Incentive, Compensation and Sales Performance Management

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.

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.

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 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.

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:

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.

There are dozens of Compensation Management Software available which can be categorized in two groups: on-premise and hosted solutions.

On-premise applications usually require dedicated hardware, and the company is responsible for keeping the application running, to apply upgrades when required, to ensure data security, etc. On-premise applications can further be categorized into turnkey solutions and high-end solutions, with offerings filling in the spectrum in between. Turn-key solutions include common incentive plans and work with limited integration efforts; these solutions are geared towards companies with few payees. High-end solutions require expensive hardware and very involved efforts from a team of compensation specialists and data integrators; these solutions are typically geared towards organizations with more than 1,000 payees.

Hosted solutions are also called software-as-a-service (SaaS) offerings and are usually geared towards companies with fewer than 500 payees. The biggest advantage of hosted solutions is that the vendor will provide all the required implementation work and be responsible for the upgrades. They can be a good alternative when on-premise solutions are too expensive or when in-house technical expertise is not available.

With fewer than 100 payees, it may be more efficient to handle compensation manually, using simple spreadsheets. However, when the number of payees grows beyond 100, or if the compensation models are very complex, Incentive Compensation Management (ICM) applications should be considered.

I will talk about different sales performance and incentive management applications later.