The Magic of SPM
February 03, 2015
Gartner has just published its 2015 Magic Quadrant review of Sales Performance Management (SPM) technology. It paints a very positive but also challenging picture for SPM providers.
There are three key implications for the industry. Vendors are to a greater or lesser extent broadening their technology footprint across SPM. This means that the required messaging to potential clients is more challenging and needs to be more sophisticated and succinct. Gartner’s findings on SPM uptake across their client base shows very different rates of adoption which means there is a need to articulate the business benefits of more holistic SPM adoption. We find that this is unique particularly across different geographies.
Finally, there is a strong message that SPM technologies are starting to be integrated across business platforms from Customer Relationship Management (CRM), which has been pretty consistent over the years and more importantly across both Human Capital Management (HCM) and Corporate Performance Management (CPM). This is a powerful development. The C-Suite needs to join up thinking, analysis and decision making across the business lines. There is a responsibility of providers to join up the technologies and enable the client executive.
Expansion of Capability
SPM is a broad-based capability which enables business to manage different facets of selling – recruiting and onboarding sales talent, coaching and developing the salesforce, managing aspects of the sales process, determining the challenge for salespeople through determining their territories and quotas and designing and managing their incentive compensation.
The challenge for vendors and integrators is to join these facets up into a compelling and simplified story. Integration rather than a myriad of applications. Some vendors have done this effectively.
Vendors have been developing system capability in addition to integration. In particular, Gartner reports increasing deployment of Territory and Quota Management, appraisal and coaching and the use of crowd-sourced data (i.e. anonymised data) from clients using their software. Gartner clients report very positive impact of the talent management functionality.
Some vendors are consciously developing a total offering across SPM. Not all of that capability is as high as some of the standalone options, for example Territory and Quota and Learning Management Systems. Some vendors are consciously not developing a total solution, not extending their offerings into areas like talent management and continuing to stay laser focused on their specific pillar of expertise.
Seeing the Business Case
The key challenge for the industry is client education. It is a complex landscape for businesses. At a simple level some businesses will have a simple rallying cry of recruit the right people and give them a comp plan and let them go. We know it’s a more complex picture with different stakeholders involved and those businesses taking a simplistic approach lack the required flexibility and capability.
The evidence is that there is broader SPM adoption. From their 45 clients surveyed, Gartner sees mixed take up of different aspects of SPM. For example 71% are using Incentive Compensation Components (ICM) and 38% sales appraisal and evaluation. However, only 22% are using territory management functionality probably because there are independent function-specific offerings in the market. Only 9% are using hiring and onboarding functionality. Why if the trend is to look at the business lines holistically and provide an end-to-end solution, and the vendors are listening and developing technology to support this ideal, is the adoption rate so low? OpenSymmetry’s own SPM & Technology Survey of 400 companies indicates that 34.3% of respondents were considering investment in SPM technology in 2014. This is a slight increase from 2013, the primary driver being cost.
OpenSymmetry also sees variation by geography. Different markets have a different appreciation and understanding of SPM. Clients need to see SPM as critical to business success rather than an optional extra or a tactical solution.
So, the industry needs a compelling integrated story to engage a client and compel them to invest. Gartner sees growth over the last year in client spends but we are nowhere near the ‘Plateau of Productivity’. Furthermore, OpenSymmetry’s sizing of the market from the SPM & Technology Survey also indicates a year on year growth of over 10%, although this varies by geography. Overall, across various analysts’ studies there is significant growth with businesses focusing on increasing investments for solutions for Sales Performance Management as well as across the business lines to Corporate Planning and Human Capital Management.
Integrating with other Technologies
Gartner sees a trend of integration with other technologies and processes. SPM provides a record of truth on what was sold and what sale generated a commission payment. That rich and accurate data then provides significant input to business planning and predictive analytics.
With the broadening capability of SPM there is integration with HCM. For the sales function there is valuable input to hiring the right talent (recruitment), effectively on boarding and enabling talent, and ingoing retention and development with appraisal and development processes. There is also, therefore, crossover to generic process across the businesses covering all functions.
We see integration with CRM as being a priority for most clients. The compelling situation of the salesperson being able to understand their pipeline and incentive plan structure and being able to perform ‘what ifs’ helps to reward the desired selling behaviours. This is also why this functionality and integration has been available for years. The strategic vision and integration HCM and CPM has previously been less of a priority, but what we are seeing is the best in class organizations that are optimizing their end to end solutions across HR, Sales and Finance are the companies out performing their competitors and achieving the highest level of SPM maturity, now that’s a compelling message to any executive to take to the market.
There is no doubt that SPM is growing, capability is broadening and system integration more possible. The education phase is at different stages in different geographies. SPM still requires compelling communication to encourage clients to invest. Clients deserve a strategic technology investment to support their business requirements; they are not looking for over priced calculators.
Critical in this is the design of the Future State. For each client that sets a clear vision on what they picture as success, they articulate a Future Vision, then they can set the path forward to achieve this future state of success, which includes people, processes and technology. Technology isn’t always the answer but it is one aspect of Go-To-Market capability. Design of compensation, organisation and processes are required to enable this Future State. One key development over the past year is the deployment of crowdsourced data to inform the design process. This is the data collated from the software vendors’ own clients or other pricing and market opportunity data sources.
Finally, clients need the confidence that their investment is going to deliver a competitive advantage. To do this, excellent design and successfully implementation is critical. The Gartner Magic Quadrant report provides valuable insight based on technology capability and company direction. It is important to marry this with the experience of implementing the technologies and aligning the solutions to the strategic direction of your company. We enjoy the validation of the market growth and technologies in this report each year and realize it is a perspective based on a technology focus. The real value is in the customer success stories of enabling these great technologies to turn real results and value for companies in achieving success working with clients on improving their SPM capability and sales performance.
Interested in learning more about the report or other analyst insights? Please contact us.