Learn best practice principles to anticipate barriers to SPM compensation. The five most common activation missteps are addressed, and practical recommendations are made to avoid them. The strategic approach outlined in this report will reduce the challenges encountered after activation and will help save time and money.

1. Barriers to effective
and strategic SPM
compensation
automation
Incent Perform Grow

2. Deciding to implement a new Sales Performance Management (SPM) solution is a significant
undertaking. There are many details to consider, and you must anticipate the various project needs and
phases. Perhaps most importantly, you should understand the potential issues that could disrupt the
smooth running of your work plan and your activation.
The key is to anticipate the expectations and processes and to prepare in the earliest stages. Create a
work plan with a full understanding of the technology, resources and cost challenges by incorporating
phases to test for problems, and where necessary, take the time to make changes to get it right.
The 5 most common mistakes encountered when activating an automated SPM solution are:
1. Taking data quality for granted
2. Unrealistic expectations for reporting
3. Not enough time for changes and testing
4. Inadequate testing
5. Overlooking hidden costs
This report will share best practice principles to help anticipate these obstacles in advance to reduce the
number of challenges encountered after the activation period.
Overview
Most SPM systems integrate data from several sources, including:
• Sales transactions
• Sales team and payee information
• Management and reporting information
• Product, customer and territory categories
1 Taking Data Quality for Granted
The current SPM system may extract the data in real-time to make payouts, but that does not ensure the data
is accurate. There can be a number of potential problems, particularly when migrating between systems, such
as:
• Duplicate records
• Orphan records
• Legacy codes not applicable to new system
• Data sources still under development
• Current workflow depends on custom code modules
Consequently, it is essential to review the data to make sure it has been extracted accurately.
Take the time to review the source data and identify data issues before activation.

3. Organizations adopt SPM solutions for the right reasons – improved efficiencies, greater analytical
abilities and enhanced management insight. Nevertheless, it’s important to take a realistic view of
the reports you will produce, particularly in the early days. A reasonable start may be limited to three
reports, such as:
• Monthly commission summary
• Monthly detail transactions
• Manager team reports
Analyze Existing Usage
Before setting up your report structure, analyze your company’s existing usage, and follow these
general guidelines for producing reports.
• If a report is not used by 90 percent of the community, remove it from the roster and plan to re-
introduce it as the system matures
• If it is not used every month, week or day, remove it from the roster and plan to re-introduce it as
the system matures
• If it does not need to be formatted for presentation, consider outputting it to spreadsheets or text
files
2 Unrealistic Expectations for Reporting Functions
Implement
Report C
Try the new system before committing to customized reports
As you are getting ready to activate, you may be tempted to invest in customized reports. Before making
that decision, use the new system for 90 days. You may be surprised to learn that the out-of-the-box
software provides what you need.
3 Not Enough Time for Changes and Testing
Build your activation schedule with enough flexibility for changes.

4. While this may seem natural, there is another item that is frequently overlooked – scheduling time for
changes after the system goes live.
Enhanced features come with a new learning curve – plan for changes in the early days.
Rather than making massive plan changes, it is often prudent to make smaller changes over time.
Hopefully, the solution offers the convenience of testing scenarios before making changes, so you can
model potential compensation plans beforehand.
You will want to test your new system before launching it. Plan time at the end of your development
schedule to test a finalized set of compensation plans.
You should devote equal time to the testing phase as you would for the requirements and design phases.
For example, if you dedicated 40 hours to requirements and 40 hours to design, then you should plan on
80 hours of testing.
Too often, a company shortchanges itself on the testing phase and ends up with surprises.
Create a Detailed Test Plan
Prepare a test plan by following the 90 percent rule – determine which plans, rules or elements pay most of
the employees, and build your test plan around them.
A solid modeling case would test a three-month set of actual data against the new plans.
Conduct a shadow testing system – make a detailed spreadsheet and use the interim formulas, rules and
plan elements to manually calculate the results. Compare against the SPM system results.
4 Inadequate Testing
Plan
Plan
Plan
Plan
Test / Model
Test / Model
Test / Model
Test / Model
Implement
Best Plans
Implement
Best Plans
ANALYZE
PERFORMANCE

5. Your cost projections must include all the one-time and recurring costs.
The one-time costs incurred prior to deployment include:
• Hardware
• Software licensing and fees
• Activation and consulting costs
Recurring costs encountered on a regular basis include:
• Hardware and software maintenance fees
• Subscription fees
• Internal support costs
• Software patches, version upgrades and major releases
The one-time and recurring costs can vary significant depending on your provider. An on-premise
activation will typically require a larger investment than a new or upgraded hardware. On the other hand,
a Software-as-a-Service (SaaS) solution is normally hosted on hardware owned by an external organization,
so this approach can reduce or even eliminate the additional hardware costs of a new SPM activation.
Learn as much as you can about the vendor’s pricing structure. Start with the initial and recurring costs, but
do not forget to consider potential hidden costs such as periodic software upgrades and new releases.
5 Overlooking the Hidden Costs
You should not regard this approach as overkill or a waste of time. Most SPM activations report that the
testing took 50 percent longer than expected, mostly because the new system calculations appear to have
differences in results. Taking the time early to prepare a detailed and realistic test plan will save time and
costs later during the actual testing phases.
Consult with the stakeholder groups who provide data for the calculations – your sales, marketing, human
resources, customer service and management groups. Involving these people in the development of the
test plan will identify important test items early in your process.
End-to-End Testing is Critical
Solid end-to-end testing will take into account data feeds, calculations, payment information and reports.
Involving key personnel from upstream and downstream systems in the discussions will help to ensure
accuracy.
Understand the Platform
The solution has an impact on the testing phase. It’s important to understand it thoroughly. For example,
an on-premise solution will have a different system flow than a Software-as-a-Service (SaaS) solution. Items
such as file transfers and security access should be reviewed and tested before going live.
Where necessary, consult independent experts. These people have gone through the testing phase before
and can quickly identify the pain points.

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A Sales Performance Management (SPM) solution has the potential to align incentives and drive growth,
but organizations frequently encounter certain challenges when adopting their system. Specifically, many
organizations seem to underestimate the need for a detailed work plan, not just to activate the system,
but to migrate their data, test the data quality, and make technical adjustments before the system
goes live. However, by understanding the common challenges, organizations can prepare themselves
beforehand and schedule time for these essential steps. Understanding these common mistakes is
critical to activating an SPM solution that is cost-effective, efficient and flexible.
Summary
New Versions of SPM Software
You should understand the potential effects that new versions of software will have on your activation
plan. Gather information from the SPM vendor that will help you plan for these new versions.
Ask questions such as:
• Are the upgrades included in the annual support of subscription fees?
• Will the upgrades require experts or consultants?
• If major releases are not included, what is the cost?
• What future releases or patches will be required and will they also require additional payments?
• How smoothly have the upgrades gone with previous customers?
• Can I talk directly to customers who have upgrades recently?
• Will the current version be covered by the ongoing maintenance agreement, or must I upgrade to
maintain vendor support?
Making a list of questions can get you prepared for your discussion with the vendor. More importantly, it
can help you build a more detailed cost outline.
Consider meeting with experts to identify common reasons for cost overruns. Their experience can help
you identify potential problem areas you may not have considered.