Incentive, Compensation and Sales Performance Management

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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/

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.

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]

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]

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

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.

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.

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.

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.