Modeling Requirements: What to Look for and Why

8 min read

Compensation modeling is an important component of the sales compensation profession, affecting everyone in the industry, from individual sales persons to CFOs. There are many schools of thought as to how to approach this problem. Historically, automated solutions have only provided a point solution for one aspect of the modeling challenge. Until today. Xactly Modeling provides a fully integrated and fully functional modeling environment to leverage all critical requirements for the finance and sales professionals.

What We Have Learned

Leveraging our extensive domain expertise, Xactly has identified several key capabilities to effectively automate sales compensation management modeling. These should be considered as requirements in any evaluation of an sales compensation management vendor. Any vendor not able to adequately support the requirements below will not be able to meet all of the day-to-day scenarios needed to safely test, validate, and promote your business strategies into daily practice.

  • Plan Modeling
    • Micro level (per payee)
    • Macro level (for organization or channel)
  • Forecast Expense Modeling
  • Organizational Modeling
  • Bi-directional Support
  • Separate Sandboxes for Production and ModelingSaaS Multi-tenant Provider

What to Look for and Why

Requirement 1: Plan Modeling

This requirement stipulates that users be able to create or modify any plan element for modeling purposes. This includes the ability to create a full plan from scratch or model individual elements such as rates, quotas, SPIFs, and more. Actual production plans and ‘proposed’ plans should be supported. Plan changes impact compensation in a non-linear fashion. This is where all vendors have traditionally focused although not all vendors support both micro and macro modeling.

Ask These Questions:

  • Does the vendor support easy manipulation of plan elements to model the needed compensation design?
  • Do they support micro modeling? Per payee?
  • Do they support macro modeling? Full organization reviewable in total?

Requirement 2: Forecast Expense Modeling

This requirement stipulates that both production data and forecast data are available to use as data sources to produce commission expense forecasts. Forecast data enables the user to produce modeled expense forecasts for future periods, which is supported by some vendors.

Ask These Questions:

  • Can my actual data be easily made available for modeling while not impacting my production processing?
  • Can modeling be run independent of and concurrent to production in case I need to perform a live calculation?
  • Is modeled data separate from production data? (See Requirement 6 for impact.)

Requirement 3: Organizational Modeling

This requirement stipulates that a modeling solution must support any organizational structure, current or forecasted, for use in modeling scenarios. Organizational modeling is the most common requirement missed by sales compensation management vendors.

You need organizational modeling to view historical data or forecasted data against actual or proposed deployment strategies. As new partner channels, products, or support overlays are needed, organizational modeling provides an accurate picture as to what you can expect. Organizational changes impact compensation in a non-linear fashion.

If a vendor does not support full organizational modeling, they cannot support all of your daily needs for designing a successful strategy.

Organizational modeling allows you to:

  • Use actual payees
  • Test results against your actual organization
  • Simultaneously test results against a new organization with:
    • Modified positions
    • Additional headcount
    • Reduced headcount
    • New team assignmentsAltered overlay or support assignments

Ask This Question:
Does the vendor support full organizational modeling for each point above?

Requirement 4: Separate Sandbox Environments

This requirement stipulates that the production environment must not be co-mingled with the modeling environment. The Xactly leadership learned over our tenure in the sales compensation management space that customers with only one production environment are reluctant to “play” with creative rule designs due to a fear of impacting actual results. This prevents the customers from being fully self-sufficient.

Our sandbox approach means that you can experiment with the application as much as you want and not worry about deleting, changing or damaging anything. If by some chance you do, you have a secure source from which to restore your model back to any state.

Our sandbox approach is the best way you can be fully confident in using an application; you can use it any way you want, every day, and not worry about making a mistake. You can’t do this if your modeling is co-mingled with your production environment.

A separate sandbox approach promotes:

  • User adoption
  • Ongoing user training
  • No performance impact on production
  • No co-mingling of actual data with modeled data
  • Secure promotion of modified plans
  • Archiving of approved plans, promotions or organizationsUnique access for alternate users that are restricted from accessing the live environment

Ask This Question:
Can your sales compensation management vendor support each of the above-mentioned scenarios?

Requirement 5: Bi-Directional Data Support

This requirement stipulates that the production data can be easily sourced to a secure modeling environment. This is not a simple copy-and-paste (See Requirement 4). Bi-directional data movement allows users to quickly deploy modeling scenarios and promote approved changes back into production in a secure manner.

Ask This Question:
Does the vendor’s data model support these criteria for modeling?

  • Bi-directional data movement
    • Aggregated objects
    • Individual objects (single rule, etc.)
  • Role security on data movement
  • Intuitive user interface for any business user
  • Protection from performance impact

Requirement 6: SaaS Multi-tenant Provider

This requirement is at the core of the Xactly design philosophy. The requirement states that in order to fully leverage the highest ROI and lowest TCO, a full multi-tenant SaaS provider is preferred.

Ask This Question:
Does your vendor support both multi-tenant database and multi-tenant application SaaS as a delivery model?