IBM SPM Roundtable Highlights Benefits of Sales Compensation Automation

© 2013 IBM Corporation
22 April 2013, Monday | Shangri-la Hotel, Perak
Room, Basement 2, Kuala Lumpur
Sales Performance Management
Round Table

© 2013 IBM CorporationSales Performance Management Round Table | Kuala Lumpur2
Did you know?
Compensation plans that are managed using spreadsheets or
home grown solutions may be riddled with errors, producing
inaccurate payments and costing your organization
thousands, even millions of dollars annually…
$400 millionVariable compensation spend per year
0.5% overpayment
$2 Million
1% overpayment
$4 Million
3% overpayment
$12 Million

© 2013 IBM CorporationSales Performance Management Round Table | Kuala Lumpur
Presenter(s)
3
Kevin Gray
Product Marketing Manager
IBM
kevin.gray@ca.ibm.com
Laura Roach
Vice President, Marketing
OpenSymmetry
laura.roach@opensymmetry.com

Agenda
8:00 am – 9:00 am Breakfast and Networking
9:00 am – 9:30 am What is SPM, Business Challenges Organizations Face and the
IBM Solution
Kevin Gray, Product Marketing, IBM
9:30 am – 10:00 am How to Ensure Your Compensation Plans are Accelerating and
Optimizing Performance to Meet the End Goal
Laura Roach, CMO, OpenSymmetry
10:00 am – 10:30 am Roundtable – Hot Topics / Best Practices
8:00 am Registration

Two Axioms
5
1
2

Two Axioms
6
1

Sales Performance Management Is Hard
7
•  Get the checks out on time
•  Make sure they’re accurate
•  But also. . .
ü  Be flexible and nimble for changing priorities
ü  Manage complex assignments
ü  Set accurate goals and targets
ü  Generate enthusiasm
ü  Deliver timely and insightful reports
ü  Resolve questions and disputes
ü  Do it with less headcount

How Is Sales Compensation Managed?
8
CSO Insights - 2012 Sales Compensation & Performance Management, Key Trends Analysis
Spreadsheets
(54%)Home Grown
(22%)
Commercial
Software
(14%)
Manual
(7%)
(3%) 61% Spreadsheets
19% Home grown
8% Commercial Software
10% Manual
2% Unknown

SPM: Issues and Challenges
9
Errors Transparency
Shadow Accounting Long Cycle Times
Audit & Compliance
Labor IntensiveInflexible
Legacy Systems

SPM: Addressing the Pain Points of Several Business Constituents
10
•  How does my comp plan work?
•  How much can I make?
•  If something is wrong on my commission
statement how can it get it fixed quickly?
•  Manual calculations and adjustments take forever!
•  Modifying the comp structure is difficult
•  Management is asking for better reporting &
auditability
Sales Ops &
Comp Admins
•  Are the comp plans working?
•  Which people I should focus my energy on?
•  Am I in compliance?
Management
& Executives
3
2
1 Sales Reps

Why Companies Adopt SPM Technology
11
Reduce Errors
Shorten Cycle Times
Replace technology
Improved Decisions
Flexibility
Modeling and Costing
Internal Audit
Legislation
Industry Regulations
Risk
Reduction

SPM: A Working Definition
12
SALES
PERFORMANCE
MANAGEMENT
§  Streamline compensation
processes
§  Reduce errors
§  Improve sales performance
§  Align behavior with goals
§  Meet compliance requirements
To Meet These Challenges
Automates the process of
administering, calculating,
reporting & analyzing
variable-based pay programs

IBM Cognos Sales Performance Management
Incentive
Compensation
Build, model and administer
variable pay programs that
drive desired sales behavior
Channel
Management
Gain a single, accurate view
of your entire sales force and
all your distribution channels
Territory Management
Manage crediting and frequent sales coverage
changes across territories
Territory
Management
Quota
Management
Channel
Management
Incentive
Compensation
IBM Cognos
Sales Performance
Management
Quota Management
Plan and distribute quota targets efficiently across all levels
of your sales organization
CRMERP HRIS
$£€
BI Other
13
Users & Roles - Security - Data Integration
Hierarchies – Workflows – Scheduling – Rules – Calculation Engine - Auditability

Two Axioms
14
1
2

Gartner Marketscope for Sales Performance Management
15
Organizations adopting
SPM technologies
90% 40% 50%
Reduce errors
By more than
Reduce processing
Times by more than
Reduce IT/Admin
Staffing by more than
Gartner MarketScope for Sales Incentive Compensation Management (2010)

Getty Images
16
16 Spreadsheets that previously needed to be manipulated for a comp plan
change prior to implementing IBM Cognos SPM

Mitel
17
Centralized payout administration from 30 to 3 employees for North
and South America
30 3

Elavon
18
Payout process reduced from
2 weeks to 2 days2 2

Cognos SPM Drives Smarter Analytics
19
•  Coverage model and role deployment
•  Sales priority linkages to the field
•  Insight to sales effectiveness
•  Incentive and sales forecasts
•  Program impact and modeling
•  Error and dispute reduction
•  SPM process scalability
•  Flexibility and resource optimization
•  ICM and quota cycle time decreases
• Auditing and compliance tracking
• Program governance
• Program and process reporting
1
2
3
4
Grow, retain and
satisfy customers
Manage risk, fraud &
regulatory compliance
Increase operational
efficiency
Transform financial
processesSmarter
analytics

Hertz: “Enabling a Business Model Change”
20
New head of sales redesigned
compensation to help the rental
company become “more sales-friendly”
Customers formerly had to rely on a
different sales rep for every line of
business, from corporate sales to tours
Now customers “can get everything
done through one salesperson”
Lynn Ferrara, Sr Director of compensation and HRIS

mBlox: “Focus Sellers on Selling”
21
“When people didn’t understand what
their achievement was, we got pushback
on everything about our plan”
“By having transparency into the system
we don’t have to worry about them
saying, ‘Wait—I don’t get this.’”
“…spend more time selling”
Steve Love, CFO

Hong Kong | Wealth Management & Broker: Flexibility to Change
22
“we didn't want to have to rely on IT
services whenever we make changes”
“gives business users the ability to fully
manage the compensation process
without requiring deep technical skills”
“drive a competitive edge for our sales
organization”
Chief Operating Officer, Wealth Management &
Brokerage
< Hong Kong based Wealth Management & Brokerage >

Incenting based on controllable profits
“a lot of things that go into that profit margin
are outside of the territory manager’s
control… such as the cost of raw materials”
“But they can have an immediate impact on
profitability by focusing on pricing”
“Now that we have moved to a net-based
sales plan a territory manager can see a
direct relationship between his behavior and
the amount of his check.”
Carla Clark, Project Manager for Commissions

Management reporting to drive performance
“(Managers) can understand, at a
glance, the productivity of all of their
associates”
“Management uses the information
about store productivity—how many
units the store sells every hour, and
how many dollars each of those
transactions is worth—to help drive
training programs”
Walter Sprague, Sr VP of HR

Align Incentives With Corporate Goals
< Canadian Bank >
§  Bonus for bundling multiple key products
together (e.g. mortgage along with
insurance)
§  Recognizing cross-selling new product
families to their customers (e.g. first long-
term debt product for that customer/
household)
§  Rewarding employees for referring
customers to another employee/BU

Institute a Culture of Selling
“Our industry historically has generated a
long line of order-takers”
“Nobody can hide…People who have the
right mindset flourish in this kind of
program”
“Cross-sell ratio has gone from 2 to 5.66”
Executive Vice President, Retail Sales
< Retail Bank in U.S. >

Bonus Program – Auditing & Visibility
§  5,000 payees in Capital Markets
§  For annual discretionary bonus
program which was previously run
using spreadsheets
§  Greater auditing around the bonus
process, better tracking of approvals
and sign off
< Capital Markets division of Canadian Bank >

Compensation Administrators: Scenario Modeling
28

Compensation Administrators: Configure the system to reflect
your compensation program
29
Workflow Processes

Sales Representatives: Dashboards
30

Sales Representatives: Plan Agreement
31

Sales Representatives: Self Calculators
32

Sales Management: Dashboards
33

Sales Management: Reporting
34

Sales Management: Reporting
35
Quota
Distribu,on
Pay
For
Performance
Analysis

Key Differentiators
36
Business
User Friendly
Configure vs. code
Visual flow approach
Flexibility
Commission, MBOs, etc.
Meet changing needs
Flexible data model
Performance
& Scalability
Built for high transaction
volumes
Imports, calculations, etc.

In-the-Labs: Leveraging the IBM Portfolio
37
Cognos TM1
SPSS

Now you know…
Compensation plans that are managed using spreadsheets or
home grown solutions may be riddled with errors, producing
inaccurate payments and costing your organization
thousands, even millions of dollars annually…
$400 millionVariable compensation spend per year
0.5% overpayment
$2 Million
1% overpayment
$4 Million
3% overpayment
$12 Million

Presenter(s)
39
Kevin Gray
IBM
Laura Roach
OpenSymmetry

Two Axioms
40
1

Total Rewards Model
41
Organizational
Culture
Business
Strategy
Human
Resource
Strategy
TOTAL REWARDS
STRATEGY
Compensation
Benefits
Work-Life
Performance & Recognition
Development & Career
Opportunities
Attract
Motivate
Retain
Employee
Satisfaction &
Engagement
Business
Performance
& Results
© 2012 World at Work Organization

Total Rewards Model
42
Organizational
Culture
Business
Strategy
Human
Resource
Strategy
TOTAL REWARDS
STRATEGY
Compensation
Benefits
Work-Life
Performance & Recognition
Development & Career
Opportunities
Attract
Motivate
Retain
Employee
Satisfaction &
Engagement
Business
Performance
& Results
© 2012 World at Work Organization Variable Pay
“Sales Performance”

Motivational Incentive Plan Design
§ Consistency with company strategy
§ Market competitive
§ Pay mix to drive the right behaviors for different roles
§ Clear line of sight for the salesperson
§ Reward on measurable, controllable performance
§ Simplicity and transparency
§ Differentiated payout by performance level
§ Plan integrated with other reward / performance management aspects
§ Easy to administer
43

Getting the Design Right
44
§  Growth
–  New products
–  New markets
§  Diversification
§  Consolidation
§  Hunter/farmer role split or
hybrid
§  Direct/indirect channels
§  Sector specific challenges
2. Pay/Paymix
3. Compensation Type
8. Compensation Structure
4. Metrics
5. Use of Other Programs
6. Crediting and Payout Timing
7. Rules
1. Number of plans/structure/eligibility
ArchitecturalPlan
Components
DetailedDesign
Components

SPM – The Complete Vision
45
Sales
Compensation
Administration &
Design
Sales Process /
Methodology
Sales Coaching &
Training
Candidate
Assessment,
Selection & On-
Boarding
Territory &
Quota
Business Intelligence
Sales Strategy
Sales Performance
Management
Business Process Management (BPM)
Enabling Technologies

IBM Cognos Incentive Compensation Management Focus
Incentive
Compensation
Build, model and administer
variable pay programs that
drive desired sales behavior
Channel
Management
Gain a single, accurate view
of your entire sales force and
all your distribution channels
Territory Management
Manage crediting and frequent sales coverage
changes across territories
Territory
Management
Quota
Management
Channel
Management
Incentive
Compensation
IBM Cognos
Sales Performance
Management
Quota Management
Plan and distribute quota targets efficiently across all levels
of your sales organization
CRMERP HRIS
$£€
BI Other
46
Users & Roles - Security - Data Integration
Hierarchies – Workflows – Scheduling – Rules – Calculation Engine - Auditability

How do you Ensure Your Compensation Plans
are Accelerating and Optimizing Performance
to Meet the End Goal
Sales Kick Off Done…
Do you know if you’ll hit your target?
Are you plans driving the right behavior?

Motivate and Drive Sales Behavior
48
Does your
organization
believe sales
compensation
plans can
motivate and
drive sales
behavior?
Yes / No

49
Is 99%
Accuracy
Good
Enough?

WorldatWork and OpenSymmetry
2012 Sales Performance and Technology Survey
51

Shadow Accounting
Job Duplicity
Recruitment
Overpayments
Loss of Morale / Trust in system
Time spent
administrating disputes
Retention
Lawsuit

53
Have you fully
optimized your
current
technology?

84% of respondents use Excel to
support compensation
management
91% use Excel to support the
annual planning cycle
91% use Excel for sales compensation
reporting and analytics
19%

We are the 1%
55
•  A formal process with required documentation
and approvals used to administer the sales
compensation plan
•  The sales compensation administration
process documented is updated regularly
•  Less manual adjustments
•  Use SPM technology
•  Use 3rd Party reporting tools for Static and Ad-hoc reports
Utilize workflow
•  Investment has exceeded expectations in regards to Accuracy
•  Would spend more time ensuring data feeds are clean and accurate

What Does Good Incentive Compensation Management Look Like?
56
§ Transparent communication of performance
§ Higher profit margins
§ Highly accurate, timely compensation payments processing
§ Balanced sales territories
§ Fair, motivational quotas
§ Simple, motivational, flexible compensation plans
§ Reduced turnover of sales talent
§ Accurate sales forecasting
§ Reduced sales cycles and lead conversion
§ Better regulatory compliance

Top 7 Sales Compensation Improvements Requested
57
83%
83%
69%
66%
62%
59%
55%
Improve reporting to the sales force
Improve reporting to management
Improve service to the sales force (to
provide a quicker response to inquiries)
Improve administration productivity
Increase credibility with the sales force
& management
Improve payment accuracy
Ease the creation & tracking of
adjustments
Source: 2012 World @ Work OpenSymmetry Survey Results

Common Reporting Needs
58
Real-Time
Deployment
Managed
Deployment
Consistently
Fast Security
Pixel Perfect
Design
High Volume
Publishing
Simplified
Data Access
Varying
Levels of
Aggregation
Functional Needs
Non-Functional Needs

Business Intelligence Capabilities
59

Business Case
60
Strategic
Revenue Growth
Operational
10% of total spend on
commissions/subsidies
Core Benefits
4 – 7% of spend on commissions
•  Increase Profitable Sales
•  Penetrate New Markets/Increase
Market Share
•  Gain Competitive Advantage
•  Channel Loyalty
•  Understand Link Between Plans
and Results
•  Deliver New Plans Quickly
•  Handle Complexity and Change
•  Reduced Overpayments/Errors
•  Reduced Admin and IT Resources
•  Improved Auditing and Tracking
•  User Self Service for Reports and
Disputes
Business Case

Questions & Answers
61
Kevin Gray
IBM
Laura Roach
OpenSymmetry

Round Table 22 April 2013, Monday | Shangri-la Hotel, Perak
Room, Basement 2, Kuala Lumpur

IBM SPM Roundtable Highlights Benefits of Sales Compensation Automation

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