ICM Buyer’s Guide for Enterprises
Buying the wrong Incentive Compensation Management (ICM) software could leave your enterprise frustrated by unnecessary manual admin, frustratingly slow changes, and costly lost opportunities.
Buying the right ICM solution for your business could put you years ahead in growth, increase rep retention and engagement, and help create resiliency through increased agility across the crucial process of sales compensation administration.
What is ICM software?
Every ICM software allows you to calculate & track commissions and provides a platform for you to automate your organization’s incentive compensation processes.
The difference between vendors often comes down to how that process works and how much of the burden lies on your team.
At a minimum, any sales compensation solution should allow you to:
- Design your incentive plans
- Align your incentives with business goals
- Automate some or all of the compensation process
- Inform users about the performance through reporting
Why buy an ICM solution?
In contrast to large companies, small businesses rarely have problems processing sales commission payments. The number of people involved and the complexity is low, so it can be managed by a single individual in a spreadsheet with relative ease.
As soon as a business scales beyond around 100 reps, incentive compensation management using spreadsheets becomes inefficient and time-consuming. And the more salespeople you have, the greedier that beast becomes.
Buying ICM software helps organizations automate away the administrative burden as they scale — allowing their sales compensation team to focus on optimizing incentives and improving performance.
Some other reasons to buy new incentive comp software could be:
- It takes too long to make changes in your current ICM solution
- You’ve lost the internal expertise to program the software
- You’re overly reliant on expensive external consultants
Why Choosing the Right ICM Software Matters
The software that you buy to help manage compensation will determine your company’s success for at least the next five to ten years. Buying the wrong sales compensation software at the wrong time could trigger a slow death spiral that slowly grinds out all profitability.
Much of the problem is that ICM software vendors will promise you the world until the ink dries and you discover that you still have to do all the grunt work to meet payroll on time.
They get away with this because installing new core software in an enterprise is often so traumatizing and expensive that it doesn’t get changed again for a long time — even if it’s totally insufficient or ineffective.
Ensuring your enterprise doesn’t get lumbered with ineffective or resource-draining software is critical to ensure ongoing success and agility in the years ahead.
5 Steps to Finding the Right ICM Solution
1. Define your business needs
Outline the typical scenarios that you run on an annual, monthly and weekly basis. Define what each of the stakeholders needs from the solution and rank their priorities. Write down what your ideal solution would be able to do for you.
2. Calculate your current costs
The true cost of enterprise ICM software ownership is often massively underestimated. Don’t forget to include salaries, consulting fees, and missed opportunities along with the subscription fees.
3. Shortlist vendors and kick-off discovery
Don’t arbitrarily set the shortlist size. Speak to the vendors who can offer what you want and who you enjoy working with until it’s time to make the final decision.
4. Test scenarios with vendors
This is one crucial step that most ICM software vendors wiggle out of. During (or before) demos, ask vendors to demonstrate how they handle complex plan changes, particularly after the initial setup.
It’s easy to set up new plans and rules in most tools, but what happens when you want to adjust one mid-year? Or run a quick, fun SPIF to boost sales? Far too many enterprises don’t find out until too late that this isn’t possible in the software they’ve bought.
5. Carefully review the SLA
Push vendors to guarantee outcomes, like payroll delivery. If a vendor tells you “nobody does that,” come and talk to Forma.ai. We guarantee you make payroll as part of our SLAs.
Follow Your Process, Not the Vendor’s
For a more comprehensive guide to finding the right solution for your enterprise download the full ICM Buyer’s Guide by clicking here, and look out for our upcoming guide to running a successful sales comp software RFP process.