The market for incentive compensation management continues to expand, as more companies recognize its ability to drive growth.
Posted Nov 9, 2007
The market for sales incentive compensation solutions is ripe for advancement, as companies across the board -- looking to accelerate their corporate performance -- turn to the applications to synchronize selling strategies with execution, according to a newly released report from market analysis firm IDC.
Even as the sector continues to expand, the field of sales compensation has become ever more complex and more important to a company's growth and success, says Judy Hodges, research manager at of Framingham, Mass.-based IDC, and author of the report "Worldwide Sales Incentive Compensation Management Applications 2007."
Expect in the next few years to see many small and midsize businesses move from their paper-based or in-house incentive compensation management (ICM) systems to these specialized software applications, which can do the job better, she adds.
"Companies now know they need to put a higher value on compensating sales people appropriately," Hodges says. "They'll be replacing their homegrown systems with these solutions as they realize the measurable valuable of flexible and strategic solutions."
In fact, companies had often overlooked or postponed deployment of ICM applications in deference to more pressing automation requirements, says Mary Wardley, research vice president of CRM Applications at IDC. That's changing as these companies begin to see the potential upside of automation.
"As organizations' enterprise applications environments evolve and become more sophisticated, automating specific processes such as sales incentive compensation creates the vital link between an organization's internal processes and those of its front-office employees," Wardley says.
The new emphasis on ICM is driven by the realization that compensating salespeople efficiently and accurately reaps benefits not just for each member of the sales force, but for the entire company. In fact, many companies make the mistake of thinking sales compensation software drives only sales, Hodges says. "These systems are really about business performance overall," she says. "Sales compensation has become complex and critical to a company, so these new systems increase accuracy and consistency and help businesses better manage change within the incentive management process."
Expect to see small and midsize companies turn to on-demand solutions when bringing this new software on board, Hodges says. Companies of that size will find the software-as-a-service delivery method particularly appealing as they seek implementation time-to-market advantage, she adds. And with the overall growth of the market -- particularly the on-demand offerings -- expect greater competition (and likely consolidation) among vendors.
"Established vendors will have to fend off encroaching market entrants by offering new products, expanding their service offerings, and offering new partnerships," Hodges says. "Mobile-enabled applications will become more prevalent to give sales managers and senior executives a way to access critical information."
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