Sales Performance Management (SPM)
solutions are proving to be incredibly valuable for organizations that adopt them. According to research firm Gartner,
organizations that implement compensation management solutions can expect to
reduce errors by more than 90%, reduce processing times by more than 40% and
reduce IT/Admin staffing by more than 50%.[1]
SPM solutions are becoming attractive not
only because early adopters are achieving success but also because there is
increasing pressure on compensation teams to deliver more. Organizations are demanding more than just
accurate commission statements that are delivered on time. They need visibility, analysis and oversight
into the entire variable compensation process as they want to understand better
what is working and what isn’t.
While the majority of organizations still
manage incentive compensation with home-grown solutions, or lots of Excel
spreadsheets, more organizations are retiring these solutions in favor of a
more complete packaged incentive compensation and sales performance management
system. With this rapid SPM adoption new trends are starting to emerge. This paper discusses the top six trends that are
influencing organizations who are considering implementing new software solutions
to help them improve sales performance and incentive compensation practices.
Over the next few weeks I will discuss each of the 6 trends.
The first...
Trend 1: Increasing Business Complexity
In a recent study conducted by the
Economist[2]
an overwhelming majority of survey respondents (86%) think that business
has become more complex in the past three years, many describing their
businesses as chaotic. This increasing
complexity is often driven by the reality that organizations produce more
products, sell in more markets, through more channels with more complex
workflow processes. These organizations also
have an increased need for speed when it comes to getting results. Adding to this challenge is that many
organizations are struggling just to keep up with an ever-increasing volume of
data. Over the past couple of years
organizations increased the amount of data stored by a staggering 62%[3]. With this hectic pace of change it is easy to
see why existing technologies, plans and processes in sales compensation cannot
keep up with new requirements.
Most organizations do not expect the rate
of change nor the ability to capture data to decrease in the coming years. Most home-grown and spreadsheet based
systems were implemented years ago and were never designed to handle the volume
of data, rate of change, expanding product lines and desire for increased
analytics, modeling and reporting. It is
not uncommon to see that today’s compensation systems need to be able to
efficiently handle millions of transactions a day in order to manage sales
reporting and incentive compensation calculations.
When considering SPM technology, evaluation
teams must consider their requirements to quickly load data, calculate
commissions and produce the necessary outputs.
They should also estimate, to the best of their ability, data volumes
and complexity for the next few years to ensure that the application is capable
of handling those volumes. Organizations
looking to implement new systems are well advised to try and determine their
performance requirements and conduct a scalability and performance test when
looking at acquiring new software.
[1]
Gartner Marketscope for Sales
Incentive Compensation Management Software, Michael Dunne, March 2010
[2]
The Complexity Challenge, How
businesses are bearing Up, Economist
Intelligence Unit, 2011
[3]
EMC annual shareholders meeting presentation.
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