Sales Performance Management Market Heats Up

For many organizations sales performance management (SPM) means customer relationship management (CRM). Others simply ignore SPM, offering little in the way of sales productivity beyond basic contact management tools. Ventana Research, however, insists that SPM systems can help the organization understand how to get full value from the talent of its sales force. Used optimally, it adds, such a system can even deliver a competitive advantage.

Organizations need move beyond ad hoc tools and adopt real SPM, not CRM or sales force automation (SFA). Gartner analyst Patrick Stakenas notes that SPM, indeed, is breaking away from what has traditionally been considered CRM. There is no doubt, he declares, that having an SPM strategy and using supporting technologies can effectively and measurably improve sales revenue.

One sign that SPM as a catergory is picking up is IBM’s recent acquisition of Varicent Software, a leading SPM player. Varicent enables sales plan administrators and sales reps to conduct detailed ad hoc, self-service analysis without the need for IT assistance. It is not about sales force automation per se but about data analysis as a way to manage and improve sales performance.

IBM acquired Varicent to bolster its growing business analytics portfolio. The acquisition brings sales performance management to IBM’s Smarter Analytics initiative and dovetails with IBM’s efforts to drive analytics capabilities into the hands of front line employees, particularly in the area of sales where many organizations still rely on silos of data and antiquated spreadsheets or rudimentary contact management tools to handle what should be a mission-critical business process.

The Varicent acquisition reflects IBM’s long-term strategy to expand its business analytics and optimization software and services capabilities. Tools like Varicent will supplement IBM’s existing analytics software portfolio consisting of previous acquisitions like Algorithmics, Clarity Systems, Open Pages, Cognos and SPSS.

Varicent’s SPM enables companies to align pay with performance by addressing the growing complexity of the modern sales process characterized by more products, different pricing and compensation tiers, and different and changing sales relationships. The goal is to optimize performance while avoiding unexpected outcomes.

The Varicent tool consists of 4 major components:

1–Incentive Compensation Management: create, model and manage pay-for-performance programs

2–Quota Planning: assign appropriate quota levels according to territories, products and lines of business

3–Territory Management: determine optimal territory coverage model and manage change

4–Channel Management: analyze effectiveness of each sales channel including agents, distributors and resellers

The SPM area is quite competitive with products coming at it from different angles. Ventana identifies the key players as Callidus Software, Merced Systems, Microsoft, Oracle Sales and Oracle CRM On Demand, SAP, salesforce.com, Synygy, Varicent and Xactly. The Ventana Research Value Index evaluates the offerings on seven factors: product usability, manageability, reliability, capability and adaptability, vendor validation, and total cost of ownership/return on investment (TCO/ROI).

In the 2011 Value Index for SPM, the top four players were Varicent, Synergy, Xactly, and Callidus. Merced Systems and SAP placed a close fifth and sixth.

With a number a good SPM products out there organizations have no excuse not to find one that works for them and use it to drive sales. Increased sales should more than justify the investment.