one to watch
While VUE Software focuses on the insurance industry, its “effective targeting” has made it a “no-brainer for this sector,” according to Ament. Wang agrees. “VUE is still a key short list contender in insurance.” Still, its excellence in this vertical begs the question of “whether the company plans to specialize in this domain or branch out into additional industries...and with what competitive differential?” Ament asks. —S.S.
The Market
Just 12 percent of companies use a commercial incentive management tool, according to CSO Insights’ Incentive Compensation and Performance Management Study. Most companies are still in the Excel era: Fifty-three percent use spreadsheets to calculate rewards for salespeople. Still, the area is growing, as the power of incentive management tools is realized. “Companies are seeing that they elicit the sales behaviors that they reward. So if they want reps doing more to improve margins, sell new accounts, or minimize customer churn, they need to implement more robust compensation management plans,” says Jim Dickie, CSO Insights managing partner.
There’s also a growing trend to align compensation with other tools. Sales forecasting and incentive management tools may be linked. Sales performance management tools are also being integrated with incentive management, making it easier for managers to manage their team.
The Leaders
Callidus Software has been around the longest, and recently broadened its focus to “a lot of things that would be helpful to a sales manager,” including sales performance management, creating “a good, broad package for people who want to get into overall sales management,” Dickie says. That helped Callidus score a 4.1 in company direction. Paul Greenberg, president of The 56 Group, has also observed Callidus’ expansion into other areas, including marketing, which makes the company “more diverse but untested.”
With a “main competency within contact centers,” according to Dickie NICE Systems (through its acquisition of Merced) has a positive reputation within its area of expertise, but analysts don’t see signs the company will branch out. If anything, “the product is becoming more niche-focused than broad market,” Ray Wang, founder and principal analyst at Constellation Research, says. With a company direction rating of 4.2, analysts seem on board with that decision. Greenberg sees NICE as “smart and well-managed,” though finds its overall portfolio “diverse but not entirely focused.”
Synygy offers module solutions, which has both benefits and downsides. “Salesforce.com attach rates remain the key reason [customers include] Synygy in short lists,” Wang says. While companies like Xactly have pursued partnerships with consulting firms that design incentive management programs, Synygy hasn’t gone that route, Dickie explains. “Their modular solutions are a plus, but their lack of consulting partnerships” makes Synygy better for companies that can self-serve their own incentive management.
“Rock stars in their world,” according to Greenberg, Xactly was just barely knocked out of the winners’ circle this year, due to its revenue score (not shown on the chart). Xactly can take credit for “getting incentive management out of the dark days of Excel, and not having IT have to do it,” Dickie explains. Its software offers “robust incentive management with capabilities already built into it.” In Excel, giving salespeople more commission for new customers versus existing ones is near impossible. With Xactly, that functionality is easy, Dickie says. Wang praises Xactly for having “grown its vision and focus,” and sees it as being on a short list for many of his customers.
The Winner
IBM’s Varicent outmaneuvered Xactly to grab the top spot on the leaderboard this year. Varicent is able to handle variable revenue calculations for organizations that may be selling 30,000 products, Dickie says. That custom coding ability makes it a good fit for large and complex sales organizations. Within IBM accounts, Wang sees Varicent “making traction” in competitive deals. IBM’s Varicent also improved its scores from last year, posting solid 4.0s across the board, only dipping lower in the cost score. “IBM’s acquisition and investment in Varicent, one of the first software companies to develop incentive compensation and sales performance management solutions, has paid off for both customers and IBM,” says Leslie Ament, senior vice president and principal analyst at Hypatia Research Group. “Customers benefit from the ever-evolving enhancements, resources, and investment provided by its corporate parent, while IBM added a robust and well-respected solution to its immense portfolio of offerings.” —Sarah Sluis