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.

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.

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.

Based on my experience and on common sense, there are some project components which are easier to offshore than others.

1. 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.


2. 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.


3. 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.


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


5. 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.


6. 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.


7. 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.

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.

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

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.

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.

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

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.

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

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

• 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!

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.

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.

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!".

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.

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

Here is an example to get started:


Other benefits of using an Excel spreadsheet to record test results instead of a Word document include:

• Ability to quickly highlight failing tests in red
• Ability to filter information displayed (e.g. display only failing tests)
• Test results can be printed on fewer pages
• Ability to create macros to perform more "fancy" features such as displaying the number of days a certain issue has been opened.
  

Other columns could be added to add additional information such as the date at which the test was performed, the name of the tester, how critical the test is, the actual result when different from the expected result, and comments.

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.

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.

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).

...

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.

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.