Xactly just announced that it has expanded its North American operations with new headquarters in San Jose, as well as a regional office in Denver. They added a whooping 80 new customers since the beginning of 2011 (that’s a lot!) and a lot of that growth comes from their Xactly Express solution which recently signed up its 100th customer. Over the last year, Xactly also increased their staff by 54% to support its quick growth.

However, what I’m the most excited about are the enhancements to Xactly Incent Version 7 which launched a few months ago. The new version has several new very important features.

Quota and Rate Table Effective Dating: This enables companies to manage incentive program changes at the time and point of need. This may seem as a not-so-important feature, but from an administration perspective it’s VERY important. It also makes the annual plan updates much more simple to achieve and saves a lot of time on the configuration side. The net effect of this feature is faster end-to-end deployment time, more administration flexibility, and easier/quicker year-end plan updates.

Report Customization:
Reports outside of the analytics module used to be fairly “What you see is what you get”; in other words, not allowing many configuration options. In this new version, there is much more flexibility and reports can be customized to meet specific needs.

Ranking Reports:
New reports are available to provide visibility into individual and team performance.

Xactly Incent 7.1:
Usually Xactly delivers mostly small improvements between minor versions, but version 7.1 added some big features.

Version 7.1 includes the addition of mobile functionalityenabling teams and reps to access reports and performance information through their mobile phone/devices. I personally think that this is a great new feature, particularly for road warriors who don’t have time to access their dashboards. The new release also comes with several improvements to Xactly Territories, eDocs & Approvals. However, Illustrator was a surprise new addition to Incent’s impressive list of recent features:

Illustrator:
Xactly added an Illustrator module to Incent which provides great modeling functionality. Reps can plan measures to forecast associated hypothetical commission. Reports are great, but I always felt that interactive what-if modeling was the best way to drive behavior.

Overall, I am really impressed by the new features released by Xactly in the past few months. Effective dating is something I had been waiting for from them for a long time, and it is what I would qualify as Xactly’s greatest configuration enhancement since the formula copy and paste feature.

Performance
With such an accelerated growth, I was also curious to see if performance would become an issue. I recently had the chance to work with the latest version, and it is still a very responsive SaaS application that can process a fairly large number of transactions quickly.

Conversation with Xactly CEO, Chris Cabrera
I talked with Chris about the future of Xactly, and not surprisingly, he thinks it’s very bright! We talked about many of the features described earlier and also about what the recent growth meant for the company. Chris believes that the trend towards small companies adopting affordable SPM systems such as Xactly Express is only going to accelerate. I initially thought that the Express would only be a “project”, but Chris is optimistic that it could eventually surpass the revenues generated by Xactly Incent. The additional revenues also enabled Xactly to add new members to its executive team, most recently a new VP of marketing and a VP of enterprise sales. Since it is not feasible to contact every small company to sell Xactly Express, a strong marketing strategy is key to its success. Finally, Chris mentioned that in a few years, Xactly would be poised to “go public”, providing additional capital to further accelerate it’s growth and leadership position in its market.

In 1519, Captain Hernán Cortés and his army set out on one of the greatest conquests in the history of the world. Cortés was going to accomplish his goals no matter the consequences, despite being up against incredible odds. When he arrived near Veracruz with 500 soldiers, a dozen horses and a few cannons, the first thing he did was burn his ships so there could be no retreat. He told his men “You can either fight or you can die”. Returning to Spain was not an option anymore. By burning his ships, he not only cut off his only means of retreat, but also made his soldiers fight harder. They were all fully committed to the cause.

I cannot condone what Cortés later did to the Aztecs, but burning the ships probably played a major role in the outcome.  Most project managers will say that failure is an option and have a “do-or-die” attitude, yet when things start going wrong, the managers usually start looking for excuses. Likewise, when blamed for delays, the project team will often start looking for their own excuses or try to jump back on the ship.

I challenge you to think about your objectives and about at least 5 factors that could make it difficult to reach them. Now, get rid of these excuses.

1. Pricing and Discounts: Obviously, published pricing can usually be negotiated, and the bigger the deal, the bigger the discount.
2. Additional Costs: Aside from the standard monthly fee, other costs can quickly add up, such as fees for additional users, customizations, integrations, third-party services, training and set-up fees.
3. Term: A longer term can mean a better deal.
4. Service Level Agreements: Make sure that SLAs – the vendor’s commitment to keeping the system up and running – are clearly defined in the contract.
5. Renewals: This process is an opportunity to renegotiate or exit a bad contract. Make sure there you are still in control when it’s renewal time.
6. Scalability Pricing: Find out what pricing options are available to increase the number of users and if there is the possibility to decrease it.
7. Support: The contract should describe the level of support that will be received: is it delivered via the web, email, phone? Is it 24 / 7?
8. Backups and Recovery: The contract should specify how often backups are performed, how long it will be kept, and if it is kept in a separate center in case of disaster.
9. Data Export: Can data be retrieved from the system?

Effectively implementing these seven principles will provide immediate value to the sales organization therefore we would recommend that you consider how your organization compares.

1. Clear link to strategy
Plans need to link clearly to company goals, hold participants accountable for the results they control, and pay for results focusing on margin or profit rather than volume.

2. Accurate, Transparent and Consistent
Performance should be accurately measured and a transparent and there should be a consistent link between performance and plan payout. Where possible, this process is automated to ensure effectiveness.

3. Uninterrupted flow of key strategic messages
There is an effective flow of key messages (for example growth, increasing profitability per customer, quality customer retention) from the sales strategy to sales targets to salesperson role to incentive plan measures to payout.

4. Significant on-target opportunity
Plans have an on-target payout which is significant and consistent with company/product status in the market. For example, a new product/service in a new market requires a more highly leveraged plan.

5. Promotes positive behaviors
The plan should influence sales behavior in a way that drives positive selling and which prevents negative selling behaviors.

6. Simple
A plan should be simple, using as few performance measures as possible. If the salesperson can’t explain how it works in under a minute, it’s too complex.

7. Differentiation
Plan payout should differentiate clearly between excellent and average sales performance.

This post was written by Jon Clark at Sean Culligan at OpenSymmetry’s UK office.

For this first new post, I’d like to talk about Merced Systems. I covered Merced’s incentive solution (then called Merced Incentive Management or MIM) about two years ago, soon after it acquired Practique Associates. At that time, the big question was, is Merced going to be successful at integrating the incentive compensation tool to the rest of its products, and will it be able to compete against well established vendors such as Callidus and Varicent in the competitive US market.  Gaining credibility from clients, selling enterprise solutions and going live with them is a long cycle, and finally, after two years, some conclusion can be drawn.

The Company…
First, I’d like to talk about the company itself. Even with the recession, Merced Systems has managed to grow and post profits for 7 consecutive years. I’m pointing this out because in a world where most other SPM companies are relying on investments to develop solutions and gain market share, Merced has actually been making money – and reinvesting it into R&D to improve their product.  It now counts over 225 employees concentrated in its Silicon Valley and London offices, responsible for more than 125 customers deployed in over 20 countries. Merced’s big challenge at the moment is to hire enough smart people to sustain its rapid growth.

The Challenges…
One of the first challenges Merced needed to overcome to be successful in the US market was to develop the ability to implement and support its ICM solution in the United States as well. Now with over two years of ICM experience under its belt, this is no longer a concern.

The other hurdle that Merced needed to overcome was to attract large clients in the United States to show that it could be successful here as well. One of its first projects in the US was Nationwide. The goal was to help agents gain more visibility into their performance, to increase payment accuracy and to reduce calculation time. Merced ICM successfully managed to accomplish these goals, and the phase one of the project was completed in early 2010. Many customers in the United States are finally live or are currently being implemented; these customers include Bank of America, Otsuka and Dell. When I spoke with Mark Selcow, Merced System’s president, he pointed out that not only was Merced successful at gaining traction in the US market, but that it was also keeping its momentum in the European market. Merced recently announced the successful deployment of the ICM Suite at Kia Motors.

The Solution…
Now about the solution itself; as a reminder, in a nutshell, Merced ICM calculates compensation and incentives, and provides meaningful reports and dashboards. Since Merced acquired Practique, Selcow noted that Merced System’s engineers have been working very hard at integrating the incentive solution to the other tools of the Merced Suite comprising Merced Planning (for territory planning, quota planning and goal setting), Merced Intelligence (for sales and compensation analytics) and to the Merced Performance Suite (used for performance scorecards, ranking, and coaching). Selcow believes that scorecarding for seller self-correction and coaching to drive best sales behaviors are emerging trends in Sales Performance Management, and will become an important part of ICM/SPM solutions.

In my opinion, one of the biggest improvements recently brought to the incentive compensation suite is the Workflow Manager module. Workflow Manager allows users to setup various workflow that can range from dispute resolution and payment approval, to requiring approval to submit a manual adjustment, MBOs, or to make any changes to a plan component.

Two years ago I also showed screenshots of some standard reports and dashboards available with this solution. I had a hard time choosing a good adjective to describe them, but the first word that came to mind was “outdated”. Again, thanks to Merced’s competent engineering team, Merced ICM received a face lift with the Merced Analytics suite. Leveraging MicroStrategy Business Intelligence, Merced ICM delivers stunning reports and dashboards.

Significant improvements were also brought to the functionality and features of the application. Some of Merced’s innovations are based on their aggressive roadmap to become the number one sales solution provider (with Merced ICM being a significant part of that objective). However, Selcow also noted that Merced is a very agile company and that many innovations are a result of customer requests.

In Conclusion…
Another aspect that makes Merced different from its competitors is the ability for a client to choose to deploy it on-premise or on-demand and to have the ability to easily switch from one to the other if needs evolve.  With Callidus trying to be a completely recurring revenue business, or Varicent which is mostly on-premise, having the ability to choose between both delivery models can be a huge advantage.

But according to Mark Selcow, even with great technical solutions, what REALLY makes Merced Systems and Merced ICM different from the competition is its relentless focus on its customer’s success during and after an implementation. “We don’t see ourselves as a solution provider” he told me, “we become a true partner”.

For those who don’t remember, I wrote an article called “Buy the Car, Rent the Car or Take the Bus” which explains the difference between on-premise, single-tenancy and multi-tenancy.

“Many people are confused about what SaaS is, and about the benefits of a pure SaaS solution” said Cabrera. “Many companies use the term incorrectly to be buzzword compliant. That’s too bad because some people start to believe it is only a marketing gimmick.” I asked him why people should actually care about if a solution is SaaS or not. Playing the devil’s advocate, it would seem like most potential customers would not care if a solution is really a SaaS solution versus hosted, or multi-tenancy versus single-tenancy.

Chris mentioned 6 reasons why potential customers should care:

1. It is in the client’s interest for the vendor – their technology partner – to be around long term. On-premise solutions are not cost effective because they have so many technology stacks and versions of the software that need to be maintained and supported. With SaaS solutions, some of the savings are passed back to the client, and a significant portion of the revenues are reinvested into the infrastructure as well as in the development of new features.
2. SaaS vendors can focus on improving a single software version, used by every customer. Every engineer is dedicated to improving a single source of code. This allows the vendor to release new features and improvements much more quickly than is typically feasible with an on-premise solution.
3. Upgrading a SaaS solution usually happens ‘behind the scenes’. New SaaS software releases are tested extremely rigorously before being released. A quality problem would impact thousands of customers and hundreds of thousands of payees. On-premise solutions often transfer the quality ownership to the clients who must perform their own regression testing after an often labor intensive upgrade process.
4. Non-SaaS solutions are not always scalable. For example, with 10, 100 or even 1000 customers, an on-premise solution might work. But the real test will be when a solution is used by thousands of customers – will a non-SaaS solution really be able to scale up? “Probably not” said Cabrera.
5. SaaS vendors constantly measure and monitor their environment. They make a significant investment into that infrastructure to ensure an optimal performance for all of their customers.
6. SaaS solutions are usually sold on a basis of $ per payee per month. Solutions such as Xactly Incent all of a sudden become cost effective for even small companies which can avoid a high upfront infrastructure and license cost.

Chris Cabrera is convinced of one thing: SaaS is the future. “On-premise solutions might still be appropriate for a very small share of the market, but SaaS is appropriate at least 98% of the time.” Looking at the market trends, I would say he’s right. Most vendors realized the benefits of SaaS and are rushing in that direction.

Management of producer (payee) data
The insurance industry has very challenging requirements regarding producer (payee) data. ACom3 supports an unlimited number of direct and indirect hierarchies with no limits on the number of levels it contains (some of ActekSoft’s clients pay more than 20 levels). ACom3 also has an integrated license and compliance module which can easily manage logic for compliance violations.

Communication / Workflow
ACom3’s correspondence module can be setup to automatically send letters or emails on demand or based on conditions configured the system (for example in can send an e-mail when a license will expire in a certain number of days, or when a debit balance exceeds a certain dollar amount). The workflow module can be leveraged to facilitate and streamline internal and external communications.

Unearned Commissions
ACom3 provides built-in features to facilitate logic to handle unearned/future commissions such as annualized payout and advanced payment with automated charge backs for policy terminations that take place while there is still an unearned commission balance on the advance. ACom3 also has a reserve feature which holds back a portion of the advance payment to offset future chargebacks.

Scalability
Unlike many other industries, the insurance industry always requires computation at the transactional level and not at a summary level. Because of the volume of transactions and often complex hierarchies which can transform an originating transaction into an additional 10 or 20 transactions, efficient scalability is critical. ACom3 uses the concept of work units which can distribute processing across multiple servers and processors.

Insurance specific concepts in Formulas
Compensation formulas contain many insurance specific concepts such policy age and policy age/holder age calculations, a wide range of performance based tiering options, and the ability to tie advances and automated charge backs to calculations.

Strong Retroactive Capabilities
Retroactive processing is particularly important to the insurance industry and ACom3 supports in excess of 20 retroactive objects that allow the system to reverse and reprocess transactions for as many periods back required. Retroactivity is often required to resolve incorrect assignment of producers to a customer or policy, incorrect hierarchies, the use of an incorrect schedule, etc. ACom3 marks all transactions that need to be reprocessed in prior and current periods to ensure that tiered based payments are correct.

Security and Audits
Data confidentiality and security is highly regulated in the insurance industry. ACom3 was built with these requirements in mind and offers strong security and audit functionality, audit reporting, secure data transfers, and encryption out of the box.

Final Thoughts
Overall, I was impressed by the richness of ACom3. The size of the company could have been a concern for potential clients, but with Callidus now standing behind ActekSoft, this should no longer be a concern. The new challenge which ActekSoft will have to manage is to retain the same level of client-focus they have demonstrated in the past for their current and new customers.

While I found that ACom3 is not the ‘sexiest’ application, several improvements were recently made to its user interface with its release version 6.0. ACom3 provides several insurance specific features, and its focus on transactional processing makes it a solution worth considering for many projects.

As I’ve discussed in a previous post, Gartner recently released their 2009 ICM MarketScope for the insurance industry. Gartner cites the following as some of the main reasons why ActekSoft deserved a positive rating:

ActekSoft was rated Positive this year, due primarily to its deep understanding and ability to deliver health insurance requirements, the number of new deals in the past 12 months and the positive nature of its customer references. Four of its customers were interviewed for this report… Several themes resonated throughout these interviews. First, ActekSoft is very committed to the pricing that is quoted to the customer… Second, customers cite a culture of customer satisfaction and commitment to project delivery.

ACom3 is accessible via a web browser. After logging into the application, administrators find themselves into a relatively intuitive interface; the various application areas are accessed via the top menu, and configuration for each of those areas are accessible in the left menu. Different sections can also be expanded and collapsed by clicking on the + or - icons. The content of each of these sections is completely configurable by simply dragging and dropping fields into the appropriate section. Sections can also easily be added as required.

A plan consists of ‘schedules’ which are applicable to a certain region and hierarchy. These schedules are rule driven and reference formulas, filters, tables, etc. Reference data is typically imported into the application, but editing information such as transaction details or producer information can be performed manually by inserting text into text boxes, or by selecting values from drop down menus.

The look and feel of the interface for payees is very similar to the administrator’s interface. Upon logging in the application, the payees can access performance details for themselves and for their subordinates via reports and dashboards. They can also access important information such as their appointments, their book of business, etc.

All of these features are very similar to what is expected from any sales performance management solution, so you may wonder what makes ACom3 different than other non-insurance specific solutions. I will discuss some of these differentiators in my next post.

Incentives have the power to motivate almost any kind of behavior if the reward is attractive enough. Let’s look at sales teams for example, the Olympic stars of a corporation. A number of incentives and SPIFFs are implemented into their quarterly sales plans to drive a particular behavior. It could be to focus on a particular product, cross-sell, up-sell – anything the company needs or wants based on its sales strategy. Slap the right incentive on anything and you’ll see results.

Incentives play a huge role in both sports and sales; they are the driving force behind motivation. Although motivation is the heart of success, it isn’t the only factor. For sports and sales, success relies on a number of elements. Motivation, talent, coaching, strategy and communication all play a part in the success of a team.

Motivation
It is important to know what drives your players. What are their incentives? Is it winning, lots of praise, mental coaching or a combination of factors? Finding the right balance is difficult. Managers have the same problem with their sales teams. What will motivate their employees? A big cash bonus? A trip to Hawaii? Fortunately for sales managers, technology has turned this guessing game into a science. With the help of incentive compensation solutions, managers have visibility into sales to see what incentives are working and can adjust sales plans quickly to align employee behavior with corporate goals.

Talent and Coaching
Coaching your players is vital to the success of any team; that’s a given. Coaches provide the right tools and expertise to help the players uplift their performance (individually and as a team). A coach must know how to take an individual from a B player to an A player. It’s the same with sales managers. If a sales rep isn’t meeting his quota, it is up to the manager to coach him to improve his performance.

Coaches must also deal with situations like bringing on new players, incorporating them into the team, as well as letting players go and deciding who has potential and who does not. Time is of the essence; when a coach brings on a new player he must quickly bring him up-to-speed on game strategies and team culture.

Like coaches, sales managers must quickly get new sales reps set up with their plans, quotas and verify they have the right qualifications and certifications required. Time is money, so a fast rollout in essential. Luckily for sales managers there are solutions that can help with this process. Sales performance management software streamlines these processes saving time and resource by eliminating the manual burden.

Strategy
A good strategy is the key to success. No matter how fast, skillful and intelligent your players are, without a strategy, the team is lost. Coaches are responsible for creating the game plan. They must have visibility into the game to be able to see what strategies are working and what they can do to quickly change the plan to overcome obstacles. In sales, a strategy is critical. The strategy ensures employees will meet their quota and execute against businesses goals. Like coaches watching a game, managers must closely watch the performance of their sales team in order to identify weaknesses, motivate the team when the numbers are down and change the strategy to reach the goal. It is important for companies to invest in solutions that provide visibility into performance and flexibility to be able to quickly change strategies in order to meet sales goals.

Communication
For professional athletes, incentives can be much more obvious than for sales reps. Fame, fortune and achievement: the three inherent rewards of any successful athlete. However, for sales professionals, the rewards aren’t always clear. Sales plans are changing constantly; every new quarter, every time a product is introduced, every adjustment affects the plan. If incentives are not clearly communicated, then the sales team won’t realize their rewards or understand how to get the reward. Managers must lay the plan out simply: you get this reward for doing this action. It is imperative to invest in tools that can ensure clear communication between employees and management in order to align sales behavior with the overall corporate strategy.

Go for it!
To turn your sales team into super star Olympians like Michael Phelps, it takes dedication, focus and motivation. Motivation is the powerhouse behind success. In an interview in 2008, six months before the Beijing Olympics, Phelps revealed he kept an article about Ian Crocker’s record setting win in the 2003 World Championships and a list of goals posted next to his bed. “…That’s something that’s definitely there for me to see and get me motivated and more excited.” Realizing his goals on a daily basis perpetuated his motivation.

To foster his motivation, Phelps invested in his talent: a great coach, lots of training time, strict workouts and good nutrition. With this strategy, he honed in on his talent, he was able to change swimming from a sport to a science. This gave him a competitive advantage over the rest of the swimmers. With the correct tools and incentives, he was able to become one of the most well-known, successful athletes in history.

Sharon Seitz is a public relations specialist currently contracted with Callidus Software. She can be contacted at sharonseitz09@yahoo.com.

There are many things that make this facility particularly interesting. At the time it was built, the prison was the most expensive building built in the U.S. Its innovative design and high technology (flushing toilets!), made it a model for over 300 prisons in the world. Criminals were sent there to reflect upon their actions, “find God”, and become law abiding citizen. This goal was supposed to be achieved by placing the inmates in permanent solitary confinement.

I’m sure the intentions behind the solitary confinement were good, but in practice there were several issues. First, as sales reps do with many incentive programs, inmates found ways to ‘game’ the system by finding ways to communicate between each other despite the rules and potential repercussions of being caught. More importantly, while the goal of solitary confinement and harsh punishments was reform, the unexpected result was to drive many inmates crazy, and turn petty thieves into dangerous criminals. Solitary confinement was abandoned by 1880 and was considered a large failure due to its lack of results.

The incentive compensation take away: A certain incentive program is not necessarily a good idea until it is proven to be, and one cannot discount the impact of unintended consequences. A small oversight could end up being a very expensive mistake!