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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

SPM Vendor Selection – Ten Tips

Just recently, I concluded a SPM package selection for a large silicon valley firm.  It was a great learning experience. The SPM landscape is very competitive and package selection requires a considerable amount of preparation and planning.

While it is all fresh in my mind, I would like to share a few thoughts on running an SPM evaluation project.

Preparation and Planning

1. Budget – Prepare a budget estimate, discuss it with project sponsors and secure a nod for funding. Gather input  from colleagues and consultants, avoid vendor’s sales reps at this stage!

2. Timeline  – Prepare a rough project plan (RFP to Go Live). Obtain a buy in from both, Business Execs and IT folks.

3. Dependencies – Look around for other IT or business initiatives planned in the same time window. Make a note on your tentative timeline that these need to be looked into in greater detail at the appropriate time.

4. Invest time in creating a good RFI/RFP.  Explain your comp plans, reporting needs, data sources, biz processes, HR policies and IT requirements.

5.  Build an evaluation scorecard with appropriate weights assigned to each criterion. This would help keep any personal feelings or bias out of the evaluation equation.

Vendor Selection

6. Shortlist no more than 3-4 vendors based upon RFI/RFP responses and initial sales demos for the next step.

7. Setup a core decision making team before scheduling detailed demos.  The key is to include the right people who will ask the right questions and whose opinions count. Email the scorecard to all the participants ahead of the demo meetings so they can use it as a reference during the actual meetings.

8. Shortlist no more than two vendors for a detailed POC (proof of concept). Set aside a full day for each POC. Provide real life Comp Plans/Data to vendors and give them at least 4-5 weeks to prepare(so they have enough time to have all their questions answered and no excuses).

9. In addition to the Comp data provided to the vendor, have a separate list of simple and relevant business scenarios and request the vendor to show/run those during the actual POC(like a surprise test).

10. Scope and Price Negotiation

  • Negotiations will be more effective whilst there are still two players in the game and they are competing against each other. Sometimes it even helps to keep both of them alive all the way until the contracts are signed.
  • Identify what you can do for the vendor, for eg. upfront payment, offsite work, press release, customer references  etc. Do not reveal all the cards upfront, use them one at a time.
  • SaaS contracts are too technical for Procurement to negotiate.  Seek assistance from your IT.
  • And yes, the dirty old trick of stretching the negotiations into the last few days of the quarter. Vendors get more accommodating just so they can meet their quarterly goals.

Good luck with your vendor evaluation!!

If you would like to see a scorecard sample, please contact me at