May 25, 2011

SPM Keys to Success - Advice from Hertz

It’s always great when someone who has gone through the trials and tribulations of implementing an enterprise software application are willing to share their experiences.   I had the great pleasure of talking with, and then presenting with Lynn Ferrara, Senior Director of Global Compensation for Hertz at WorldatWork's annual TotalRewards conference in San Diego this week.  Lynn has just come through a roll-out of a new SPM solution across multiple business units for Hertz.  

Today's session  focused on providing some guidance for organizations who are just starting out on the Sales Performance Management journey.  As is often the case when I have these conversations I found her insight invaluable.  

 Lynn's advice can be summed up in four key points:

Reduce and Improve Reporting – I blogged about this earlier, but Lynn echoes the need to create mock-ups of the reports that you plan to produce and run them by your end-users.  Her advice to project managers is to do this early, at the very outset of the project.   In the end, it’s the reports that contain the value for management – you must make sure that the reports you design provide the value desired.  Lynn also advises that just automating the reports you have today, will often not meet the requirements of management.  If this is done early in the project, any mis-alignments are identified while there is time to adjust the project plan.  Agreeing on reports creates alignment, avoids disappointment, delays and cost-overruns later in the project. 

Allow Enough Time for Data Integration - different reporting systems can provide data on different time tables (i.e. Weekly versus monthly), in different currencies, converted at different rates, and from disparate manual systems.  Working to get a common, reliable set of input data often takes going back to source providers and working creating new or different extracts, schedules and formats.   This activity usually takes longer than most team allow.  

Consider Testing Requirements Early – when implementing a new system, you have to consider that a lot of things can change in the compensation system that will make testing a challenge.  One common example is that the source data has been updated since the compensation data was calculated.  This happens as people make corrections and adjustments to source data when errors are discovered downstream.  For most organizations it is nearly impossible to track all of the data changes to the source data.  This means that that data that was used to calculate sales compensation in the old system is different than the source data for the new system.   Add, manual overrides, currency fluctuation, errors in the current systems and processes and other data inconsistencies, and it is virtually impossible to come up with exact the same commission results for from the old and new system.  At the outset of the project, teams are well advised to think through a testing plan thoroughly, and setting realistic expectations.

Communicate, Communicate, Communicate – there are many interested parties when a new incentive compensation management system is implemented.  Constant communication with the payees, Information Technology groups, the executive team, Sales Management and the plan administrators are all key to ensure success in a Sales Performance Management system.  Lynn advises that project managers should allot more time to communications across the groups in order to both train them on the new system, but also sell the solution that you are building.
Again I want to thank Lynn for taking the time to share her thoughts with the SPM community.

May 24, 2011

Spotlight on Compensation – Avoid the Risk of Being Disappointed

Last year WorldatWork hosted their first conference dedicated to the topic of sales compensation.   Located in Chicago the Spotlight on Sales Compensation was well attended and a terrific event.  The conference provided a unique opportunity to hear from leading experts on sales compensation, including Jerry Coletti, Mary Fiss, Dave Cichelli and Ted Briggs.  The conference also included presentations and opportunities to meet and share ideas with practitioners and industry consultants.   The only problem that I witnessed was that there was much more demand to attend than there was capacity for people to attend.  (Please note that I do not work for, nor am I paid by WorldatWork, nor do I have any formal relationship with them.  I am just a fan of this type of dedicated event.) 

This year, even with an even bigger venue there is a good chance that this is going to be another sell-out event and people will be turned away again.   If you are thinking of attending - register quickly and avoid being disappointed.  I know you have all heard this type of hype before and generally treat this as ‘marketing hype’ but in last year’s case there were many disappointed people who turned away.

I have often lamented to industry associations and conference organizers that there are not enough focused events where specialists focused on sales compensation can gather and share best practices, hear from experts and share ideas with their peers.  WorldatWork has done a great job of putting together the Spotlight on Sales Compensation, but based on the attendance it would appear that there is a lot more interest in topic and practitioners are not being served adequately.  

There is a lot of demand out their for timely, relevant, quality content on Sales Compensation.  Don’t miss the Spotlight on Compensation event this year.  It will be a while until there is another chance.  

To find out more about the conference follow this link

May 16, 2011

Life, Liberty and the Pursuit of Sound Plan Design

At INSIGHT11 in Boston this week, Brandon Kulik from Deloitte’s Sales Effectiveness/Human Capital Management practice presented his thoughts on integrating administrative and technology functions into the sales compensation plan design process. 

He suggests that the plan design process is multi-functional, highly visible, business impacting, and yet for a lot of organizations it leaves out critical players who can ensure its success.  Two of the most critical and sometimes overlooked players include those who are responsible for administering the plans and those who provide the data and upstream systems which are part of the overall commissions management process.  

All too often sales teams design plans with the best of intentions, but without input from compensation administration and information technology groups.  Without their involvement in the design process it’s hard to determine the practicality, cost and time involved in implementing their ideas. For example, if the data required to calculate commissions for a new plan doesn’t exist then the plan needs to be reconsidered, or the time to implement extended so that the data can be sourced from new or different systems.  It is much better to know this early when there is time to adjust, rather than figure it out after the new plans have been communicated to the sales team.

Another key point of Brandon’s talk was that the compensation administration and information technology groups bring a detailed understanding of the way things work today.   Many new plan concepts are designed and work at a general level, but confusion and mis-interpretation creep in where there are exceptions, unique cases and the like.  There is a need for absolute clarity on how the rules should be interpreted and managed in every scenario.  Making sure everyone understands this, can significantly reduce delays, errors and significant cost and wasted effort further down the road. 

Two other key considerations to ensure a more effective plan design process are to ensure that there is a governance process that formalizes the involvement of the compensation administration and information technology groups to ensure that this involvement is not ad hoc or convenient, but rather part of the standard processes by which the organization operates.  The other was to leverage modern sales performance management solutions to aid in the analysis, implementation, communication, roll-out and eventual success of the new plans.  Relying on legacy systems, manual processes and spreadsheet based systems will not allow organizations to efficiently and effectively design, implement and roll-out new plans at the speed of business today.

If you have any comments or follow–up questions please post them here or contact Brandon directly at

May 13, 2011

INSIGHT11 - Varicent Customer Conference - final preparation

I was just sitting here packing up, getting ready to head out to Boston for INSIGHT11, our third annual customer conference.   The team here has been working at a frantic pace getting all the last minute things sorted out for the conference.  We just took a minute to think about how far this has come in 3 years since our first INSIGHT in Chicago.   It's come a long way!

Even though the conference has nearly tripled in size, the thing that remains consistent is that it is  the support of our customers, and our partners who truly make this event the success that it is.  I know that a number of people that wanted to come this year just couldn't due to scheduling conflicts and competing priorities.    We will do our best to tweet (follow #INSIGHT11)  and blog about some of the major happenings at the conference.  We will also post some of the pictures on our Facebook wall.   

If there is something specific you want to hear about you can send me a tweet @bhartlen or email and I will try and get something posted.

May 9, 2011

What is Sales Performance Management?

Sales Performance Management has many different and broad definitions.   From a software perspective, Sales Performance Management (SPM) is defined as a comprehensive solution that helps organizations drive sales alignment from strategy through to execution, while improving efficiency, accuracy and timeliness of the associated administrative processes.  Implementing a Sales Performance Management solution ultimately leads to better management and utilization of sales resources. 

Sales Performance management is about putting timely and accurate data in the hands of decision makers in order to aid them in making more informed decisions.  Who sold what products at what price last month?  What are our top selling products by region?  Are commissions payouts in-line with expectations? Are my territories all covered effectively?  How many reps are over 70% of quota and now on accelerators?   These are just some of the questions that sales management ask every day.  In most organizations there is no simple, consistent and accurate way to get the answers to those questions.  The ERP has some of the information.  The CRM has some of the information.  The HR system has some of the information.  Much of the rest of data is in emails, spreadsheets and legacy systems.  Analysts who are charged with finding out the answers to these questions generally resort to a combination of extract files, Microsoft Access and Excel to pull the data together to provide the answers.  Often the resulting report or analysis is incomplete, late, and suspect in terms of accuracy.  The burden of pulling it all together makes even the simplest of requests a daunting task.  When it comes to managing, processing and reporting on territory assignments, plan eligibility, quota attainment and commissions calculations the process looks much the same.

Sales Performance Management (SPM) help organizations understand and improve the performance of their sales organization by offering a complete solution to manage incentive compensation, roster management, territories and quotas.  Most common sales performance systems provide capabilities to:

·         Integrate data from a variety of disparate source systems (commonly ERP, HR, CRM, spreadsheets and legacy systems.)  This eliminates a lot of data duplication, expensive and error-prone custom ETL routines, multiple and inconsistent versions of the data.

·         Calculate results – the ability to take all the input data, and then match source data with eligibility rules, territory assignments and the plan components to derive accurate commission calculations.

·         Create custom reports – with an embedded reportwriter. These include the ability to capability to generate personalized and branded commission statements, operational and management reports and analysis.

·         Automate workflow processes – to ensure that all operational aspects of the commission management process are documented and effectively executed.

·         Provide complete audit trails -  The ability to track all of the actions, data changes and resolutions involved in Sales Performance Management processes.  This includes plan acceptance, dispute, inquiry and resolutions, calculation expectations etc.

Organizations looking to implement a Sales Performance Management System should look for the following benefits: 
  •  Aligning sales resources to organizational goals and strategies 
  •  Providing timely, accurate and actionable sales information in order to improve decision making
  • Streamlining the administration of incentive compensation management processes in order to reduce errors, costs and time 
  • Provide increased visibility into the compensation process for audit, compliance and management oversight

The definition of Sales Performance Management differs slightly depending upon the perspective and background of the individual or organization.  I have included Sales Performance Management (SPM) definitions from a few of the more popular sources and experts below.


Ventana Research

Ventana Research defines Sales Performance Management[1] as a coordinated and integrated set of sales-related activities, processes and systems that help organizations meet customer revenue goals and objectives.  Only those sales organizations that integrate people and processes tightly with information and technology are able to maximize their effectiveness, from top management, through finance and operations to the sales representative on the front line.

Ventana believes that Sales performance management today remains more art than science. They also believe this must change. Advancing the maturity of sales and thus its effectiveness and contribution to company success requires not just improved processes but ensuring that the people associated with those processes are evolving to become the sales talent that represents the best of your company. One of the essential underpinnings of this evolution is complete access to information about sales activities and to the metrics that most significantly track the performance of the sales organization.



According to Michael Dunne, VP Research of Gartner, in his note - Introducing the Concept of Sales performance Management[2], SPM represents the next generation of best practices for sales. It establishes a strong foundation for improving sales execution. Use this concept to better organize sales territories, quotas and compensation plans to increase sales.


SPM solutions provide executives and sales management with a clear view of critical sales data, such as what products were sold where, by whom and to whom, that enable quick and informed course correction to ensure the alignment of sales strategies to desired business outcomes. These solutions are unique in their ability to solve the “one-two punch” of insight and action (i.e., knowing what business strategies need to be changed and having the tools to make the required changes). Together, these products and services offer medium-to-large enterprises in a multitude of industries the ability to transform their incentive payment systems into strategic business weapons to drive profit growth.

[1] Ventana Research,  website -
[2] Introducing the concept of Sales Performance Management,  Gartner Research Note (G00141067), Michael Dunne, Research Vice President Gartner, 2006
[3] – Sales Performance Management Definition

May 1, 2011

Look for more than improved efficiency when implementing a Sales Performance Management System

I am often asked about the drivers of Sales Performance Management projects.  What specifically are organizations looking to accomplish?    How do they determine the Return on Investment (ROI) on their Sales Performance Management initiative?  What are the first priorities?

While every organization is unique and they each have their own challenges, perspectives and priorities there are three categories of benefits that are common across Sales Performance Management projects. 
They are:
·      Efficiency gains
·      Business enablement
·      Reduced risk

One of these goals normally takes precedence over the others and tends to get most of the focus from project teams.  Organizations are well-advised to look at the opportunity for business gains across all three drivers.  

Efficiency Gains

Organizations often start projects with the goal of looking for efficiency gains.  The pains associated with high commission error rates, delays in processing times, and significant effort and administrative burden are tangible and it is relatively easy to quantify the benefit of gaining improvements in this area.

Improved efficiency is about doing more with less.  The expected gains are in area of reducing the time and effort it takes to process and manage commissions, quotas, roster and territories.  Reducing effort to maintain the current systems, reducing the number of days to process month ends, reducing errors rates in commissions are all common themes.  This makes a lot of sense as industry analysts cite that organizations implementing a Sales Performance Management System (SPM) can reduce the administrative and IT staffing effort by more than fifty percent.  They can also expect to reduce incentive compensation calculation errors by over ninety percent.   Organizations looking for a hard ROI can generally find find ample evidence of organizations than have had major successes in processing efficiency.

Business Enablement

The second area of benefit that most organizations find is in enabling the business to do something that was previously too impractical if not impossible to do.  Many organizations are unable to implement certain types of components in their plans as their current systems, processes and technology preclude them from doing what they want.  Common examples include implementing margin-based versus revenue-based plans, introducing quarterly SPIFs, and incentives to drive certain packages or bundled offerings.   Being able to adjust to market shifts and implement changes quickly can help organizations take advantage of new market opportunities and react to other market shfts quickly.  The overall result is that incentive compensation plans drive the desired sales behavior and help with organizational alignment.   The inability to do this has long been the frustration of many sales leaders.   Modern SPM systems provide sales leaders with the speed and flexibility to drive the sales organization the way they want, ultimately driving increased revenue, increased margins, and increased organizational alignment.


Risk Reduction

The third driver of interest in Sales Performance Management software is risk reduction.  According to the respected analyst firm Gartner, approximately ninety percent of organizations with over one hundred sales reps are using home-grown or spreadsheet based solutions to manage incentive compensation.   While these 'systems' lead to many of the inefficiencies and create roadblocks to improved effectiveness that I referred to earlier, it is often the case that there is a compliance or audit driver that is behind putting in a new Sales Performance Management software solution. 

From a compliance viewpoint the challenge is to provide a holistic view of commissions from an overall view down to individual performance.  Increased checks and balances, multiple approval levels, tracking down exceptions and other compliance requirements tend to put a burden on home-grown and spreadsheet based systems that slow them down and create more rigidity - exactly the opposite of what is required.     Modern Sales Performance Management solutions provide built-in complete audit trails, plan approvals, dispute resolution and compressive reporting on exactly how and when territories, quotas, plans and commissions were changed.   For many organizations this increased visibility replaces error prone and time consuming email chains and voice mails.  Payees appreciate the clear and consistent view of their commissions, administrators save significant time and effort tracking down reasons for adjustments, and sales compensation administrators are much better prepared for both external and internal audit and compliance requirements.