Compensation Management with a Real Payoff
Ingres, a provider of open-source information management services, sees itself—and its solutions—occupying the cutting edge. (In fact, executives there boast of having the industry’s first relational database.) One Ingres department, however, was nowhere near that edge in early 2008.
“We have an adventurous [chief executive officer] who actually built his own application to handle sales compensation,” says Mike Kostow, Ingres’s vice president of business operations. “But our [chief financial officer] was spending 20 [percent] to 30 percent of his time dealing with sales compensation and managing the application that [the CEO] had built. From infancy, this was a huge challenge for our company—we had a global business and we didn’t have an adequate solution in place.” In short, the homegrown sales compensation offering lacked automation, timeliness, and transparency.
One of the largest issues for Ingres? The work-anywhere nature of its business involves employees scattered all over the globe—and involves paying them in their respective currencies. The homegrown solution, though, couldn’t handle foreign currency. The old setup required too much time to operate, restricted the ability to view an entire spreadsheet at once to just the manager or auditor, and couldn’t delve into any individual employee record. The system also kept employees from viewing their own sales and payment records, meaning salespeople weren’t clear on what commissions to expect.
Worse, they were engaging in “shadow” accounting. “They were trying to calculate their own commissions,” Kostow says. “That becomes quite a process for your sales teams—to be spending a quarter of their time worrying whether commission numbers were right or not.”
In addition, says Shelley Keefe, Ingres’s businessoperations analyst, the auditing process was a mess, with auditors unable to drill down to one particular field. She had to hand over the entire spreadsheet at once.
When Kostow took over the operations role, he decided that Ingres needed to implement a new solution—and fast. The company, without much deliberation, chose Xactly’s Incent on-demand sales compensation management application and rolled out the solution in mere weeks. The on-demand model made sense, Ingres executives say: About 95 percent of the company’s information infrastructure is built on on-demand solutions. (Doug Harr, Ingres’s chief information officer, discusses the company’s overarching Salesforce.com platform in “Be Nimble, Be Quick,” Secret of My Success, on page 45.)
Ingres executives say that the sales team took to the solution quickly—thanks, in part, to single-sign-on access to Xactly via the Salesforce.com system—and the salespeople now rave about the ability to see the same data that management sees, under the same lens.
“We now have no discussions about ‘Should I be paid differently for XYZ?’ because we’re all looking at the same data,” Keefe says. “There’s nothing hidden. There’s nothing I can’t show them with regard to their compensation.” The currency and auditing issues are solved, too, making note of exchange rates.
Executives say that, in 2009, the company essentially saved the salary of one full-time vice-president–level position, countless CFO-level hours, and $25,000 that had gone to a systems integrator. Kostow, who originally came on board to manage the sales operations, has been able to pass along all the compensation duties to Keefe. He says he’s now able to focus on revenue-generating activities such as managing relationships with large systems integrators.
The time spent searching for transactions and records has dramatically decreased. Sales reps can trace each transaction on their own in seconds—from the enterprise resource planning invoice to the commission amount. This eliminates the bottleneck and time spent emailing the compensation administrator. Email correspondence about sales compensation often took up to 24 hours given time-zone differences. With Xactly, the administrator now receives 75 percent fewer commissions-related emails.
“Naturally, in any company there’s tension between sales and operations,” Kostow says, “but what Xactly has done—by allowing everyone to look at the same thing—has helped foster a better relationship [between] the two groups of the company.”
With Xactly’s sales compensation solution on the Salesforce.com platform, Ingres was able to:
- reduce its error rate on commissions by more than 50 percent;
- cut the time needed to configure new compensation plans from weeks or even months down to just days;
- cut $25,000 in systems-integration costs;
- reduce compensation-related dispute time to between 1 and 2 hours per quarter, versus three weeks previously; and
- save the salary of one full-time vice-president–level position.
For the rest of the November 2009 issue of CRM magazine — a look back at the first 10 years of Salesforce.com — please click here.
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