License fees begin when?

Don’t pay any license fees until you have a working ICM solution!

Each industry has its own quirks, and the incentive compensation management (ICM) software business has a few.

What is laughable is the practice of vendors insisting that license fees should commence at the start of the engagement.

This makes sense for SMB software that kind of works the moment you register an account – for example, applications like Xero or Nimble CRM.

But it is ABSURD for an enterprise (a company with 500+ salespeople) to be paying license fees from day one when it is impossible to get any value out of the product until the implementation is well underway.

Now, vendors will make all sorts of claims of how their product works out of the box and can be set up in days and you can do it yourself blah blah blah. Yes, we make those claims too and we have a better track record than most. In fact – here’s one where we went live within 14 days of the kick off workshop – Five Day Sales Incentive Sprint. But, show me a customer who can self-start and be ready to use the system the same week they signed up the vendor – and I’ll show you a purple unicorn.

And no, just because the vendor claims they are cloud-based or put the word “cloud” in the company name doesn’t mean that you can expect the same user experience you might have got when you set up a salesforce.com trial for your team of 10 reps. Cloud solutions like Performio are faster to deploy for sure. But incentive compensation management is a unique and specialized domain.

TIP: You should insist on a commercial arrangement where the commencement of the license starts at the end of an agreed scope of work.

Usually, this scope of work will cover the most relevant plan designs for your sales force – not all. It will also cover the most relevant business rules and data sources. What you are basically doing here is testing the competence of the vendor to deliver the project = the quality of the people they have assigned and the quality of their methodology. If they screw up – you should be able to walk away and get yourself a better solution.

TIP: If the vendor insists on annual license fees in advance – you should also withhold a significant part of the payment until full delivery is completed.

Keep the bastards honest as they say here down under!

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