3 Pillars for a new ICM Solution

Three Pillars to hold up that Business Case for your new Incentive Compensation Solution

So, you’re ready to dump your excel spreadsheets and other desktop tools and implement a new Sales Comp solution in the cloud.

Your boss wants a business case. You need to advocate a compelling case for change.

Where to start?

I have seen the benefits and costs of more than a hundred incentive compensation solution implementations and as many business cases. Typically, there is a mismatch between in practice and the promises made in the business case.

What follows are three pillars that will provide a compelling and credible business case for change.

1. Sell More

You need to prove that salespeople will be more effective in using your new tool. You need to make a persuasive case for improving the top line. With so many factors impacting your top line, it’s difficult (impossible?) to isolate the impact of any single initiative on sales.

I suggest a rational and an emotional case for change.

The best rational case is to visit vendor reference sites (such as customers using Performio) and ask the sales managers to comment on what would happen if they returned to excel spreadsheets. In our experience the reaction should be:

That will waste a whole bunch of selling time and we wouldn’t know how we are tracking.

Ask them to put a number on it. Extrapolate that number to your business. Include both the number and the testimonials in your business case.

prove that salespeople will be more effective 

 

The best emotional case for change is that:

It’s 2015 and more than half of your sales force don’t know what work life was like before the smartphone. Why are you still sending spreadsheets via email in 2015? What does that say about your sales organization and culture? Do you want to be laggards or leaders?

2. Spend Less

You need to make a strong case for cost savings. But don’t overshoot. A good incentive compensation solution should rip out more than 75% of the administration labor cost. In your case, that might not be a very big number. And if it’s 70% of 0.3 of FTE, you’re not going to realize that benefit on your cost center.

talk about productivity improvements

Even for larger admin processes – the reality is that headcount savings may not be a compelling case for change. You need to be talking about productivity improvements. This is about process improvement. Sales compensation is a process that touches so many people across sales, finance, HR and the executive team. Work out how much time is wasted because the incentive compensation process isn’t automated and the data isn’t available on demand.

There is also an emotional argument:

We aren’t using excel to run payroll. Why are we using Excel to pay our sales people? How many mistakes are we missing because they are hidden in a oblique set of worksheets on a server?

Probe that. Why is it so obvious that Excel is an inappropriate solution for Payroll, yet somehow it’s okay for our sales team? Don’t provide the answer, let the decision maker explain it to you. The more they try to explain it, the more they will come to realize your case for change.

3. Minimize Your Investment

This point is obvious, right? However, the usual story of the Enterprise software business case is one that overstates benefits and over commits on investment. The mathematical result equals a poor ROI when the benefits fall short and investment blows out. Unfortunately for you the people you are trying to persuade have probably signed off on more than a couple of these bad business cases in the past and haven’t forgotten the betrayal they felt by the vendor.

The best thing you can do for your business case is to understate your upside with conservative estimates and work like hell to minimize the total solution cost.

Remember that cost is a function of time, money and risk, therefore, you need to prepare plenty of hard evidence that shows the project can be delivered quickly, is low cost relative to value and the risk can be managed.

low cost relative to value & risks can me managed

How can you drive down on cost? Follow these tips:

Save Cost

You should be able to get a working incentive compensation solution running for less than 100 hours of labor. That’s not a complete incentive compensation solution but it should be a solution that gives a very clear value on the work required to go live. If it’s going to take more time to the vendor – find another vendor. Your business case should detail a phased rollout with gates and checkpoints.

Save Time

If your vendor isn’t talking about an incentive compensation solution that can be up and running in days with fortnightly sprints towards a site live in 6-8 weeks – find another vendor.

Manage Risk

Do not commit contractually to a full rollout. You should be paying for a “phase one” rollout of a maximum 100 hours. Only with a successful completion of a project review and the detailed scoping to go live do you commit to extra expenditure. The vendor should provide an estimate of the total cost – that can’t be confirmed until the end of phase one. Hang on, you might hear “but we need to know the fixed full cost to sign off the case”. Bull. This a project. Projects carry risk. Manage the risk.

Remember, time is fixed and the task is variable. If your vendor is still working on the old “waterfall” project management methodology – find another vendor.

Now, get going before you get left behind.

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