Observations from CFO Enterprises CPM conference

I had the opportunity to present at CFO Enterprises annual Corporate Performance Management (CPM) conference in New York last week.  Robert Kaplan opened the conference with an update on The Balanced Scorecard and Activity Based Costing.  He used some great examples of companies like Volkswagen to illustrate how organizations are mobilizing the entire company towards executing a few key strategies utilizing the Balanced Scorecard.   David Axson, of Accenture (formerly a partner at the benchmark research firm – The Hackett Group),  opened the second day with a great session on our need to recognize that the speed and impact of world politics, business events and even weather have an increasingly stronger direct influence on this year’s financial plan.   Organizations must be more nimble in their planning, forecasting and budgeting processes in order to survive.

Most of the speakers talked to the finance audience about alignment, strategy and execution.  Each and every presentation I attended mentioned increasing revenue and increasing forecast accuracy – from both a revenue and cost perspective.  The challenge I observed however is that many of the follow-on conversations led back to the traditional topics of how to improve budgeting, consolidation and forecasting.   This has been the traditional view of CPM over the years.   I believe that while this is important and necessary, it’s missing a key element - sales force alignment.   It’s hard to find an organization that doesn’t have strategies that involve penetrating new markets, selling more to customers, launching new products, yet there was precious little conversation about how to align and motivate sales teams in order to execute these strategies.  

Based on the feedback that I received at my session and the follow-on conversations I had with attendees, it appears that I hit a nerve. When CFOs think about strategy and organizational alignment their perspective on what sales should be doing is quite often at odds with what the heads of Sales believe.  One example of this disconnect is that most sales organizations are striving to introduce incentive plan simplicity.  Many CSOs believe their sales compensation plans are too complex, too confusing, too rigid, and are looking for ways to simplifying them in order to drive the desired behavior from their sellers.  Many of the leading compensation plan consultants argue that a good sales incentive plan should have no more than three components.  

Yet when CFO Research Services surveyed CFOS about the same topic, CFOs responded the most important thing that Sales could do to ensure reaching its goals is to Encourage Sophisticated Sales Behavior.   They want to drive up-sell, multi-year deals and other high-margin offerings.  The goal is to drive bottom-line improvements and overall customer retention.   Increasing sophistication is at odds with increasing plan simplicity.

Both the Sales and Finance leadership are motivated to improve sales but their views of the solution lead to conflicting tactics.  This is just one area of the discord.   Sales Self-Service, the right role for business analysis,  how best to set sales targets,  technology to support sales management are just a few of the topics that Sales and Finance need to agree on in order to work together to drive organizational alignment and driving increased high-margin business.

When considering how to execute strategy and improve organizational alignments CFOs and CSOs need to make sure that they are aligned first.


If you would like copies of some of the research I reference here just let me know and I will forward it to you. 

Great Executive Interview questions for Sales Performance Management

When we talk about the keys to success when implementing a new sales performance management system, the issue of executive sponsorship always comes up.  It is critical to ensure that organizations are aligned across business functions (covered in this blogpost - http://bit.ly/vHkO5P ) but also that organizations are aligned vertically throughout the organization.

This week  I was talking with Mark Coleman, Managing Partner of Compensation Analytics (www.compensationanalytics.com) about some of the great research they are doing and the topic of executive sponsorship for Sales Performance Management (SPM) projects came up. Our mutual experience has shown that spending time upfront to make sure executive sponsor's needs are well understood is critical.  These will be things like aligning sales performance management capabilities with business strategies and providing sales management with the information they need to be more effective.  Getting in to the weeds too quickly (on a topic as complex as sales compensation) can result in your sponsor missing the value of SPM – it’s best to save the discussions on error rates, dispute handling, and pipeline processing for the subject matter experts.

When talking with executives it is important to understand their priorities and perspectives.  The following is a sample set of questions that will help guide an executive meeting.  Some of these are higher level and more strategic, and some of these are more tactical, but all of them are geared towards gaining insight as to where improve sales performance is on the executive sponsor's list of priorities.  These are intended as a guideline and should be tailored to your specific organizational needs.

 

1.      What are your top priorities and what do you need your sales force to do differently in order to achieve these goals?

2.      From your perspective, what is broken with sales compensation?  Why? What do you think are the underlying root causes behind these issues?

3.      What strategic capabilities do you think you’ll need in a few years that you do not have today?

4.      On a scale of 1-10, how would you rate the performance culture of your sales organization (1- what is performance management?, 10 – high expectations, active performance management)

5.      If you had 3 wishes for capabilities that would improve your sales performance, what would they be?

6.      After being out of the office for a while, what is the first Sales report you look at upon your return?  Why?

7.      What’s the number one thing you would like to know about your current sales performance that you don’t know today?

8.      If you could enhance the information you now receive to improve its value to you – what would you change?

When should the executive meetings/interview happen?

Some people advocate that you get all of the research done, figure out potential solutions and answers to these questions before meeting with executives.  You will have to judge your own organizational dynamics and culture, but I believe that you should go in early with these questions.  It’s only once you have the executive perspective that you can really go out and research potential process, organizational and technological improvements.

 

New Michael Dunne White Paper and Webinar now available

Many organizations are working hard to improve their sales effectiveness.  Increasingly many of these organizations are turning to information technology to help improve the efficiency and effectiveness of their incentive compensation and sales performance management processes.  Many of these organizations are now in varying stages of rolling out Sales Performance Management (SPM) solutions.

During these deployments, organizations go through a number of distinct phases as they mature.  The first phase is to ensure that the processes they have in place are efficient and produce accurate results.  As organizations look 'beyond the numbers' they go through increasingly complex phases ending with business agility and overall SPM optimization. 

I asked Michael Dunne, X-Gartner analyst, and long-time veteran  of sales effectiveness and sales performance management to write a report, outlining these stages of evolution, and to provide some guidance for organizations who find themselves in different levels of  SPM maturity.


The result is a new report which provides great insight as to the evolution of SPM systems within an organization.  This is a must-read for anyone trying to educate themselves on the Sales Performance Management landscape.   I have also asked Michael to discuss this paper and answer any of your questions in a webcast. This is now scheduled for December 6th.

Click to download Michael Dunne whitepaper or to register for webinar Dec. 6th 

6 New SPM Trends: Trend 5 - Transition to the Cloud

Much has been written about the advantages of cloud based computing.  It’s not that cloud computing is new in 2011, but rather that many large organizations had thought that cloud based computing was only appropriate for small to medium sized businesses.  They were concerned that cloud solutions:

·     Would not scale to their volumes

· Would take away the ability to control upgrade timings

·   Would fail strict security and audit requirements

·  Could not offer the flexibility to meet specific and demanding requirements of large enterprises

There are compelling arguments for why cloud based solutions do provide significant benefit.  These include:

·      Reduced burden on existing, overburdened IT staff

·      Faster project start times (avoiding hardware procurement process)

·      Reduced initial investment and shared risk pricing model

·      Improved vendor support  - as they manage the entire hardware/software environment

The good news is that cloud computing has matured; the early adopters have paved the way, and software vendors have expanded their capabilities, offerings and platforms.  There are more options available to meet the specific needs of today’s complex organization.  For organizations that don’t want to co-mingle their data, there is a single-tenant cloud solution.  For those with security and firewall concerns, there is a new movement towards private cloud deployment. With this flexibility and configurability in deployment options, most organizations are now choosing cloud-based options for new Sales Performance Management implementations.

With the increasing array of options and flexibility in SPM offerings, it’s not simply an on-premise versus cloud decision facing organizations.  It’s much more complex.  Project teams are well advised to make sure that they consider both their requirements, and the specific options offered by their short-listed vendors.

 

 

2011 Sales Management Association Sales Productivity and Performance Management Conference

Bob Kelly and the team at the Sales Management Association put together a great event in Atlanta recently.  The agenda was filled with many experts including academics, practitioners and vendors.   Most of the attendees were from sales operations and the people I talked to were happy that there were many sessions targeted specifically for them.  Some of the topics covered included Inside the Sales2.0 Organization, Predictive Analytics for Sales leaders and Technology’s impact on Sales Management Practice.

Andris Zoltners,  the ‘Z’ in ZS associates opened Day 1 with a presentation on the importance and impact of Sales Management on sales productivity.   Day two saw Barry Trailer from CSO Insights and Mark Selcow President of Merced, present a keynote comparing improving sales force productivity to the new Brad Pitt movie Moneyball.  Joe Galvin, former Gartner and Sirius Decisions analyst seemed to be moderating, participating and generally adding value to most of the sessions that I attended.  With his history and rich background in sales effectiveness I always find that Joe provides some great insights.

I was fortunate to have the opportunity to present on the ROI of Sales Performance Management solutions with Justin Lane of OpenSymmetry and Rebecca Sandberg of Elavon.  Justin has such a broad base of experience implementing SPM solutions that he had a lot to contribute.  Rebecca shared her experiences at Elavon, a global credit card processing organization and gave advice on implementing an incentive compensation management solution in a global financial services organizations. 

While this was the inaugural Sales Productivity and Performance Management conference,   I certainly hope it was just the first in a long line of successful conferences hosted by the Sales Management Association.

6 new SPM Trends - Trend 4 - Increasing requirements for Audit, Compliance and Visibility

There is an increased need for oversight in the world of Sales Performance Management.   There is a growing desire to scrutinize the inner workings of the compensation system and the related processes.  There are two main drivers of this change.  First, some organizations are cracking down on the internal audit processes.  They are driven by concern of new industry regulations.  Many are making sure that they can comply with the changes to incentive compensation brought on by the Dodd Frank Act[1].   In particular, they must comply with section 956 of that Act which states that covered organizations must disclose to the regulators (and there may be more than one in some cases) the structures of all incentive-based compensation arrangements.  The intent is that organizations should have plans that appropriately balance risks and rewards, are compatible with effective controls and risk management and are backed up by strong corporate governance and oversight.

The second driver for increased audit and compliance comes from organizations who want to better understand how the sales operations, HR and Finance processes are working with respect to SPM.  They are trying to evaluate the effectiveness and service levels for their key operational processes.  How long does it take to process all commissions?  How many disputes are filed with every commission run?  How long does it take to resolve these disputes?  Are commissions tracking towards the agreed targets?  Which management reports are being viewed?   These are just a few of the questions that organizations are looking for better answers for.

While many organizations have solid incentive compensation plans, documented processes and workflow surrounding compensation they cannot efficiently and effectively respond these new demands for reporting and audit.  Data from emails, conversations and sales-driven exceptions often fail to make their way into the system of record.   Hiring more administrative staff, or taking a long time to respond to audit requests, is not acceptable so many organizations are implementing new incentive compensation management systems to help.  As the majority of organizations also use spreadsheets and homegrown systems to manage incentive compensation the ability to provide the necessary insight also diminishes.  These tools do not provide the robust audit trail, embedded security, role based access and other key features required to pass an audit.   With changing and more stringent requirements for increased visibility on the horizon it is critical to have flexible reporting capabilities in the hands of those who need to provide data to all the oversight groups.

Potential buyers of SPM technology should survey the finance and internal audit groups within their organization to survey their existing needs, and anticipate their needs going forward.  This establishes a foundational baseline of requirements when looking for a new system.

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[1] Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

6 New SPM Trends - Trend 2 - Sales Adoption of Mobile Devices

Last week I blogged about the 6 new trends I see in Sales Performance Management. The first trend was about the need to handle increased business complexity.  This week's blog is about mobile devices for sales teams.

It’s no surprise that Ipads, smartphones and other mobile devices are being adopted by sales forces everywhere. Smart devices are now outselling laptops[1].   It seems almost every week there is a new entrant into the tablet wars.  The market is expected to grow from 26 million to over 80 million tablet users in the US^[2] alone. 

Many questions are now being considered by sales organizations everywhere. What is the appropriate mobile device for the sales team?  What is the right set of functionality that needs to be delivered to the mobile device?    There is no universal right answer, and the adoption of mobile technology for sales teams is a broader issue than SPM.  There are three key things that organizations have to look at when it comes to mobile adoption - Device Support, Functionality, and Culture.

Device Support – What platform do you need to support?  On the tablet side, Apple has gone out to an early lead with about 68%[3] market share of all tablets sold.  The market however is still young and there is lots of room for technology advances.  Organizations must consider whether they want to take a device specific approach, or an agnostic approach.  Looking for vendors who support standards like HTML5 and browser agnostic support gives an organization the most flexibility in tablet support.  Applications coded specifically for a platform may have tighter integration with that platform, but will be more limiting in terms of device support as the market matures and shifts.

Functionality -   Once the platform is decided, and then you must decide what functionality you want to deliver on the mobile device.  In most SPM scenarios simply replicating a full desktop or web experience on a smartphone doesn’t work.  Have a look at your current commission statement and imagine how much would be viewable on a Blackberry, Android or Iphone window.  Typically commission reports are multi-page statements with lots of columns and in order to comprehend the entire statement you would have to be able to look at more than one or two columns at a time.  Organizations are well advised to design reports and outputs specifically for the mobile device, and not settle for delivering full reporting onto mobile devices – just because you can.

Culture - this is often overlooked when considering mobile device support.  Some Sales Leaders want to ‘get everything on the smartphone and tablet’ to avoid all the wasted time lugging around laptops, trying to figure out VPN or other connecting activities.  The idea of ‘right here right now’ information delivery has a huge value over waiting for the sales reps to connect when they are back home, in a hotel or office.    There is another train-of-thought where sales leaders are concerned about everything that takes away from their sales teams ability to have customer facing time during the day.  The idea of delivering commissions, quota and territory update information constantly throughout the day is a distraction.  Their belief is that this kind of information should be delivered to the laptop/desktop when the reps are not out in the field.

The overriding trend we are seeing in mobile device support is that the adoption of mobile technology for sales is directly proportional to the frequency of data updates.  Organizations that report on sales and commissions daily are much more likely to want to drive this information out to mobile devices than organizations who update their data monthly or quarterly. 

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[1]  IDC Worldwide Quarterly Phone Tracker, January, 2011

[2]  Forrester Research eReader Forecast 2010 – 2015 (US)

[3] IDC Worldwide Quarterly Media Tablet and eReader Tracker, September 2011

10 great links for Sales Performance Management

Spotlight on Sales Compensation
 http://www.worldatwork.org/waw/salescompspotlight/html/index.jsp

WorldatWork has done a great job of putting together the Spotlight on Sales Compensation, a conference focused specifically on helping sales compensation professionals. This year’s conference runs August 24-26th in Chicago.

Survey:  CFO Research Services
http://www.cfo.com/whitepapers/index.cfm/display

CFO Research Services does a great job of understanding the role of Finance and marries that with excellent survey, analytical and writing skills to provide some of the best research available. I sponsored research to better understand what CFOs were thinking about their changing involvement in sales compensation. “Managing Sales Incentive Compensation amid Uncertainty” provides some great data on the changing role and changing perspective of CFOs when it comes to the need to change sales compensation. This is a good read and well executed by Sam Knox and his team.

Ventana Research 2011 SPM Value Index           
http://www.ventanaresearch.com/research/overview.aspx?id=3208

Ventana compiles an authoritative look at the Sales Performance Management Market. The 2011 Value Index provides a comprehensive look at the Sales Performance Management market and vendors.

BetterSalesComp Blog                                       
bettersalescomp.com/blog

Ted Briggs and Clinton Gott share their real-world experiences in sales compensation. They are particularly knowledgeable in High Tech, Financial Services and Medical Devices.

New Sigma Blog  SalesCompInsights                     
https://salescompinsights.com  

Industry veterans Scott Barton posts regularly with valuable insights and opinions. A must read for Sales Compensation professionals. 

CSO Insights - Compensation                                      
http://www.csoinsights.com/topics/Compensation-Territory-Quota
Jim Dickie and Barry Trailer are experts in understanding senior sales executives. Over the years they have gathered fantastic survey data on key trends in improving sales performance. Combined with their personal experiences and insights they are a great resource to understand the keys trends from the Sales perspective. This link leads to some of the great findings on compensation, quotas and territories.

Ann Bares - Compensation Cafe                              
http://compforce.typepad.com/compensation_cafe

Ann writes one of the best blogs on compensation practices. It's broader than sales compensation, but her opinions and posts are very useful for compensation professionals. 

Compensation Analytics                                             
http://www.compensationanalytics.com/resources.html

There are a number of good articles and insights from Mike Chapman on his website. Mike has a long career in Sales Performance Management. He brings lots of experience from being a practitioner with a couple of insurance companies, and also from the consulting side as a Accenture partner. This link takes you to some of the articles he has posted.

Sales Management Association                               
http://salesmanagement.org/

Bob Kelly has put together some impressive resources and experts all focused on helping sales and sales operations leaders. They provide tools and training for individuals who manage, coach or lead sales organizations. There is a membership fee for this site, but Bob does provide a lot of webinars and replays on slideshare.

The Alexander Group                                    

www.alexandergroup.com/blog

David Cichelli is Alexander Group’s principal thought leader regarding sales effectiveness challenges and solutions facing sales organizations during different stages of growth. He has written two books on Compensating the Sales Force, and speaks a lot of conferences. The Alexander Group blog has some information on driving sales force effectiveness

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.

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 bkulik@deloitte.com

SPM Keys To Success - Global versus Local Sales Plans

In my SPM Keys to Success section of this blog I have been writing about the conflicts that can occur at the outset of the project.  Resolving these different priorities will go a long way to ensuring project success.

David Chichelli, who runs the Sales Effectiveness practice  at the Alexander Group recently wrote a great blog post about the conflict that  organizations  face when it comes to designing plans.   Read his post on the challenges and benefits of developing centralized/global plans versus local sales compensation plans.

http://bit.ly/hC0ipx