There is a lot of buzz around Business Performance Management and the need for tools for organizations to analyze and set expectations. There is a lot of interest in the Sales Performance Management tools as well. While in the current world they are treated as separate initiatives, the truth is that they actually are related and together can add value to a business.
These two are part of the same puzzle that businesses have been putting together for years. An organization is driven by sales, and the sales may be of services or products. Sales are the beast that supports the organization and drives the need to analyze, plan, and set expectations for the business, e.g. the need for Performance Management. So can you really separate the two, and treat them as completely different initiatives? While the tools used may differ, the end goal is the same: to have the complete puzzle put together and be able to see the picture. As a jigsaw is not complete without all the pieces, Performance Management is not complete without Financial Management and Sales Management working together.
While most of the Business Performance Management revolves around Financial Analysis, Financial Planning, and Financial Reporting tools, Sales Performance Management (SPM) revolves around compensation and revenue analysis tools. One analysis that seems to cross both processes is the need to analyze revenue trends by territory, region, and products. Does it not make sense then to use a Sales Performance Management process or tool to feed the Business Performance Management process or tool?
The Sales Performance tool can analyze sales, cost of sales, and allow for data to be easily integrated into a Business Performance tool for additional planning and trend analysis. Controls allowed by the SPM tool enable the Organization to clearly see the Revenue and the compensation associated with the creation of that revenue. Sales compensation is one of the highest risk factors of an Organization, and a SPM tool enables the Organization to see, predict and control how compensation is handled and that it adheres to the plans and the rules of the Organization.
In addition, this tool can aid in determining the profitability of a product or service, and whether the compensations are fair to the sales force and the organization. Sales Compensation is one of the most manually analyzed and controlled aspects of the sales process, and due to this one of the biggest risk exposures for many organizations. While an analyst may hear about an underpayment, they will likely never hear about an overpayment.
Once this data is merged into a Business Performance tool, the Organization can more accurately analyze and plan for Revenue and Product management. Gone are the days of taking a number, and arbitrarily assigning a growth number. These tools working together enable better decision making by presenting a more factual picture of an Organizations viability and potential for growth. Financial Analysis is driven off of ‘truth’ and not a wish list, and allows for Organizational Management to make informed decisions and the Organization to ensure viability and growth.
With IBM’s purchase of Varicent, a Sales Performance / Analysis tool that integrates with the IBM Business Analytics line, all the pieces to the puzzle are now available.
To find out more about Sales Performance Management, be sure you check out IBM Cognos ICM.