeedBurner will enable you to view my incentive compensation management blog as an RSS feed (for example my blog entries can easily be delivered to your Google customized home page).

Feedburner will also have the possibility to subscribe to my blog to receive each post in your e-mail automatically. Hopefully this will make it easier to read me, without having to constantly check the blog for updates.

To get started, click on the "Subscribe in a reader" or enter your e-mail in the text box and click on "Subscribe". These links are located on the right hand side of the blog, below the "View my profile on LinkedIn" button, and above the "Links" section.

An Incentive Compensation Management Solution won’t Solve all your Problems…

2008-01-09T01:00:00.002-05:00

An ICM Solution won’t solve all your Problems… This may sound like a strange statement coming from a compensation consultant. The truth is that many compensation management application vendors often pitch their product as being a solution for all compensation related issues; while it is true that a solid ICM solution will provide the right tools, these tools alone are not enough to warrant success.

The right people will be required to customize, implement and manage a compensation solution. Even in the case of an on-demand solutions implemented by a vendor, the right people will be required to communicate the requirements and to manage the system. If incentive compensation is new for a company, someone will need to be able to answer questions from payees (employees receiving the incentives). If the ICM solution replaces a home grown system, a spreadsheet or some other solution, there will be a learning curve for everyone involved; the ICM team will need to learn new tools, and payees will need to understand new reports and the impact of incentive compensation on their total compensation package.

Also, clients often fail to understand that their initial problems are usually not only caused by a bad solution; the root cause of the issue is usually bad processes. Those processes are often poorly documented, and the associated knowledge and expertise lost. To be successful with a new compensation system, it is important to understand existing processes, understand how the ICM solution will impact those processes, and more importantly, be able to adapt and accept process changes.

The Surge of On-Demand (SaaS) Incentive Applications

2008-01-07T22:27:00.000-05:00

In 2000, I started to hear predictions that Software as a Service (SaaS) would eventually replace conventional 'enterprise' applications. The idea was slow to catch on, but we finally see more and more on-demand applications emerging.

Today, the Silicon Valley Business Journal had a news release regarding Callidus' Financial performance.

Without discussing the actual company performance and the resulting effect on its stocks, what is interesting to note is that Callidus did notice more on-demand.. demand, and less demand for its Enterprise applications.

"We are announcing preliminary financial results today which reflect a record level of on-demand sales activity but a disappointing level of perpetual license revenues," said CEO Leslie Stretch. "While there was a good level of overall activity in the business, it was skewed towards on-demand as perpetual license sales were lower than expected."

I haven't made any predictions for 2008, but if I had to, I would have to finally agree with everyone saying that the age of SaaS has finally arrived.

Choosing an Implementation Partner

2008-01-07T21:53:00.001-05:00

If it was determined that the in-house implementation of your incentive management system was not ideal, the choice of your implementation partner will make the difference between success and failure. A solid team will insure a successful delivery of the system on time and on budget; a poor team will cause the project to run beyond schedule and over-budget. An experienced implementation partner will also be able to assist in making the optimal solution decision.

There are 3 different situations that can be considered:

Hiring a large IT/Management consulting company such as Accenture or IBM.
Hiring a smaller/boutique consulting firm specializing in Sales Performance Management and Incentive Compensation Management
Hiring individual contractors

Each of these approaches also offers several advantages and disadvantages.

Large Consulting Company Pros:
Large consulting companies...

are likely to have implemented the chosen solution several times
will be able to leverage deliverables from several past clients
will have learned considerably from past successes (and failures)
will usually be able to leverage an established and proven method,ology
will be able to pull in the appropriate resources at the different stages in the project, and increase or decrease the head count as required

Large Consulting Company Cons:
Large consulting companies...

have many consultants with limited experience; with a typical fast career track, consultants are promoted into management roles without having mastered a technology.
The ‘doers’ on the team are often fresh out of college and may have no previous compensation management experience (or even IT experience)!
have bigger overheads; as such, the contracting fees are also typically higher.
may not undertake a project if it does not generate at least a million dollars in revenues.
are large because it operate in several IT sectors, across several industries, in several countries. The actual compensation management practice may not have a greater headcount than a specialized company.

Boutique Consulting Firm Pros:
Boutique consulting firms...

usually focus on a niche market – several companies focus on sales performance system integration. Some companies even focus on the integration of a specific solution
really care about their client’s satisfaction – their reputation is everything to them
will also be able to leverage deliverables from past clients
are also likely to have implemented the chosen solution several times
will usually have more seasoned technical experts

Boutique Consulting Firm Cons:
Boutique consulting firms...

may be less “stable” than larger well established company
don’t have a brand name to sell to management
may have issues to replace their consultants if team members become sick or leave
may not follow a methodology

Individual Contractors:

Contracting individuals is a great way to supplement a team with experts. These individuals will be able to bring a different perspective to the table to assist the in-house team or integration partner in the system design and integration.

The choice of a small or a large implementation partner really depends on the specific situation. Having worked for both a large consulting company and a small consulting company, I would say that the value for the money of hiring a smaller company is better. However a small consulting company should be selected with great care!

The bottom line:
Whether you choose a large consulting company or a small boutique firm, ask for references, make sure they have plenty of relevant experience, find out if they have relevant certifications, and ask yourself if you can trust them.

If you have had good or bad experiences with different types of consulting partners, please share your thoughts!

Sales Compensation Management - How Much Does it Cost?

2008-01-04T21:55:00.000-05:00

I came across an interesting article describing 3 popular web-hosted Sales Compensation Management Applications (Callidus TrueComp, Centive Compel and Xactly Incent). The article Tech Solution: Sales Compensation Management was published in DestinationCrm.com.

I briefly described those products earlier, but the article is adding some pricing details which I was unaware of. Being a consultant, I have always worked on on-premise implementations which are much more expensive.

Here are the price figures mentioned in the article:

Callidus TrueComp: TrueComp On-Demand starts at $50 per user per month
Centive Compel: Compel has a tiered pricing and a maximum fee of $50 per month
Xactly Incent: Incent subscription fee is $50 per user per month

As we can see, the pricing is nearly identical for each of the application. Functionality, ease of implementation, proximity and availability of consultants, etc will be the determining criteria in making the right choice.

Implementation: In-House development versus Hiring Consultants/Outsourcing

2008-01-04T19:15:00.001-05:00

In-House Development Pros

Build and maintain knowledge in-houseLower maintenance costs in the long term
Lower implementation for future releases
Lower perceived development costs (pay salaries vs consulting fees and associated travel expenses)

In-House Development Cons

Potential longer development time
High training fees and long learning curve
Complexity of project could be underestimated
Project scope, timelines and expectations may be exaggerated
No extensive prior experience increases risk
Staff may not be available to be dedicated to project
No previous deliverables to leverage
Outcome of implementation is impossible to predict
Incentive Compensation is not the core business of the organization

Obviously, the greatest advantage to hiring an experienced team to perform the implementation is to increase the odds of meeting the objectives and to decrease risks associated with a complex implementation. On the other hand, the major draw backs are that the knowledge acquired while building the project could leave along with the consultants, and the implementation costs may appear to be higher.

Different circumstances could make the balance lean in one direction or in the other, and a lot of information regarding the merits of either approaches can easily be found online.

My 2 cents is that a team consisting of consultants working on-site, along side with an in-house team who will eventually 'own' the system could be the best of both worlds.

My next article will include some tips on choosing an implementation partner.

Which Sales Incentive Compensation Management Software is Right for you?

2007-12-28T21:00:00.002-05:00

Gartner published an excellent research in July 2007 called “Market Scope for Sales Incentive Compensation Management Software”. This research discusses several of the sales incentive compensation management offerings and is surprisingly free.

The offerings evaluated are:
ACTEK
Callidus Software - TrueComp
Centive
Oracle (E-Business Suite)
Practique Associates
SAP
Synygy
Trilogy - Versata
Varicent Software
Westport Software Group
Xactly

The evaluation criteria were: Overall Viability, Customer Experience, Product/Service and Market Responsiveness. Results of the study are summarized in this table:

This study is a good start to help identify the prominent vendors of Incentive Compensation Management offerings. The best choice would be determined on a case-by-case basis since some of these vendors focus on a particular company size (number of payees), on a particular technology and in some cases on specific industries.

I would also like to highlight that several more vendors exist but were excluded from the study because they did not meet specific criteria including having at least 16 clients, of which at least 12 using the system in production, and with enough cash to fund at least one year of business operations.