Stay connected with latest information about sales performance management

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

road2Sales 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:

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

Spectrum Webinar: SaaS for ICM – Is It Right For You?

Are you considering an ICM Package and evaluating vendor hosted SaaS options? Do you have an on-premise ICM package but are considering moving to SaaS?

Join Spectrum and Jeff Saling to learn if SaaS is right for you. In this FREE Webinar you will learn pros and cons of SaaS and specific points to consider in evaluating SaaS option for ICM.

You will learn:
* Differences between SaaS, Cloud and ASP
* Cost comparisons of SaaS and On-Premise
* Business case for SaaS forICM
* Contract Terms and SLAs for SaaS
* Data security in SaaS
* Common risks and cost overruns for SaaS -ICM projects

Who should attend:
* Executives in Sales, Sales Operations, Finance, IT and HR

Space is limited.
For more details and to reserve your Webinar seat now at:

QnA with Jeff Saling contd

This is Part II of my conversation about SaaS and ICM/SPM industry with Jeff last week. You can read Part I here.

AD – While selling a  SaaS solution, did you encounter situations where the security concerns outweighed all the other benefits and clients chose to go the other way?

JS – Yeah, especially where there is a high degree of regulation, involvement of the government or a specific security requirement, then SaaS is not an option. It is becoming less and less of an issue but when SaaS first got rolling, the IT department was concerned about the security of the data outside of their firewall. Today, with people’s identities being stolen,  the concentration is on making sure the SaaS app is secure and protects the data better than a similar on-premise app, even if there is a price difference. The liability is potentially huge if security isn’t properly taken care of.

AD – What about data ownership? Are clients concerned about that?

JS – Not so much, really. The basic assumption is that data is owned by the customer and the IP around the technology is owned by the vendor. It’s a pretty clear dividing line. Where it does get a little bit grey is where you as a SaaS vendor use the collective data of all your customers to draw conclusions. The owning of the conclusions and the follow on data from the original data can sometimes be a grey area, but most SaaS vendors define that as their own. If there is an argument with the customer, then they normally agree to share the results and conclusions with the customer at no additional cost.

AD – Does it really matter to the customer whether the SaaS vendor supports multi-tenancy or single-tenancy in their architecture?

JS – That kind of goes back to the security question. As the security gets better and better the customers care lesser and lesser about the infrastructure and architecture that you use to serve them.  If you have a good story that’s packed with facts about how you are handling security, and you can prove that with your procedures and SaaS 70 audits, the customer is not going to be worried about it. The adoption has been much stronger in the US and it is now going into Western and Northern Europe and next into Southern and Eastern Europe and also into the Middle East, Africa, Asia, South America. Although the adoption of SaaS looks weaker now, I expect it to follow the same trend that we have seen here in the US.

AD – Nowadays we are seeing a lot of focus on intelligence, analytics in the SPM arena? Where do you see that going?

JS – You are probably going to see vendor like the BI folks, the Coaching folks, the more generic HR applications that are adjacent to Sales moving into the ICM space or vice versa. The days of getting the data in and just getting commissions out are gone. I mean, there is still a lot of work that goes into doing it right and on time every single time. You also need to get the reports out and make sure that you are using that information from the system to make strategic decisions. BI and DW will play a big role in this. Also, there is going to be a need for companies for a good dispute management process.  Also there are other parts of the business that are similar to the whole comp process. ICM primarily pays direct and indirect sales people. A lot of companies have a whole channel that is not paid by these systems, and may get paid in the form of a rebate.

AD – Do you see the fixed and the variable compensation systems coming together? I recently read about one such solution that does all of this and thought that was very interesting.

JS – It is interesting. The politics inside of many organizations would have to be switched a bit to see a big adoption of that. Typically Sales Ops folks are in charge of commissions and that’s a very different group than the people who are doing Salary and Benefits. Seeing these systems merged, I think, is a possibility. Whether or not, an ICM vendor has the appetite to go into those more traditional and less complex areas, I don’t know. Over time, maybe the ICM vendors might enter those verticals or those vendors may enter the ICM space. This seems more likely to happen through an acquisition or something like rather than creating a new solution altogether.

AD – We’ve seen the ICM paradigm shift to SPM. Sales Organizations and higher Sales Management is now the champion of these systems rather than Sales Ops or Finance. And how has SaaS been a key here?

JS- Oh yes, the industry has morphed from ICM to SPM, the agenda being that this is more than just paying commissions, it is all about managing your Sales Group’s Performance. This has set the target and I think the next target you’ll see is the whole life cycle of a Sales Person, getting the right people in the door, getting them on the right Comp Plan, paying them and coaching them so that they can perform better, using the data so the whole company can perform better and then feeding that data back into the system to create a broader circle.

SaaS is the method of delivery for the whole solution. And the narrower version of ICM or the broader version of SPM or the still broader version of a Sales Lifecycle will continue to be delivered via a SaaS model to the point where the on premise model will become an exception.

AD – Tell us about some of your experiences in your journey towards SaaS.

JS – In this whole journey towards SaaS that I went on with Callidus, the claims that the customers make during the whole negotiation process can be interesting. Anywhere from “we have no data center costs” to “all of our vendor’s sign 100% of uptime SLA”.

Certainly it has been gratifying to see that an idea that we had half a dozen years ago has come to be the main focus of not only the company that I worked with, and not only the ICM and SPM industry but also something where everybody is heading in general. And being a part of this process has been a lot of fun.

AD – I can go on and on and listen to you talk on this subject but I am running out of time. It has been great talking to you and hearing about your experiences. Thanks a lot for taking the time out and sharing your thoughts and views.

Merced ICM Calculator

The biggest competition for all the ICM packages available in the market is none other than Microsoft Excel. Excel is so ingrained in the commission world that often times, potential buyers tend to minutely compare the two and are not willing to giving the ease and simplicity of excel.

So instead of competing with Excel why not use it to your advantage. In my opinion, this is exactly what Merced has done with their calculator. That said, my post today aims to throw more light on the Merced ICM Calculator and how it works.


In simple words, a calculator is a reusable object that a user has defined for managing a calculation which is equivalent to writing a formula in Excel. The layout of the calculator UI is very similar to an Excel spreadsheet.


A Plan is a rule or a container that holds the criteria to filter transactions based on different matching criteria defined by the user. A Calculator contains the logic to process the transactions. A user can quickly write formulas/logic using the excel like spreadsheets and test it out to make sure it produces the correct result. Calculators can also feed into other calculators. This allows users to break down complex calculation logic into smaller chunks that are easy to understand and maintain and can be reused by other entities.


The different calculator types are Summary, Event, Function and Table Calculator. Each of these calculators is suitable for different types of calculations.

Summary calculators operate over a group of transactions and produce an overall result. For e.g, it can be used to aggregate transactions before computing the overall commission and achievement.

Event calculators operate on a per transaction/event basis and it is recommended that they be kept to a minimum.

Function calculators as the name suggests can be used to create functions(similar to excel) that can be referenced by other calculators.

Table calculators are typically used to define Rate Tables and such.

(Click to Enlarge)

(Click to Enlarge)


Here is an example of how all the entities come together. The example shows how a single calculator can accept inputs from multiple plans to produce desired results.

(Click to Enlarge)


Calculators are very powerful and can be used innovatively to achieve the desired results. But they can easily become unmanageable and complicated if not thought out properly.

They should always be made generic by utilizing lookup tables. This makes them reusable and minimizes the number of calculators needed.

Use Summary level calculators very possible and limit the use of Event calculators as they can prove to be very expensive.

Cell references must always be in caps, for e.g A1 and not a1.

Cells with calculations/formulas should start with “=” otherwise the contents will be read as plain text.

Customers love Merced ICM calculators because they are so excel-like, easy-to-use, flexible and extensible. Most people configuring calculators have usually built out similar requirements using Excel at some point.

If I were asked to choose one single calculator feature that truly takes the cake, it would have to be the Calculator Test Mode. One can build a calculator, provide test input data and instantaneously see the calculated output including results in intermediate cells as well. And from my personal experience, all this can be done in a flash.

Merced mostly definitely has a WINNER on their hands!

Territory Assignment and SPM systems – Neighbors Or Strangers?

After struggling for months you finally have an SPM package deployed in your organization.  All of your commission related business processes are finally automated…or may be not!

One area of commission processing that SPM packages fail to fully automate is – Territory Assignment (TA). The process of assigning the sales order to an appropriate territory or sales rep(s) often ends up being done outside of SPM packages.  The scope of manual work varies across companies and industries.

WHO needs Territory Assignment?

Companies which have one or more of the following characteristics

  • A large Field Sales Operations
  • Network of channel partners, VARs, Distis, Resellers, Retailers etc.
  • Heavy Order Volume
  • Complex Territories based upon Named Accounts, Products, Zipcodes, Partner Name etc.

Hi Tech and Pharmaceutical industries are some of the very common industries that fit the above profile.

WHY Don’t SPM vendors have a solution for TA?

Most SPM packages offer a vanilla version of Territory Assignment but not a full blown solution. A lot of customers, especially in the Hi-Tech worls, are still using spreadsheets. Some of the reasons that come to mind as to why SPM vendors do not offer an integrated Territory Solution :

  • Their main focus in the commissions engine and they do not want to get into the nitty-gritties of Territory Management and Assignment.
  • They should ideally be receiving data from a TA system and want to keep it that way.
  • TA is a back office operations problem, that is solved (to some extent) by xcel spreadsheets and human bodies.
  • Just a few industries (hi-tech, pharma etc) probably have the need for a dedicated and robust TA engine. For SPM vendors, the ROI may not be tangible.
  • A smart TA engine has to deal with data cleansing and de-duplication for Account Names, Addresses and other such data. It is best solved by leveraging the services of specialized third party vendors (like D&B and Infonow) and adds to the overall complexity of the solution.

Where does Territory Assignment fit in the BIG PICTURE?

So, what do you think? Does it make sense to integrate Territory Assignment within an SPM system or is it better left stand alone?

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.

ICM Implementation Project Gotchas – Part II

In my last entry, I talked about the issues involving project objectives, software selection, business processes and data feeds. In Part II, I will cover common issues during implementation and testing phases.

Over Customization – As I have stated in the previous post, your best bet is to buy a product that fits most of your needs OFF THE SHELF. Sure, customization does address some of the needs but the overall outcome may nullify the positives. It can put the package out of warranty, cause support problems and lead to performance issues. Performance and other benchmarks provided by the vendor are useless in case of significant customization. So educate your stakeholders about the risks of customization. Learn to live with what you get out of the box!

Insufficient and Inaccurate Test Data – Often times, customers are reluctant to release real data(customer numbers, revenues, account numbers etc.) to external consultants for testing. I strongly recommend using a data scrambler to hide the real numbers but use SIMILAR VOLUME of data as it is in your production system. Compromising on the quality or volume of data leads to poor testing. If you can’t get a data scrambler, put in adequate time to generate realistic data and scenarios. For instance, generate enough data to walk each tier of a Rate Table.

Too many reports – Prioritize. Prioritize. Prioritize. Loading up the project with too many reporting requirements causes a huge distraction from the main objectives. Break down the reporting wish list into multiple phases. Identify the ones that are absolute must-haves for Phase I and defer the nice-to-haves to Phase II. The fewer reports you have to deal with in Phase I, the better your resources can focus on the more important aspects of the project.

Perpetual Parallel runs – I have seen parallel runs go on and on and take over the entire project. It not only drains the budget and resources, but also risks the Project Go Live! A common mistake is to perceive parallel runs as ‘extended testing opportunity’. It is important to remember that the objective is to prove the integrity of the new system and not achieve a 100% match between the two systems. In order to manage a parallel run, limits need to be set and cross-checking criteria clearly defined. Set up a weekly status review to do a health check and resolve issues ahead of the go-no-go decision. It is important to publish a date for the end of parallel run, so users are prepared to cut the chord when the time comes.

Unclear Go-No Go criteria – The previous point leads into this one about defining the acceptance criteria for the new system. If limits aren’t set on what is acceptable and what is not, it is impossible to change over from the old system to the new. Projects are seen to be abandoned at this stage not because the testing did not meet the criteria but because of lack of clarity on the acceptance criteria.

When to Go Live? – It is common for business teams to overlap the go-live with the new fiscal year roll out, so they can get away with one time testing for both the projects. This is a double edged sword since the testing scope is generally very different for both the projects. In my experience, it is a better to keep the two projects independent from each other, especially in large scale implementations. The project team gets overwhelmed by taking on both the projects simultaneously, leading to poor planning and testing.

This brings me to the conclusion of the list. There are a lot of things that can go wrong in a perfectly well thought out project. Timely action can prevent the project from going off track but just being aware of what can possibly go wrong is a first step in the right direction.

Your comments are most welcome!

ICM Implementation Project Gotchas

Every growing business feels the need at some point or another to automate their day to day business processes. This means they are implementing software of some kind, be it CRM or ERP or ICM. But how many actually do it the right way? Where do they go wrong? Why does this happen?

I have been involved in ICM implementations for a while now and in my experience, a very small percentage of the overall success actually depends on the software being implemented. It is the treatment of the overall process that is the bigger contributor to the success or failure of a particular implementation.

And no, I am not alluding to any particular ICM package. The issues are common irrespective of the package.

So what are the common gotchas for ICM implementation projects?

Here are a few of the common pitfalls that I have experienced,  listed in the order as they crop up in the project cycle. The list is long, so I’ll spread it out over a couple of posts. Here is Part I.

a. Cloudy expectations

A typical ICM project goes much beyond business process automation. It also entails issues like business strategy, employee morale, contractual obligations etc. Often times there are multiple  stakeholders including HR, Sales, Finance and Legal to name a few.  Each one of these stakeholders has distinct and sometimes conflicting objectives.

It is crucial to agree upon a list of common project goal(s) and priorities.  Make it loud n clear, that not all goals would be met in phase 1. Be prepared to articulate a roadmap for subsequent phases, in order to get the buy-ins for the initial implementation.

b. Shoe doesn’t fit?

There are a lot of vendors in the market for ICM software – Callidus, Xactly, Merced etc.  Accept and broadcast the fact that no off-the-shelf package can solve 100% of your  problems. Pick a vendor that can handle majority of the requirements out-of-the-box. Don’t wast time trying to fit every single exception into your RFP and vendor evaluation. Treat exceptions as, well, exceptions!

Look at what your industry peers are doing. I like the analysis provided here by Julien Dionne on industry sectors and their choice of ICM solutions.

But again, as I said before, doing it right, is more important than choosing the right package. So after the decision has been made, focus all the effort on the actual implementation.

c. Rigid Business Processes

If you have chaotic processes, implementing an ICM package may quite well end up in automated chaotic processes. The message here is to examine the business processes, streamline them or even redefine them if needed and better leverage the new software.

Adapting the business processes to the new system would increase the overall productivity and offer the biggest bang for the buck.

It is sometimes difficult to get all stakeholders to be flexible. Getting  an industry expert to work closely with admins and IT to provide recommendations might be a way to obtain signoffs on new processes.

d. Devil is in the Data

Garbage in garbage out! And if it comes from multiple sources, it is gargantuan garbage.

Data Reconciliation is especially crucial in a Compensation system in pretty much all the areas since it a system of records for commission payments. There is no room for errors. Spend enough time to analyze each and every data source.

Consider a scenario where order information is coming from a channel partner’s order system. One can’t really control the quality of data coming  from various partners. Take a count of various such data sources and put a plan in place to deal with each one of them. If you cut corners now, be ready to deal with testing problems later.

So IN SUMMARY, if you take care of setting realistic project objectives, realigning processes and analyzing the data feeds, your project should have a solid foundation.

The road ahead has some more challenges, so stay tuned for my next post.