10 Implementation Pitfalls in Sales Compensation: How to Work with Your ICM Vendor

10 Implementation Pitfalls in Sales Compensation: How to Work with Your ICM Vendor

Even well-planned sales compensation projects can go astray. It’s not only the technology scope and multiple stakeholders that can complicate things, but also the need to cooperate and work closely with an outside vendor.

This post outlines 10 of the most common implementation pitfalls we’ve encountered, having worked on dozens of Sales Performance Management (SPM) projects with different clients. We also provide practical tips on how to avoid these pitfalls to minimize your risks and ensure a successful sales incentives compensation system.

Here’s a quick navigation of implementation traps covered in the post:

Implementation Pitfall #1: Poor Planning

A poorly planned project is going to set you off on the wrong foot and impact the way your sales compensation project runs. It’s therefore critical to make sure both sides are on the same page from the start. 

Here are some tips:

  • Align your implementation and testing methodologies with your vendor, so that there is clear understanding of how the project will flow. Additionally, how long the different phases of the project are split up and how long they should run.
  • Plan contingency time into the project plan in weeks, not days. There will be delays, underestimated timescales and extra requirements that need to compensated for. To mitigate risk include time in the project plan for these incidents.
  • Ensure you have adequately sized hardware (servers, databases) for your production environment and test environments.
  • Verify the change control process, which has been agreed with the vendor, and additional budget to implement the changes.
  • Make sure you have time in your project plan to train your operational staff on the vendor’s software. The more self-sufficient they are, the more likely the solution will be adopted.
  • Don’t go at it alone, work with your vendor!

Implementation Pitfall #2: Inadequate Requirements

Prior to the start of the discovery sessions, think about and document clear business objectives for your sales compensation project. Knowing what you want before the vendor starts will help produce well thought-out requirements in a timely manner.

  • To aid payee uptake of the system, survey your payee community to understand how their needs are reflected in your requirements.
  • It is tempting to invite several members of each business area to each of your discovery sessions to get a comprehensive overall understanding of the sales compensation system you want to implement. But in reality, it’s actually counterproductive. Discovery sessions are far more productive where there is a small group of individuals including a Project Manager, Business Analyst, Compensation Admin owner, an SME and the Vendor. You should be aiming for groups of 8 people or fewer, not 30!
  • Have the discovery sessions onsite rather than over a WebEx. This aids communication, allows people to open up, and permits difficult or confusing requirements to be explained visually.

Implementation Pitfall #3: Ignoring Upstream Data issues

Although the sales incentive compensation solution you have purchased may have some ETL features, you should always try to fix upstream data issues at the source, rather than applying a Band-Aid in your Sales Performance Management (SPM) solution.

  • There are always going to be odd issues at go-live which couldn’t be avoided. However, to reduce the impact of these issues, provide several month’s production data to your vendor during the design phase, so they can test with real data.
  • Prior to go-live, run a production simulation side by side with you current system using live data.

Implementation Pitfall #4: Gaps between Requirements and Design

During the design phase you should have regular design reviews with your vendor so that any concerns in misaligned requirements can be identified quickly and resolved before the project is delivered to your test teams. 

  • The design of your reports and compensation statements will likely be a collaborative process with the vendor and your ICM operational team. It is important to think about what should be shown on the screen and the user experience, particularly if your reports/statements need to be shown in other languages than English, which may have longer phrases.
  • Be willing to consider the performance implications of your requirements and reevaluate whether the benefit of the solution outranks the potential impact on the system performance.

Implementation Pitfall #5: Unmaintainable Solutions

Try to prevent overly complex solutions, which require heavy customization of the sales compensation management product. If it truly isn’t possible to avoid, then ensure the solution is well documented and stored so it can be referenced to in the future. The 80/20 rule is your friend! 

  • Avoid excessively complicated workflows and unrealistic authorization scales. If a process has to go through 8 people for signoff, it’s likely to become overwhelming in real use.
  • While it’s possible that your SPM solution will fix every single compensation issue you have ever encountered, there are times when it’s easier and cleaner to fix things with a process, rather than adding extra complexity to your solution for issues that occur rarely.
  • Don’t base your pay plan on mathematical impossibilities. Your SPM solution isn’t magic, and can’t calculate metrics without data and rules. Try not to design a pay plan based on algorithms that aren’t mathematically feasible.

Implementation Pitfall #6: Poor Project Communication

Manage communication to your executive sponsors carefully and effectively, as they will not be directly involved on a day-to-day basis. It’s important that information regarding the project is presented in the correct forums. Schedule bi-weekly meetings to provide project plan updates, and RAG updates on project components. 

  • Assign an experienced internal project manager to the project, and make sure they have regular meetings with the vendor’s project manager.
  • Delegate a customer champion within your team as a person who will take ownership of understanding the solution as a whole and work alongside the vendor. This will improve the communication of your teams internally, as they will have single point of contact and a SME.
  • Clearly define the management structure within your team and the vendor’s team, including escalation routes.
  • Identify risks early and often as they will evolve over time. Contingencies need to be discussed in detail.

Implementation Pitfall #7: Overrunning Test Cycles

It’s likely your internal testing will have several stages, such as FST, UAT, Performance, and Production Simulation. If each/any of your test cycles overrun, it will put enormous pressure on the project. You can avoid this trap by following these tips:

  • Before your internal test cycles begin, you need to have thought about how you are going to validate the results of your calculations, whether you have an existing tool, or you need to create a spreadsheet for manual verification.
  • Train your test team on the vendor’s software and how to document defects before you enter your testing. This is crucial, in order to make the most of your test phases.
  • If possible, give your vendor access to your test systems. This can be read-only access if necessary; however, it will vastly improve the turnaround time on defect resolution if the vendor can see issues occurring in your test environments.
  • Provide regular copies of your test systems to the vendor during the testing phases. This will make defects easier to reproduce, and shorten resolution times.
  • Ensure you have internal DBA/Infrastructure support so performance issues can be investigated.
  • Ensure you can trace fixes and releases provided by the vendor. The likelihood is that over the course of the project you will need to move fixes between multiple environments to be available to different test teams.

Implementation Pitfall #8: Overcomplicating Processes

Touching on one of the themes above, complex and overcomplicated practices tend to cause time, budget, and quality overruns. Simplicity, when used intelligently in processes, can be far more effective and deliver a larger bang for your buck as well as make it more intuitive for the end-users of the sales compensation system. 

  • Look at your existing processes and consider what works well and what doesn’t. If any business process re-engineering is required, make the decision early.
  • Contemplate the 80/20 rule. There is a high probability that you can decrease the complexity and the timeline by implementing procedures that impact the large majority.
  • Take the time to survey your customers, users of these processes, and see what it is that they need and whether the existing process is effective or even utilized by the end-users.
  • Identify what manual processes can be automated and what should not be. Discuss the processes with your vendor and see if there are other ways or areas of the solution that can handle these.
  • Measure the efficiency and the quality gained by adding complexity. Often the complexity only affects a small percentage of the population, yet it adds in many more steps and can frustrate end users.

Implementation Pitfall #9: Rushing Implementation

Patience is a virtue. It’s essential that enough time is built into the implementation of the sales compensation project to make it successful.

  • Incremental or phased releases are key. It reduces the complexity and lets you solve for your business need at each release. This also lets you refine and revise as you learn the system and allows for flexibility to change things in future releases.
  • Allow time for quality testing. When you or your vendor are rushed, quality is the first thing that suffers. Take the time to do thorough testing.
  • If you do have a firm and short timeline, look at reducing customizations and using the vendor’s best practices.

Implementation Pitfall #10: Not factoring in Security or Legal Requirements

Be aware of any security requirements from other teams within your organization regarding the new Sales Performance Management system. For example, are there additional reporting requirements around system access?

  • Consider how long data should be kept for before it can be archived, where it should be stored and what are the retrieval requirements.
  • Think about the policies you have regarding passwords, which need to be included within your sales compensation system. For instance, you may have internal policies that require all passwords to be encrypted within the application to a particular encryption standard.
  • If you have to transfer data off site, what level of data masking needs to be applied and how can the data be transferred?
  • How are your payees and users going to access the system once it goes into production? Do you use SSO? What access (if any) will you give the vendor for support?

 Learn more about managing sales compensation with NICE SPM