This week we are pleased to welcome one of our valued Jedox Partners in the USA as a guest to the Jedox Blog. Headquartered on the West Coast, Spectrum Technologies shares their unique insights on a fast-growing sector of enterprise performance management in our new 2-part series.
Sales Performance Management (SPM) is defined as a set of operational and analytical process to help align selling resources with business priorities. This includes encompassing territory planning, quota planning, calculation of sales compensation, publishing commission statements, sales forecasting, commission accruals, management reports and analytics. There are a handful of niche SPM software products available on the market, most have been around for more than a decade.
The key benefits of SPM automation are:
- Savings of 3% to 5% in sales compensation expenses & over payments
- Ability to rollout complex compensation plans to best align sales behavior with business goals
- Data-driven analytics to speed up decisions and actions
- Reduced operational costs in administering various SPM functions
According to Gartner’s 2020 SPM report, 40% of B2B companies with over 100 salespeople will have an SPM solution in place by 2022. Clearly, the market adoption for SPM software is nowhere close to what we see for CRM or ERP software. In our opinion, the primary reason for this lukewarm adoption rate is that SPM processes and business requirements vary significantly from one company to the other, even within the same industry. Implementation of existing SPM software takes too much time and resources, jeopardizing the short-term ROI and posing long-term risks as business strategy changes over time.
Key Challenges with Current SPM Solutions
Fixed Data Model
Current SPM tools are built with somewhat static pre-determined data model as core part of the system architecture. The customer is required to align the processes and data with the tool. While the tables in the data model are customizable to customer needs, the underlying process flow cannot be changed without significant customization. The approach works very well when business processes are standardized and static i.e. not expected to change over time. With these systems, business users must understand and adopt a new paradigm of how information flows within the prefabricated data model.
Rigid Data Integration
With most SPM solutions, data integration means providing transactional and organizational data in a pre-defined format as specified by the tool. This requires heavy IT involvement to get the data ready from the source system. Moreover, if the data needs preprocessing, or manual updates, these systems have limited capabilities. For example, contract data coming in from a CRM system needs to be augmented with the tribal knowledge available to sales admins for sales compensation purposes. In such situations, when the incoming data is not completely clean and ready (as is often the case) the data landscape poses a foundational challenge for SPM automation.
Complex Rule Building
Most SPM tools on the market are perfectly capable of handling complex sales commission rules and compensation processes. However, updates to these rules must be made by skilled and highly trained consultants. Even experienced commission administrators with above average data skills struggle with this issue. Over time, as business users make seemingly simple changes without a true understanding of the implications, these systems become a maintenance nightmare.
Limited Reporting Capabilities
SPM tools often come with set of “out of the box” reports and dashboards, and the option to build more custom reports. But most of these do not come with a comprehensive and state of the art report building platform. For management reporting, admin users extract data out of an SPM tool into more robust reporting tools. Moreover, ad-hoc analysis of the data is either not available or very difficult.
How an EPM solution supports SPM automation
An EPM solution with a foundation in state-of-the-art technology such as Jedox lends itself very well to SPM automation. Leveraging Spectrum’s capabilities and two decades of experience in SPM, we built a Sales Compensation Model in Jedox to help automate sales compensation processes. It is used primarily for commission calculation, reporting, and management dashboards.
In part two of this blog series, we will discuss the capabilities of the model and how Jedox customers can continue to optimize their value creation by using it in a new way: SPM automation.