Sales Performance Management Best Practices Blog

Three pitfalls of homegrown Sales Commission Software solutions

Posted by Jerry Hegarty on Wed, Aug 15, 2012 @ 09:08 AM

Homegrown solutions aimed at automating the Sales Commissions process fall into two main categories;

  • Those built by in house technical experts, such as developers in IT, that are typically driven by database centered technologies.
  • Those built by business users such as Financial Analyst that are typically driven by desktop / spreadsheet based technologies.  
In both cases, what eventually undermines the viability of each approach over the long haul is how change exposes the lack of flexibility (homegrown db’s built by IT), scalability (Spreadsheets built by financial analysts) and sustainable support (both).

Sales Commissions Software

Let’s take a close look at what those shortcomings may mean to your sales organization;

Lack of Flexibility

Any internal solution geared towards automating the sales commission’s calculation & reporting process is driven by a set of requirements that is almost universally driven by the static demands of the current process. Internal IT teams facing the challenge of applying a rigorous set of business rules to a substantial data set often look to enterprise database technology as the core of the new system. This makes perfect sense and is precisely what software vendors in the Sales Commissions space have done as well. The difficulty arises when the system that is built on such an internal framework of requirements is subjected to unending attack by the force of change. Goals, plans, organizational structure, and sales strategy are always changing as the sales organization struggle to keep pace with a changing world. Additionally, it takes quite a high level of sales comp spcific experience to be able to understand how and where to build in the flexibility your system will need in the near and distant future. Systems built on a rigid set of requirements are simply not architected to keep pace with a dynamic sales team and will struggle to keep pace with the need to change

Lack of Scalability

Spreadsheets have certainly proven to be flexible and friendly to the analysts that support the sales comp process. Like IT built databases, spreadsheet based systems eventually hit a wall when confronted by change in the form of growth. Growth drives the need for scalability in many area's, for example;

  • to manage increasing amounts of data, 
  • to manage a larger sales force, 
  • to generate reports for increasing numbers of sales reps, etc. 
Every time market conditions demand that sales management shift gears and change plans & the data on which performance is measured, Financial Analysts are essentially asked to recreate the wheel. That said, when the scope is within reason, this may be sustainable in the short term. You will probably find that as you become more successful and grow, this approach will hit a tipping point where the negatives will far outweigh the positives and service levels to front line sales teams suffer through high error rates, poor reporting and extended processing & performance-to-pay cycle times.

Lack of Sustainable Support

The challenge of coping with change when using one of the above approaches is exacerbated over time when key analysts and developers, those who built the system and know where all the skeletons are buried in the code, move on to other companies / jobs / assignments. Anyone brought in at this point to modify the system is faced with a daunting task of learning how the system was originally put together and then modifying it to address the new challenges. It is simply not practical and jeopardizes the level of support sales will have for such a key process.

To address these pitfalls, we advise anyone who is pulling their hair out trying to keep up, or is contemplating building a sales commissions software solution themselves, to consider partnering with a software vendor (shameless plug -NetCommissions) whose business has been built from day one to help you overcome the shortcomings of flexibility, scalability and support as described above. 

NetCommissions Sales Performance Management

Topics: EVP/Sales Leader, CTO, CFO/Finance Leader, Sales Compensation Professional, CEO, Human Resources, Sales Professional