|
|
|
|
|
Comments or Suggestions?
|
|
|
|
|
|
Share this Article
|
|
Enterprise software is expensive and this has never been more true than today. But do you need to spend a million plus to solve your business issue?
By Mike Rose, Director of Development, SalesLobby.com,
Sales Compensation Consultant, The Alexander Group, Inc.
Maybe not. In today’s economic environment it pays to look carefully and ask some important questions before you start spending. Strategic as well as tactical challenges face most organizations as they navigate the hazards of lean times toward profitable revenue. Here are just a few:
Strategic Challenges
- Changing Business Conditions
- Evolving Sales Strategy
- New Markets and Channels
Tactical Challenges
- Revenue Tracking
- Sales Crediting and Commissioning
- Systems Evolution and Compatibility
How can one best address these challenges and, at the same time, maintain a reasonable expense line. To some extent, the manner in which you design and administrate the sales incentive compensation plan is part of the answer. In this article, we look specifically at compensation administration software and identify solution options as well as a path for moving forward.
Options
- Spread Sheets - Simple but not Scalable
- Point Solution - A Simple Low-Cost Fix
- Custom - Tailored to your Needs
- ASP - Rent a Solution
- Suite - Solution Module as a part of a larger CRM or ERP Suite
- Enterprise - A Best-in-Class Enterprise Software Application
Option 1: Build it Yourself/Spreadsheets
Buy or Build? That is the question. For many organizations, the question really comes down to the availability of internal resources. Typically, an organization that has relied on spreadsheets reaches a point at which the old process is becoming increasingly cumbersome, time consuming and error prone. Provided your plans are not overly complex in terms of transaction volume and business rules (see figure 1) and the systems infrastructure involves a minimum number of data sources then building your own simple system or relying on spreadsheets may be a viable option. Another item to consider when talking about building an application in-house is the skill sets of available programmers. For example, people trained on legacy mainframe systems are hardly appropriate for web-based application development. A good question to ask is do we honestly have the expertise in sales administration to do a good job on a software application to administer it?
The advantage of the in-house solution is cost. Its disadvantage is resource time, effort and system maintainability.
Option 2: Point Solution
When internal resources are not an option yet the plan mechanics are simple including a minimum of business rules, a point solution may be an option. Low cost point solutions do exist and may provide the answer to organizations looking for an interim solution prior to an enterprise purchase. Some organizations with 200 or less sales people are still too small to warrant the purchase of an enterprise solution. For these organizations, a point solution may be the answer. By point solution, we mean a solution that runs on a PC but is not enterprise wide, that is, it is not communicating with multiple systems and is administered by typically one person.
Option 3: Custom
Unlike a point solution, a custom solution is tailor made to fit your business needs and processes. These solutions are more expensive than a point solution but less than an enterprise solution. In addition, they can deal with non-quantitative measures like MBOs and provide a web-based two-way communication vehicle between management and the field.
The strength of the custom option is its fit to your business. The weakness of the custom option is its inflexibility -- if your plans change next year you may have to reprogram part or the majority of the application. In addition, custom solutions are best utilized when not dealing with huge transaction volumes (10M/month) or exception processing (adjustments, credits, charge backs, etc.).
Option 4: Rent It!
For many organizations, the headache of maintaining complex internal systems is simply not worth it. Why not out source the entire functional area to an organization that specializes in administrating compensation plans? In fact, many organizations do, not only compensation but CRM, ERP as well as accounting and payroll. There are a variety of ways that this approach can work. Some organizations still require access to data, plan configuration, employee data, etc and this is provided over the internet. At the other end of the spectrum, some organizations prefer a complete outsourcing in which they communicate changes and provide a transaction file and the service provider does the rest.
The advantage of this option is the lack of infrastructure or resource requirements because there is nothing to maintain. The disadvantage is the monthly costs can be significant. Another issue to bear in mind is that the system must still be configured and implemented -- this can be an expensive process depending on application used and the integrators involved.
Option 5: Suite
Before you make any decisions you may want to examine any CRM or ERP systems you currently possess. Many vendors including Seibel and Oracle have compensation administration modules that may effectively solve your problems.
The advantage of this approach is the obvious cost savings and ease of integration with the ERP or CRM systems. A disadvantage of these systems is their lack of sophistication and their inflexibility.
Option 6: Enterprise
Finally, you can simply go out and buy an enterprise application and get it up and running. These are big and expensive enterprise applications that typically can take between 3 and 18 months to implement depending on the application and your company’s plan automation readiness.
For an organization with 400 or more sales people, large numbers of transactions per month and complex business rules, these systems usually make the most sense. The following table summarizes the options as well as advantages and disadvantages for each.
A path for moving forward: Assessment
Prior to any investment decision, it is generally advisable to seek the assistance of an independent consultant to help assess your current information infrastructure as well as gather the user and system requirements. These engagements can produce high level assessments or can be very detailed including: system requirements documents, decision matrix, RFP’s and vendor evaluations along with product selections. Utilizing an unbiased third party expert in automating sales compensation administration can help ensure that the right product is selected for your organization and provide experienced advice during the automation selection and implementation process. The Alexander Group, Inc. offers assessment services and is uniquely qualified to do so because of their experience designing compensation plans for the Fortune 500.
Printer-friendly version
|
|
|
|
