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Build vs. Buy: Making the Right Choice for Your Incentive Compensation Management (ICM) Platform

May 13, 2020
3 min read
Incentive compensation is one of the biggest expenses that an organization incurs. Here's everything you need to know about buying versus building a system to manage your sales incentive processes.

​Incentive compensation is one of the biggest expenses that an organization incurs. Yet, too often, companies consider their incentive strategy to be a side component of their success and relegate compensation plans to the sales department.

According to Ventana Research, 52% of sales information is scattered, and 47% of companies have inconsistent execution caused by lack of visibility. Defining incentives should be a collaborative effort between multiple departments, including sales, finance, and HR. And to take things one step further, incentive compensation management (ICM) efforts should be automated and data-driven. 

But the status quo is far from this.

In this age of cutting-edge technology, many organizations still use labor-intensive tools, such as error-prone spreadsheet applications or homegrown solutions, which result in decreased productivity and slow growth that impacts revenue.

A Purpose-built ICM Platform Motivates Higher Sales Performance

Doing business in a dynamic environment is complicated as is. And when organizations operate globally with geographically distributed teams and a salesforce that is always on the go, it becomes even tougher to drive desired sales behaviors and motivate higher performance. It is why designing and executing robust compensation programs that are accurate, transparent, and benefit both the business and sales reps has never been more challenging.  

Thus, having a comprehensive, forward-looking cloud-based platform that is built specifically for incentive compensation management is the need of the hour.

ICM Automation is Table Stakes Today

Automation is an obvious starting point when it comes to compensation plan design and execution to motivate your sales team in the right direction. Still, deciding between building an in-house system or buying a turnkey solution for ICM is not an easy task. It is a common struggle for organizations looking to automate key operational areas of their business.

Many companies believe they are equipped with the staff and specialized knowledge to run their day-to-day operations. Organizations may also choose to build and maintain custom applications for greater control over the solution. But they underestimate the costs and challenges of building a custom solution. 

An in-house ICM solution might look like an attractive and lucrative option at first. But before you decide that is the right path for your business, you must consider several important factors—especially when Sales Performance Management (SPM) is not your organization’s core expertise. This includes:

  • Organizational priorities
  • Resource availability
  • TCO or Total Cost of Ownership
  • Security
  • Scalability and Performance
  • Continuous SPM innovation

These are among other factors. Moreover, it is essential to critically evaluate the limitations and risks of relying on spreadsheets or in-house ICM tools and how that would impact your organization in the long term.

Investing in a Best-in-class ICM Tool Improves Your Competitive Advantage

Incentive compensation is the most significant performance driver for any sales organization. In fact, per Gartner, ICM is the principal of the three core capabilities of SPM. It is how companies motivate their salesforce and drive behaviors in a specific direction to generate maximum revenue and win against the competition.

Moreover, compensation plans are strategic assets that help a company build and sustain their competitive advantage. Hence, maximizing the return on investment on ICM is critical, and companies must manage this investment strategically by using the right ICM platform.

In these changing times, it is also vital for organizations to select not only the right ICM platform but also the right partner who will be there guiding every step of the way. 

Transformation is hard, but partnering with the right vendor can make your ICM automation journey painless and set your sales organizations on the right path to continual success.

Here is a thoughtfully crafted guide that outlines the factors to consider as well as the risks and limitations to be aware of before making this critical choice for any organization. In this guide, you will also learn:

  • Why having a robust and purpose-built ICM solution is essential to your organization’s success
  • How a purposefully structured ICM platform can strengthen your competitive advantage
  • Factors to consider before you decide to build or buy 
  • Limitations and risks associated with building a custom ICM solution
  • Benefits of choosing the right SPM partner, not just the platform

Incentive compensation management is only the beginning of shaping and motivating your salesforce. To truly succeed, organizations must look to holistically plan, execute, and continually optimize their sales processes. Hence partnering with a Sales Performance Management market leader like Xactly, who is fully-concentrated on and committed to SPM innovation, will significantly improve your competitive advantage in the marketplace.

  • Incentive Compensation
  • Sales Performance Management
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Xactly News Team

The Xactly News Team reports on the latest product, events and market trends taking place within Xactly and throughout the revenue intelligence industry.