The 8 Most Expensive ICM Software Implementation Mistakes

Sales leaders that look to their incentive compensation management (ICM) software as a revenue-driving tool are already a step ahead of their competition – but only when they implement it correctly.

We work with Fortune 500 companies to optimize and automate their sales compensation processes, and we frequently see the damage done by poor or inadequate ICM software implementations.

Here are some common software implementation mistakes we have seen and how you can avoid making them during your procurement process.

1. Not understanding the problem first

This mistake isn’t unique to incentive compensation management software.

Many organizations buy software thinking it will help solve their problem, but without a full understanding of the problem they’re solving. That often results in software that either doesn’t solve the problem, only solves one part, or transfers the problem into a different system.

You must understand the complexity of the problem in your unique business context, or you risk spending a lot of money to face the same enemy in new clothes.

Solve the problem first, then find software that enables you to automate that solution.

2. Not defining outcomes first

Implementing new software is a huge opportunity for enterprises to improve their processes to get better outcomes in the long term. But far too often, their existing paradigm blinds them from seeing that opportunity.

If you start with the goal to “get a new ICM software,” that’s what you’ll get. But that’s also all you will get.

To realize the full benefits of your software upgrade, define your desired outcomes from the ICM software implementation project before you begin. Start by writing down all the problems and issues you currently experience with your sales compensation administration process and ask yourself:

• Do these issues have a common theme or root? What is it?
• What impact do they have on the business?
• What impact do they have on the sales compensation team?
• What would life look like without those problems?

3. Not appreciating the need for agility

One common issue we see with customers is that there isn’t a full appreciation across the organization for the need for agility and flexibility in the sales compensation process. Many leaders believe they make far fewer changes to the comp plan than they do in reality.

In legacy ICM software, almost every plan change requires manual intervention. Those constant little tweaks and adjustments to logic fill up the days of sales compensation admins, preventing them from performing higher-value, more strategic tasks.

Assess your need for day-to-day changes and how things like exceptions and one-off splits are being administered to get a clearer picture of how much agility is needed.

4. Not planning for future change

This mistake is related to the one above but is more to do with appreciating the complexity and work involved in changing the sales compensation plan logic in the future.

Every incentive compensation software vendor will help you set up your program and the automation logic needed to keep it running for the first year. But compensation plans are not static.

Within 18-to-36 months, the sales compensation plan will be renewed, updated, or overhauled, requiring significant updating of the logic in the ICM software. That usually means paying the software vendor (or one of their partner implementation consultants) a hefty sum to advise rebuilding the logic to fit the new plan — or doing it yourself if you can work out how.

Press the ICM vendors you’re considering to demonstrate the steps required to update the credit and commission rules in the software when plans are added, exceptions are made, or new reports need to be constructed.

It’s easy to show you blank demos and set you up with an implementation that works for one plan and its logic. It’s far more difficult to build one that can be easily adapted in future without completely rewriting the logic.

5. Not asking for commitments

This mistake stems from mistakes one and two: You can’t ask for what you want if you haven’t a clear picture of it.

Once you know the outcomes you want from your ICM software implementation, don’t be afraid to push vendors to commit to delivering them.

Far too many businesses settle for a basic implementation instead of getting tangible commitments from the vendor to deliver the outcomes they promise in their marketing.

Press vendors to answer these during your procurement process:

• How will this make our sales comp program more effective?
• How will this help us drive revenue?
• What happens when we want to make a change?
• How do we run short-term sales promotions or SPIFs?
• What analytics and insights will this give us?
• Who is responsible for maintaining the data and logic?
• How much will implementation and onboarding cost?

6. Fitting your comp plan into the software’s function

Far too many organizations allow their ICM software vendor to tell them — directly or through their software’s limitations — what they can do with their sales compensation program.

We must be able to communicate the comp program to reps and their results to management, so we allow vendors to build us a simple plan because that’s all they can show you via their dashboards or tools.

It doesn’t make sense to have your organization’s sales compensation plan dictated by the tools you use to administer it. Allowing your comp plan to be shoe-horned into ill-fitting software will reduce its efficacy immeasurably.

7. Using the same dirty data sources

A computer is only as good as the data you put into it. Many organizations suffer more from a data-management problem than a sales compensation problem.

The time it takes to manually upload and validate all the data sources in an enterprise sales compensation function creates bottlenecks and errors that have a knock-on effect up and down the value chain.

If you plug your existing unreliable data sources into new software, they will only produce the same errors.

The key to end-to-end sales compensation automation is reliable, real-time data. Fix your data first, and then find a tool that helps you validate data and keep it clean over time.

8. Doing it yourself

Most attempts at automation break down at this stage for one simple reason: payroll and sales comp analysts are not software programmers.

Several of the newer sales compensation solutions have made automating areas of the sales compensation process easier with pre-made drag-and-drop builders.

These are not as simple as they seem and are very limiting. Anything that isn’t an out-of-the-box calculation will require a custom build or manipulating data upstream from the comp tool. Avoid these Band-Aid solutions at all costs — they will only place an increasing burden on the comp team over time.

No matter how simple the UX is sold as, building software should be left to software engineers who understand the philosophy and best practices needed to build best-in-class automation solutions.

Forma.ai is the only sales compensation solution that moves at the pace of your business. Book a conversation with one of our sales compensation experts here to the future of sales performance.