Ascent of Incentive Compensation Management Solutions
The dangling of the proverbial carrot has been a time tested mechanism to attract and retain talent, leading to the evolution of variable incentive compensation software. ICM software came on the horizon in late 1990s, to a lukewarm reaction from the market. Finally, after all these years, we are seeing rapid adoption of ICM software across various industry verticals like insurance, banking, high tech, health care, pharma, telecom, SaaS etc.
What is shaping up the ICM landscape? What are the key drivers for this growth?
- Declining Costs – ICM solutions started with mammoth on premise implementations that used to cost millions of dollars. As more vendors entered the market, costs went down. With the advent of SaaS, costs were further slashed and small and medium sized businesses (SMBs) could now think about adopting ICM solutions. Cost effectiveness and affordability paved the way for companies to jump onto the bandwagon.
- Expanded Scope -ICM Solutions are no longer just ICM solutions. Most vendors have expanded their offerings into Sales Performance Management(SPM) solutions by including analytics and intelligence in their product suites. SPM addresses the broader objective of aligning sales strategy with the corporate goals as against just computing accurate payouts. Thus clients find it easy to fund an ICM project, because it not only solves their compensation problem, but also, the bigger sales visibility problem.
- Sales Management influence – The SPM concept is more appealing to higher sales management as it provides better visibility into performance metrics. In order to achieve more productivity, Sales is now driving the decision to implement SPM solutions. The Sales organization has proven to be a much stronger influence than the Comp Admin or Operations personnel when it comes to spending money.
In short, reducing costs, ease of implementation, evolution of SPM as a strategic tool, increasing influence of Sales Management are some of the drivers for the growth in the SPM landscape.
Below is a list of some of the leading vendors who are enjoying the rapid adoption of ICM solutions.
Callidus Software was founded in 1996 and their flagship product is called TrueComp. Their best-in-class solutions have been chosen by more Fortune 1000 customers than any other vendor. Callidus acquired Acteksoft in early 2010 to extend its SPM footprint.
Merced Systems was founded in 2001 and has been offering the Merced Performance Suite for call center employees since then. They acquired Practique Associates in mid 2008 and added Incentive Compensation Management to their suite. They have been enjoying significant growth the past couple of years.
Varicent was founded in 2003 and their incentive compensation offering is called Varicent SPM. The company is based in Canada and has established a global footprint in a short span of time. The list of their customers is growing fast and they already have significant Fortune 500 names in their kitty.
Xactly Corporation was created in 2005 to meet the needs of the broader market by providing the most affordable on-demand sales compensation solution allowing companies to improve their business performance through the use of more effective sales compensation programs. Their main solution is called Xactly Incent. They acquired Centive in early 2009 and have consolidated their customer base.
ZS Associates, founded in 1983 is a global management consulting firm specializing in sales and marketing consulting. Their Javelin Software Suite is a comprehensive set of tools that includes Javelin Incentives which helps customers manage and administer incentive compensation plans.
Excentive was founded in 2002 in France and enjoys a wide customer base in France and Europe. They are now trying to break into the Americas market with their Total Compensation suite of products that addresses both variable and fixed compensation and several other aspects of compensation.
Makana Solutions was founded in 2004 and their offering is called Makana Motivator. Its offers a complete range of solutions from planning to administering sales compensation plans.
Oracle offers Oracle Incentive Compensation (OIC) which is a global variable compensation application that automates the design, administration, and analysis of transactional pay-for-performance incentive programs. Oracle acquired Hyperion in early 2007 and took over their ICM solution. Oracle is strong contender in the vendor evaluation stage due to existing client relationships and more importantly, their strong ties with Big 5 consulting companies.
Please drop me a comment if you’d like to include any other names in the above list.