Incentive Systems Inc., a best-of-breed vendor focusing on Enterprise Incentive Management (EIM), on Monday announced its first EIM suite, which boasts a J2EE-complaint platform featuring business process management and analytics that can scale to tens of million of transactions and tens of thousand of payees, according to officials from the Bedford, Mass.-based company.
The company also announced Monday that it has changed its name to Centiv to avoid confusion with the name of the burgeoning EIM market.
As companies lean more heavily on their sales organizations to drive revenue growth in the harsh economic climate, they are increasingly turning to EIM systems to align incentive-based compensation of their sales staff with strategic company goals to boost corporate performance.
These systems are used not only to calculate and track incentives, but to inject sales organizations with critical agility and to quickly adjust incentives to move excess inventory or ramp up sales in a specific territory. The technology also addresses a growing corporate trend to link incentives not only to sales but to broader metrics such as customer satisfaction, inventory turns, and sales cycle times, according to industry observers.
The EIM market will grow through 2006 from US$2.1 billion to $2.6 billion, according to a recent research report from the Aberdeen Group. The market will be driven primarily by its ability to help companies cut costs given that average company spends $1,500 per employee annually to administer incentive compensation plans, the report says. In fact, as much as 40 percent of the total cost of administering a sales channel comes from managing incentives.
In addition to best-of-breed vendors, including Siebel Systems, enterprise application vendors such as PeopleSoft and Oracle are maneuvering to capture a piece of the burgeoning EIM pie.
"Especially in this economy, companies need to sell products and they need to do it smartly," said Monica Barron, senior analyst at AMR Research in Boston.
"These [EIM] applications are among the tools to give them visibility into who is selling what. It's very much tied to a theme of the performance-driven enterprise where employees need to be very aligned in a real-time manner with corporate strategy. It really starts to tie salespeople's behavior directly to corporate goals."
Centiv's new suite includes modeling, reporting, data integration, analytics and process modules as well as quota and territory modules. The suite is built on a J2EE-compliant platform that includes a reflective data model, temporal database, and calculation engine.
In addition, it features Centiv Tools, designed to provide a workbench for customizing and creating compensation components that can be deployed within the application, reused among multiple plans, and shared with other business units, according to Nina McIntyre, Centiv executive vice president of marketing and strategic alliances.
The Centiv component library offers pre-configured components designed for specific vertical markets including insurance, financial services, life sciences, telecommunications, and high technology.
The Quota module is designed to enable users to analyze, optimize, and set quotas based on historical or projected sales data, while the Process module is intended to improve collaboration and communication between managers and employees by streamlining automating and accelerating the business processes related to EIM.
"When you have a consistent set of pay plans across the enterprise you have more consistent performance," McIntyre said. "If you can communicate how they are being paid and what you want your people to focus on, they will achieve it."
Acuson, a Mountain View, Calif.-based capital medical equipment company and subsidiary of Siemens, was able to automate incentive compensation of 130 employees without adding additional staff by using the Centiv EIM system.
"It is so much faster to have it calculate automatically instead of having to populate spreadsheets, and you can do more complex calculations," said Tracey Moore, Acuson compensation analyst. "We also moved to reporting online so our statements are [available online] for our sales force to log in and take a look at. They don't have to wait for something to come into the mail."
Future plans call for Acuson to allow its sales force to view orders they have booked to date and calculate the commission for additional sales to help motivate them to meet targets, Moore added.
PeopleSoft plans to roll out a sales incentive management solution in December. Future releases will apply the technology to customers and partners to develop methods to focus behavior in these areas to boost overall corporate performance, said Jenni Lehman vice president of global human capital management product strategy.
"How do you provide an incentive to your loyal customers who pay on time?" Lehman said. "How do deliver an incentive to your suppliers that always deliver on time? It would be pulling information in from all different kinds of sources and calculating the appropriate incentive to that customer or that supplier & and trying to reinforce those kinds of behavior you are looking for."
Both PeopleSoft and Oracle plan to leverage their enterprise application vendor status to attack the EIM market. PeopleSoft will roll its solution into its ERP offering while Oracle offers Oracle Incentive Compensation as part of its e-business suite. Oracle's technology is designed to provide an end-to-end incentive management system that incorporates input from sales management, finance, incentive planners, and the individual salespeople.
It encompasses the design, approval, and distribution of incentive plans as well as the tracking of performance to plan, according to Fred Voltmer, senior product manager for Oracle Incentive Compensation.
"On the financial side, their primary objective is to match incentive pay with business objective," Voltmer said. "What we do & is give finance manger the ability to do some planning of these compensation plans before they activate them [by asking] 'What is the best way to motivate our sales force and still meet our financial objectives?'"