Why Do You Need A Health Check For SPM Implementation

Why Do You Need A Health Check For SPM Implementation

Just as a tune-up makes a car run better, periodic health checks on SPM implementations can optimize SPM processes and improve the overall ROI. This is especially true for SaaS products which are frequently updated, making it difficult to keep abreast of all the new features constantly being rolled out.

In fact, due to the impact of COVID-19 on businesses, a health check is not only recommended, it’s imperative. Why? Almost all businesses are seeing significant gaps between the sales forecasted at the beginning of the year and actual sales to date. Businesses have had to adjust their sales compensation plans to reflect the current situation And if you’ve changed any aspect of your sales compensation plan, you need your SPM tools and processes to be updated accordingly.

So, there are many reasons – both from a technical aspect and from a business aspect – for conducting a health check. Here are just a few of them:

Compensation Plans Evolve

As mentioned above, due to COVID-19 most businesses have had to make ad-hoc changes to the sales compensation plans. Aside from COVID, think back to when you first implemented your SPM tool – be it Callidus, Xactly, Varicent or some other tool.  What did your sales comp plans look like then? You may not even recall the nuances of your comp plans at that time. More than likely your plans have evolved since the initial implementation and you’ve made small ongoing tweaks along the way or perhaps, you’ve done a major overhaul.

I suggest stepping back and taking a holistic look at both your SPM system design and underlying business processes. For example, in a recent health check performed for a client, we found several versions of similar lookup tables, built by various team members over the years, which could be consolidated into one single lookup table for easier maintenance and better performance. Because most comp administrators are focused on their “day jobs”, they don’t realize that they can speed up the process by working ‘smart’ instead of just ‘hard’. A health check identifies all such improvement opportunities.

Business Processes Evolve

Just like compensation plans, business processes evolve as well. But has your SPM system kept up? A health check presents a good opportunity to take a fresh look at your current business process to determine how to best leverage your SPM tool. For instance, your sales team may still be submitting inquiries via emails even though the SPM tool may have Dispute resolution functionality you should be taking advantage of.

Other factors such as business growth, M&A, and IT upgrades can also impact the ROI of your SPM implementation. All the changes incorporated on an ‘as-needed’ basis in piecemeal fashion add up over the years and it becomes necessary to reset the course and steady the ship. Conducting a health check lets you reassess and determine if there are ways your SPM system can work more effectively.

New Features

Let’s be honest. Do you really pay attention to all the software release notes? Chances are you missed something interesting along the way, or dismissed something you didn’t need when it was first released but may be useful to you now. There may even be new offerings from the software vendors at no additional cost that you may benefit from. Performing a health check allows you to discover such features and offerings. For example, Analytics may have been an add-on module in the past, but is now available for all base subscriptions. The knowledge you gain from a health check can help you carve your system roadmap more efficiently, thus increasing your ROI.

Irrespective of the tool you use, if you’d like a no-obligation Health Check for your SPM landscape, please contact us at info@spectrumtek.com.

Resource Guide: Top 5 Sales Performance Management (SPM) Vendors

Resource Guide: Top 5 Sales Performance Management (SPM) Vendors

Every year the team at Spectrum issues a resource guide for organizations researching sales performance management vendors. We’ve just released the Top 5 SPM Vendors – Updated for 2020. 

The market for SPM software is crowded, with more than a dozen vendors competing fiercely. For those considering new SPM software, the process of evaluating every one of these vendors can become overwhelming. And there is no single vendor who stands out as an obvious winner.

Our report is intended to give you a jump start on your search for the SPM software vendor who most closely fits your needs. This year’s report includes Optymyze, Oracle, SAP, Varicent and Xactly.

Here’s a sneak peek of two popular vendors, SAP/CallidusCloud and Varicent:

Resource Guide: Top 5 Sales Performance Management (SPM) Vendors

Top 5 SPM Vendors

In addition to providing a snapshot on each vendor, the report also covers:

  • Key customers, by industry, for each vendor
  • SPM market share insights
  • Recent developments

Download your copy of the Top 5 SPM Vendors – Updated for 2020 today!

Contemplating SPM Automation Tools? Is Your Organization Ready For The Road Ahead?

Sales Performance Management (SPM) involves multiple business processes, and hence, the procurement and implementation of an SPM Tool (such as Callidus, IBM, Xactly) requires a significant amount of planning and effort.

The planning must start long before you schedule vendors demos. There is no point in conducting vendor demos if your organization is not yet prepared to travel the road towards SPM automation. So how do you go about evaluating your preparedness?

To determine your organization’s readiness for an SPM tool, here are the top 10 questions you should answer:

1. What is the Business Justification?

The answer could be Cost Savings, Enhanced Reporting, Operational Efficiencies, Auditability, Calculating Payments or something related. Whatever it may be, if you can’t come up with a couple of strong business justifications, you will find it difficult to make a business case for the tool. Although it doesn’t all have to be about the financials, you have to be ready with a worksheet that shows the numbers. To learn how to build a business case, here is a link to a webinar that could be very helpful to you: http://bit.ly/2pvd1Ts.

2. Are the Executives on board?

Have you discussed your plans with your executives? Do they understand the high level budgetary needs for such a project? Do you have their verbal nod for a ballpark budget?

If your executives aren’t okay with the estimated budgets, maybe you have gotten ahead of yourself. Save yourself some time and initiate the vendor demos only after you see your executives warming up to the idea.

3. Are Compensation Plans Stable?

The most common reason for SPM implementation failure is that the compensation plans are in a state of flux, sometimes even changing while the implementation is in progress. Are your organization’s comp plans still going through significant changes because of evolving market landscapes?  If so, you will have a tough time keeping your SPM implementation on track.

Taking this into consideration, you are not ready for an SPM tool. And yes, when you are told that the tool can handle all future changes without any time or effort, take it with a grain of salt.

4. Do you have enough Time?

From vendor demos to go-live, SPM projects will take no less than 4-5 months. If you are too close to the beginning of the new Plan Year and the deadline for Pay file is already in sight, you have probably missed your window of opportunity. If you decide to move forward at this point, you will be scrambling to move fast, thereby compromising the quality of your decisions, and creating a huge risk to the project overall. You are better off planning a mid-year rollout, which will have its own challenges, but at least you have time to plan for it.

 5. Are Business Processes Mature?

When the organization is growing rapidly, HR and Finance are constantly tweaking the organizational framework. For this reason, or maybe due to a recent M&A, if the processes and policies in the organization have not yet been solidified, it is difficult for the implementation team to configure the new tool.  A lot of time and effort would go to waste in changing the tool configuration again and again.

For example, if the new hire draw policy is changing every few months, the SPM tool can’t really be successful.

6. Do you have IT Systems providing Reliable Data?

SPM tools can’t operate in a vacuum. If you don’t have HR systems providing reliable Payee data or ERP systems providing sales data, you will have huge challenges with the SPM tool. Garbage in, garbage out. For instance, if new hire notices are coming to the commission administrator on Post Its, you are not ready for an SPM tool. You must first invest in HR tools and processes.

7. Is IT Leadership ready for one more Tool?

SPM implementation projects require IT budget and resources. If the IT team has resource constraints, or there is another large IT initiative, such as an ERP upgrade planned for the year, then IT will not be very happy about supporting an SPM implementation. A quick synch up with your IT leadership would help ensure that no such major roadblocks exist.

8. Is the Cloud an option?

Almost all major SPM tools are now available only as SaaS solutions, where the software is hosted in the vendor’s Cloud. What that means is, if your organization has a strong preference for On-Premise solutions, your choice of vendors becomes very limited.

It’s better to clarify with your business leaders if Cloud solutions are an acceptable option. If not, knowing the road map for all software vendors, you may want to abort the idea of packaged solutions or wait for your organization’s mindset to change.

9. Do you have Resources to support this Project?

After the tool is implemented, you may be able to cut the headcount in commission operations. But initially, you will have to dedicate a great deal of time and energy in evaluating and implementing the tool. If you are unable to free up any of your current resources and can’t find the budget to hire external consultants, it will be extremely challenging for you to get this to the finish line.

10. Is there an M&A on the Horizon?

Last but not least, if there is an M&A on the horizon, it’s better to wait on an implementation project. The new company may already have an SPM tool, and it is almost guaranteed that your business team will want a single SPM tool catering to the joint salesforce.

If you need further assistance with getting you prepared for an SPM project, please contact us at mktg@spectrumtek.com.

The Evolution of Sales Performance Management

Sales Performance Management, A Look Back

Back when I started my professional selling career over 35 years ago, the term sales performance management meant sitting though weekly sales meetings and performance reviews every 3 months. Sales performance management in those days had little to do with analyzing productivity, team performance, sales enablement or incentive compensation, except, if you weren’t performing, i.e. hitting your numbers, sales management took the keys to the company car in return for your last check.

24 Carat Gold Calculators

From the early to mid-90’s, sales compensation management software started to hit the market. There wasn’t much science or empirical data to drive business outcomes based on historical or regression analysis, just a more streamlined and efficient calculator of sales commissions. This software was sometimes referred to as a ‘24 carat calculator’ because of its overall cost relative to its utility. A lot of IT organizations began building rudimentary commission calculators and reporting tools more cheaply. In fact, my team worked with our IT folks at Textron Systems to build such a proprietary system in 1990 using Lotus Symphony (before IBM) on Unix / Sun Solaris.

From SCM to EIM to ICM and Now SPM…

Over the next decade or so, sales compensation management (SCM) as it became known, morphed into EIM or enterprise incentive management as finance looked to increase its focus, and control, over incentive spend relative to performance. Then, by the early to mid-2000’s, incentive compensation management (ICM) became a more common definition as incentive compensation management moved across lines of business to now include other forms of incentives, both cash and non-cash for sales and non-sales staff with varying degrees of reporting and workflow.

As the new millennium was nearing the end of its first decade, sales performance management (SPM) became the defining terminology. With advanced reporting and analytics, territory and quota planning, improved workflow and flexible user interfaces, SPM software was now the quintessential tool designed to align sales performance with company goals. Sales operations suddenly had a new face, with new responsibilities and for some, a seat at the table.

From a technology perspective, the adoption of the Cloud (SaaS) and advanced integration technologies made the economics more attractive. The newer generations of SPM software became technically superior over just a couple of years prior. For better or worse, functionality also became quite similar across vendor offerings making vendor selection even more challenging, at least visually.

SPM Software, The Devil’s in The Details and The Requirements

Today, there are nearly 30 software vendors, including the leading ERP vendors, that perform many of the common SPM functional attributes. Out of these 30 software vendors, fewer than 10 are considered to be best of breed SPM software vendors. Of these best of breed vendors, most can satisfy at least 70% to 80% of the typical functional requirements found in technically challenging RFP’s. However, any one vendor can fall short on reporting, analytics, workflow, territory & quota planning, data volumes, managing overly complex compensation plans – the list goes on.

This is why it is imperative for stakeholders to take ownership of defining, gathering and documenting requirements for their particular line of business. The most successful implementations of a SPM solution occur when line of business owners are directly involved from the onset, executive sponsorship is established and realistic project goals are set. SPM projects are like ERP projects in some ways; there are a lot of fingerprints touching various segments effecting a lot of people, the way they work and the financial impact to the company. SPM is not a compartmentalized nor a departmentalized tool.

Human Capital Management Software

Human Capital Management (HCM), Human Resource Information Systems (HRIS) and Human Resource Management Systems (HRMS) also have variable compensation management capabilities. A few have rudimentary sales incentive compensation management functionality but none can manage the volumes of transactional sales data, perform complex sales crediting, perform simulated scenario modeling of plans, territories and quotas then analyze this data for outcomes against a prescribed forecast. That is a fundamental difference between HR tools and SPM, currently.

Many SPM tools can also calculate bonuses, assign and measure MBO’s while enabling scorecard functionality, a core function for HR tools. But, they cannot perform many of the core workforce management functions such as salary administration, equity or stock distribution, deferred compensation and merit pay, together known as total compensation or total rewards. In addition, HCM tools provide a unified view across all employees that can analyze role-based performance, measure skill levels and prescribe best-fit candidates for a particular job and provide a holistic view of the total workforce.

If a top tier HCM or HRMS vendor were to acquire a top tier SPM vendor, or, the other way, around, then integrating the two successfully, while offering either as a stand-alone solution or together as one, that would be a market moving game changer. I’m surprised that hasn’t happened up to this point given the speculation and rumors that have circulated throughout the industry for years. I think further consolidation of the SPM market is inevitable, which can be a good thing.

About the Author: For more than 15 years, Tom Troiano has been a successful senior sales executive with the leading Sales Performance Management vendors including IBM / Varicent, Synygy (Now Optymyze), Callidus Cloud and Oracle. Throughout these years he has helped 100’s of companies across many industries evolve from spreadsheets and homegrown tools to today’s data driven SPM solutions supported by a strong business case. Tom has been in sales and sales management his entire career. Starting in 1980, where he led a sales team at a small startup that grew into a big sales team while designing his first sales compensation tools.

Data Quality for SPM Operations

SPM operation, especially the Incentive Compensation part of it, is all about handling data. Poor data quality can significantly drive up the operational costs and cause the sales team to lose faith in the calculations. Good data is essential to producing correct pay calculations and reports, allowing sales team to focus on delivering sales, rather than dealing with discrepancies.

But, having good clean data is not enough. SPM operations are time sensitive, and the data across various underlying systems is every changing. Hence proper data synchronization (across business and IT systems) is important as well.  Different Reporting Cycles, Payroll Cutoffs, and Period specific Adjustments can’t be handled accurately, until data is clean, and well synchronized.

The following check list will help guide the decisions to deliver consistent and accurate data to the SPM system:

1. Choose the data source carefully

Companies that have a single source for revenue and customer sales data are more likely to have good data quality, thus generating the most accurate reports. Data quality suffers when companies have multiple production systems and data repositories that are managed by multiple teams.  If these systems and repositories are not in sync because of different adjustment and reconciliation processes, the data quality will be poor.  To insure integrity of the SMP reports, these companies must design requirements that sync up the various data sources and utilize the same data that is used for all other company reports.

2. Consider full data loads vs. incremental transactions

Based on the cost and time it takes to process sales transactions, the most common transaction loads are incremental. Because companies make periodic payments to Sales, the SPM data must be date-stamped and stored. This insures that future transactions do not alter or compromise the historical values previously used for pay calculations. Many core business systems provide the infrastructure to load incremental data without compromising the historical data.  Companies with known data issues however, may resort to full YTD data loads prior to the close of each pay period.  Still others still, design compensation calculations that factor the YTD data changes into the current pay period.

Companies should decide on the type of data load best suited for them, based on factors impacting their sales crediting policies such as, type of business, number of transactions, and volume of revenue adjustments.

3.Determine the impact of adjustment transaction

Adjusting sales results involves different types of transactions, including contract revisions, cancellations, discounts, claims, and pricing revisions.  Three important principles should be followed to ensure good SPM data quality:

  • SPM data should be loaded in sync with adjustments posted in the core systems and those posted to management reporting systems
  • Do not attempt duplicate postings of core data adjustments directly into the SPM data loads. This could be a costly move.
  • Create a separate category for “SPM Only” Pay For Performance adjustments (small volume critical pay adjustments) that can be posted within a specific pay period for correcting payouts. By year end all final adjustments will be posted to the core systems and these SPM adjustments will show a net of zero.

 

4. Reconcile with core systems before running compensation calculations

Even the best designed data acquisition and validation processes need to be reconciled with the core system before pay calculations are executed. This is easily done by reconciling the SPM data loads with core system results during the period-ending data load process.  Make sure that the revenue and other key metric values are reconciled to the same reporting periods, so that SPM calculations are in sync with other business systems.

5. Provide an easy way to create reports and data files for sales and support teams

Add customized reports and data extracting options, specifically designed as inquiry tools, to the SPM system.  This will enable Sales Support and others to easily create reports whenever needed.

6. Retain “locked” multiyear data available for SPM analytics

The ‘locking’ functionality in many SPM systems allows access to detailed, multiyear performance data and provides a major advantage when producing sales team compensation analytics, internal pay plan performance trends, and business performance metrics.

In summary, the first priority in the development of a SPM Pay and Performance reporting process is to design requirements that will produce superior data quality. This includes dictating that the SPM data is in sync with your company’s sales results reporting and business metrics.  Poor data quality will lead to a lack of confidence in the SPM system and Operations team, creating unease and discontent among your Sales team.

Managing sales compensation programs takes planning; focus and a daily drive towards the organizations sales performance management objectives.  To discuss this further feel free to email us at info@spectrumbiztech.com.

About the Author:  George O’Connell has on premise and SaaS expertise in the area of Sales Performance Management (SPM) and Incentive Compensation Management (ICM). His experience includes design, development, operations, governance, and analytics for a company with $2.5 billion in sales to over 500,000 customers.   He’s managed SPM operations for a wide range of sales channels including telephone sales, sales executive channels, union contracts, new business start-ups, call centers, third party vendors, sales management plans, and director / sales VP compensation.

“Broken” SPM / ICM Systems

broken-chain - Copy (320x80)“Our incentive compensation management software is broken. We need something new.”

Over the past few months I’ve heard that statement and similar sentiments from at least four companies. All were using Gartner defined Sales Performance Management (SPM) “Leaders” ) yet all believed their SPM system was failing them. The companies complained about the lack of flexibility to adapt to their changes and some were moving to manual processes to get commission calculated.

Speaking further with these companies highlighted the same core issue at each firm and it had very little to do with their SPM technology and everything to do with their staffing decisions. For instance, one of these companies had been successfully operating their sales compensation system for over three years. Three years of success and then the only trained person to maintain and operate the system left the company.  Then, much to the company’s surprise, everything came to a screeching halt. The company blamed the software for not being flexible enough and set off to find a new system.

While it’s easier to blame a vendor than to accept responsibility, this company was operating with a naïve assumption that anyone could step in at any time and keep the system running.  IC systems are complex and require the proper staffing, training, and maintenance to keep them operating smoothly. Single points of failure are never safe (would you fly with only one pilot?). Maybe it was the original sales pitch that told them how easy things would be that led them to this point? Maybe it was a short term situation that turned into a long term situation? Regardless, if you want to minimize your risk of a service disruption and make proper use of your SPM solutions, take the following steps.

1. Document
You must maintain some minimum level of documentation. In the case cited above, there was nothing in writing – it was all in the head of the one user. Start with a simple ‘run book’ that documents the major steps in your commission cycle (i.e., data loading, calculations, QC steps, outputs) as well as a Data Flow Diagram. Each cycle, make note of special cases and exceptions and use the history of multiple cycles to guide you to process improvements.

2. Staff Appropriately and Cross-train
It’s important to have skilled people (more than one) supporting your IC system. Companies all too often fail to appreciate what it takes to manage an SPM system well – trusting too much in the tool’s much advertised flexibility. Companies that do this well, acknowledge that this is a specialized skill set and requires people who are adept at managing multiple constituencies and who are able to translate requirements to produce deliverables. Be sure to anticipate and address peak staffing needs as well by cross-training beyond your core support team (for example, you can have the person who is responsible for quota maintenance also learn your ICM system).

3. Stay Current
SPM/ICM vendors are constantly rolling out new features. Pay attention to those and proactively work to incorporate those into your configuration. That means staying on (or near) the latest version of the software as well as investing in training – both base-level training to new staff and advanced training to more tenured staff. Join and participate in local user group meetings and attend the vendor’s national conference (i.e., Callidus’s C3 and IBM’s Vision) each year.

4. Archive Old Components
Be sure to allow for time to archive and remove unused components (rules, data, reports, etc.) from your system to keep as clean as possible. Doing so extends the overall life of your incentive compensation system, keeps the processing speeds faster, and allows for faster configuration changes.

In summary, managing sales compensation programs takes considerable focus and proper staffing. Recognizing and addressing this is critical to its successful operation. To discuss this further feel free to email us at info@spectrumbiztech.com or call us at (408) 813-1443.


About the Author: Dan Ganse has 20 years of deep expertise in the area of Sales Performance Management (SPM) and Incentive Compensation Management (ICM). His experience includes assisting customers in all aspects of enterprise-wide incentive management and brings a unique combination of business and technology expertise to address customers’ incentive management issues.