The most common reason why companies purchase sales performance management/incentive compensation management (SPM/ICM) solutions is to effectively manage the administrative costs of their compensation program. Although SPM/ICM solutions do this well, the biggest value they deliver is enabling companies to create more effective compensation plans. It is standard practice for companies to reduce the volume and complexity of compensation plans to make them more efficient to manage, but the companies that get the most from SPM/ICM solutions use their capabilities to support the complexity needed to build the best plan for each role without increasing the cost to administer each. This change has become a reality recently as new providers have deployed new and innovative approaches to enable their customers, who are focused around three key points:

  • Empowering the administrator to support more complex use cases. Doing this reduced the need for systems integrator (SI) support. For years, companies assumed they needed to have SIs to help them deploy and maintain their SPM/ICM solutions — so much so that companies hired SIs to determine which solution they should purchase. SPM/ICM new entrants into the market have changed this and are providing options that remove or reduce the need for SI investment, reducing the total cost of ownership for SPM/ICM solutions. Those considering new solutions should include SI costs as part of the evaluation process to understand the overall potential cost savings of the solutions being evaluated.
  • Taking customer success to the next level. My evaluation of the SPM/ICM market made it clear that not all customer success programs are created equal. Though most vendors in my evaluation provide a level of customer success, the skill level of the people in these roles varies. Reference customers consistently mentioned that SPM/ICM solution providers with customer success teams dedicated to this technology provided better service than larger providers with customer success managers that support a broader portfolio. When deciding on the best solution, validate the skill set and focus of support resources.
  • Continuing to receive value from foundational capabilities. When talking to vendors, we found that generative AI (genAI), scenario planning, and CRM integrations are often differentiators, but very few reference customers have deployed these features. Although a handful of evaluated vendors have genAI capabilities, reference customers didn’t notice, and those whose solutions had these capabilities weren’t using them. Though these capabilities will be more useful in the future, the most valuable capabilities of SPM/ICM solutions today are core features such as ease of use, the ability to handle complex calculations, and data transformation. Don’t get distracted looking at the cool features; instead, focus on the solution’s ability to execute core compensation use cases.

Seeing what modern SPM/ICM providers have been able to do to add value with foundational capabilities is exciting. The solution is modernizing both from a technology and support standpoint and achieving strong results. While genAI capabilities are just starting to emerge, providers in this category are well positioned to continue to evolve and improve their capabilities with AI. Those evaluating these solutions should start looking beyond the standard cost-savings metrics and toward ways to leverage their core capabilities to optimize plan effectiveness.

To learn more about the SPM/ICM category and its vendors, you can read the latest landscape report and Forrester Wave™ evaluation.