Consider A Managed Services Approach as a means to Improve and Optimize Sales Performance Management

January 18, 2015

Sales Performance Management (SPM) and more specifically, Incentive Compensation Management (ICM) is a business function that combines people, process and technology as a solution set to effectively compensate sales performers for their performance against their sales plan. Most, if not all organizations that have sales performers greater than ten (10) have some sort of functional process for ICM. However, as the number of performers and the level of complexity of compensation plans increase, many organizations look to improve their SPM function; often through the use of automation.

Many would-be SPM buyers (economic or managerial) see the current state of their ICM function as too cumbersome, too complex, unsustainable with a high risk of failure or simply not providing the business value expected (consistency, auditability, transparency, etc.). In turn, being operationally draining on internal resources and providing no value added services.

When buyers try to research solutions or seek out new solution paths, the overwhelming majority of information is focused on commercially available technology solutions.  Functional automation is touted as the primary answer to all issues and the competition amongst vendors is typically rooted in product feature/function as opposed to full business requirements value.

This solution path can range from several months to more than a year depending on various factors including vendor responsiveness and customer readiness issues such as budget and ROI, data complexities, process rationalizing, approvals, contracting, and resources. Buyers often times exit this process confused due to a lack of a focus on how the system should perform based on their requirements, alignment of the processes and roles surrounding the system.  All too often, once a vendor has engaged on a deployment effort with a customer, the goal becomes more about getting a system up and running as fast as possible rather than a measured focus on achieving the customer’s business goals and objectives, which was the reason a new solution was sought after in the first place.

Once the new system is in operation, there may be a gap between the staff required to operate the old, largely manual functions and the skills required to operate the new system. There is a more expensive risk associated with employee turnover due to the time and cost to train and enable both functional and technical staff

Picture this – a buyer in this scenario looks beyond technology as the only solution and instead focuses on the business problems. If the buyer were to take a step back and look at the real business objective, it would probably be something along the lines of:

“To maximize the effectiveness of the sales compensation programs with the optimal operational and management controls in terms of expense and time.”

In other words, sales performance programs are only effective if they can incent and motivate the right behavior whether on a sales team or any team with pay at risk. It is critical that any solution is cost effective and aligns with sales goals and objectives. While the “strategic element” of this function is the design and implementation of desirable and incentivized compensation programs, the operational and processing aspects of these programs are more “tactical” in nature. Yet these tactical aspects can affect your strategic impact based upon your ability to operationalize the programs.

To this end, a business solution to be considered, to achieve the SPM business objectives, would be a Managed Services - Business Process Outsourcing (BPO) of the SPM related to the tactical and operational aspects of ICM. With this type of solution, the focus can drive toward higher sales performance in both planning and execution. The goal is to strike a balance between customer-focused requirements and BPO deliverables.

Under this kind of processing solution, the customer retains the strategic capability related to the sales compensation function and the tactical aspects are left to a service provider with the necessary infrastructure and labor to process and service the SPM function in a more consistent and scalable operation. The service provider can often leverage economies of scale across multiple customer needs to offer a more robust service level than what can be accomplished by an individual customer where the transaction volumes cannot justify the level of investment required.

Since sales and incentive compensation is a specific business model usually managed by the internal finance or sales operations team, finding a Managed Services (BPO) provider that understands your business is key. Selecting the right BPO provider can help determine the strategy for improving your performance management environment, help you set an adoptive course and provide you with best practices for consistent delivery.

As a trusted leader and global advisor that deliver Sales, HR, and Finance solutions to accelerate business performance, we are able to help you manage and optimize sales performance and incentive compensation technology solutions. Success Is: Having it your way. With OS Managed Services, you can design a full or partial Managed Services offering to meet your business requirements. To learn more, speak with an expert today.

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Comments

I second. An holistic research for a SPM solution should include an end-to-end due diligence from all possible dimensions to help a better planning and realizing optimum benefits.. As capability wise most of the available products are competing in current days and offers out-of-box solutions for a standard set of business problems encountered across the industry, majority of the organization’s decision on platform selection is purely driven by cost,  essentially overlooking the process and cultural changes that these solutions enforce on them. There are examples of quite a few customers who have implemented CoTS solution but never been able to use it in its true potential. Probably in coming days,, customers will be acknowledging this hard fact and will understand the imperative need of a ‘Managed Service’  to be successful in their transformation journey.

Thank you so much for your post and your insights. One thing that we have come to recognize is that long before customers engage in selecting a solution platform, they are engaged in discussions and identification of the business problem(s) they face. Often times, this results in a platform decision without the proper due diligence to determine the operational, resourcing and process control affects associated with their decisions. The result is once the platform solution is deployed, the issues and challenges of cost effectively running the operations comes crashing into their reality. An approach that presents the right framing of end-to-end due diligence provides proper planning and risk mitigation. I would love to further hear your thoughts and experiences in this area and the challenges you see customer’s facing.

Very well captured Joe. This is precisely most contentious problem most of the would-be SPM buyers are facing these days which kinds of putting them in double minds with their end decisions on procuring the solution.. Where majority of the commercial demonstration of most of the SPM product houses are peddling the functional automation capability and thus underscoring the smartness of their technology, none really address the entire SPM business process holistically and how their product fits in the bigger business landscape. I have experienced quite a few customers who are fascinated by certain SPM product capability while researching a commercial off-the-shelf solution but at the same time clueless about how to tailor it as per their own business process model.. And this opens up the perfect role to play by an ideal System Integration partner who can engage with customers to understand their Business process pain areas and offer a E2E Managed service starting from the selecting the product-of-choice,  to optimally configure it in customer landscape, to scale up customers Business user pool in post implementation era.

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