BigMachines Utilizes Xactly Incent Managed Service for Sales Compensation Management

Testimonials & Case Studies / BigMachines

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“We strongly believe in the on-demand model. Going with the outsourced Xactly Incent Managed Service—which also enables us to leverage Xactly’s domain expertise in compensation design, management and administration—was a natural fit with this philosophy.”

- Godard Abel, BigMachines, Co-founder, President and CEO

Based in Chicago, Illinois, BigMachines is the leading provider of on-demand configurator, quoting and proposal software that helps companies empower their sales teams and channels. The BigMachines Lean Front-End® (LFE) solution digitizes tribal knowledge and streamlines configuration, quoting, proposal generation, and order management. BigMachines provides extensive reporting capabilities to analyze sales activities and easily integrates with existing ERP, CAD and CRM systems, including those from salesforce.com, Oracle Siebel CRM On-Demand, and SAP. The rapidly growing BigMachines customer base includes global leaders such as Kodak GCG, Siemens, Ingersoll Rand, NTT Communications, as well as innovative growth companies such as ShoreTel and Aruba Networks.

Challenge
Like many private companies, Big-Machines didn’t have dedicated internal resources to create and manage sales compensation plans and administer the ongoing operation processes. Instead, sales compensation management fell into the controller’s portfolio of responsibilities, and a spreadsheet-based system was used to track sales commissions. But with that approach came a variety of problems, notably data entry and data management errors long associated with spreadsheet-based variable compensation.
“BigMachines is a fast-growing private company and we’re adding sales reps all the time,” said Godard Abel, BigMachines co-founder, president and CEO. “For example, in 2007 we grew new subscription contracts 133 percent over 2006. We don’t want to do anything to slow down that rate of growth. It is important that we keep our salesforce focused on selling strategically, and finance focused on improving cash flow and receivables—not on manually calculating commissions.”

According to Abel, the problem with spreadsheets is that even if they get sales commissions right, they are hard to read and understand. “Spreadsheets just aren’t a very user-friendly format,” said Abel. “Frankly, they were frustrating for the sales reps, who would typically spend at least a day a quarter going through the spreadsheets to make sure that everything was correct. It was a huge waste of time. I’d rather have them selling. And if they caught a mistake, our reps wouldn’t trust our accounting team. And that’s incredibly difficult to get back—once mistrust settles into the organization, everything gets called into question.”

Additionally, the sales reps had no visibility into where they stood at any given moment in a quarter. This resulted in the sales representatives, sales engineers and other employees with variable compensation constantly asking the controller for the status of their commissions attainment. Multiply that by the number of people who might be calling or emailing the controller on a weekly basis—and you get a quick picture of just how much the controller’s core responsibilities were interrupted.
“We viewed getting sales commissions right as an extremely critical issue to keeping our sales reps focused and feeling confident and positive,” said Abel. “We needed to get it right and we needed to get it done quickly. That’s when we called Xactly.”

Solution
Going into 2008, BigMachines determined that the spreadsheet-driven approach to sales compensation was not going to be able to scale with its business.

“We anticipated doubling the size of our sales team in 2008,” said Abel. “Our strategy was to implement an improved sales compensation management system before we scaled our sales organization. Additionally, as an on-demand company, our operating philosophy is to utilize and leverage other on-demand applications. For example, we are a salesforce.com partner and we use Salesforce for customer relationship management. Our sales reps just about live and breathe Salesforce. We also use SuccessFactors for performance and talent management and QuickArrow for professional services automation. We also use our own BigMachines solution to generate quotes and proposals for our customers. All these on-demand applications support web-based integration and feed information into one another. Xactly Incent Managed Services was a natural fit with this philosophy.”

Benefits

Increased productivity
With XactlyIncent™ Managed Service, sales reps are now able to spend more time selling, rather than looking over their commissions statements to make sure they are being paid correctly. The BigMachines controller, who previously spent time going back and forth with sales reps addressing commission disputes, is now focused on more strategic aspects of the business. “By outsourcing our sales compensation management with Xactly, we have one less thing to worry about and are enjoying a tremendous productivity boost across the company.”

Increased accuracy
Utilizing Xactly Incent Managed Service, BigMachines has seen a significant reduction of commission errors. “When we used spreadsheets, we would experience one set of errors relating to underpayments,” said Abel. “You’d always hear about those, but seldom would we hear about the other set of errors—those related to overpayment of sales commissions. Because overpayments represent a 100 percent margin loss for the company, it was money wasted. Using Xactly Incent for Managed Service, we’ve been able to help eliminate these costly and time-consuming errors.”

Cost-effective solution
Xactly enables companies to focus on their core business while outsourcing compensation management. “We’re more interested in helping our customers and selling our solution rather than increasing internal staffing to manage sales compensation. Xactly Incent Managed Service provides us with a cost-effective solution to manage sales compensation—and scale with our growth—rather than increasing internal staffing,” said Abel.

Real-time, web-based visibility
BigMachines sales reps and other employees receiving variable compensation for the first time now have real-time, web-based visibility into sales compensation. “Prior to the Xactly solution, our sales reps had no visibility into where they stood at any given moment in a quarter,” said Abel. “Now, using Xactly Incent for Managed Service, our reps have accurate, real-time visibility into how they are being paid, where they stand, and where they need to get to. They can be more proactive. They see the things that we are trying to incent them on.”

Internal process controls
BigMachines is exempt from Sarbanes-Oxley directives that mandate public companies to have a set of internal procedures designed to ensure accurate financial disclosure. However, private companies like BigMachines are benefiting from the kinds of process definition, execution consistency and audit-worthiness that Xactly Incent Managed Service delivers. Abel explained, “Even though we’re a private company, our investors have an expectation of the same level of controls and processes as public companies. Xactly Incent for Managed Service provides us with more robust controls for sales compensation than we could manage with our current resources.”