TEC’s I&CM Evaluation Center (Slowly but Surely) Gaining Traction - Part II

Part I of this blog series expanded on some of TEC’s earlier articles about companies’ need for better commission and incentives calculations and best sales performance management (SPM) practices. It also introduced the latest entry in TEC’s I&CM (Incentive & Compensation Management) Evaluation Center, Varicent Software’s flagship product, Varicent SPM [evaluate this product].

Varicent SPM Architecture Overview

The product suite’s architecture consists of several layers, starting with a number of source systems that can handle diverse structured data. Such data can come from customer relationship management (CRM) systems, and from the order entry, human resources (HR), payroll, accounts payable (A/P), and general ledger (G/L) modules of enterprise resource planning (ERP) systems. The source systems layer can also handle unstructured data coming from Microsoft Word, Excel, PowerPoint, and PDF documents.

At the data storage layer, there is support for the Microsoft SQL Server, Oracle and IBM DB2 databases, while at the presentation and analytics layer, there is support for the IBM Cognos TM1 (formerly Applix TM1), Microsoft Analysis Services, and Oracle Hyperion Essbase online analytic processing (OLAP) platforms.

Finally, the output destination layer presents several options from Microsoft Excel documents and hypertext markup language (HTML) Web pages, via mobile devices, to business intelligence (BI)/online analytical processing (OLAP) cubes, G/L and Payroll systems.

Out of the above layers, the Varicent Application Layer encompasses the data storage layer, Varicent SPM’s calculation engine (written mostly in the Microsoft .NET Framework) and the presentation & analytics layer. Such multi-layered architecture was designed with scalability, flexibility, and openness in mind.

Furthermore, based on the above-mentioned architectural blueprint, the system features advanced reporting & analytics, modeling & simulation, and dashboards & alerting capabilities. For example, users can use a plethora of dimensions for out-of-the-box reporting purposes such as: accounts, time period, customer, product, territory, payee, payee group, etc.

Broadening Reach

The recently released Varicent SPM 5.0 's user interface (UI) is backed by a calculation engine that leverages an Excel-based syntax, allowing business users to more easily replicate and manage their company-specific compensation models directly within Varicent SPM. This empowers end-users to control the application, including integration with source systems and scheduling routine tasks such as importing and exporting information to and from other enterprise systems.

Without relying on the IT department, business users (or end users) gain the ability to have a comprehensive review and approval wrapped around business processes while also managing compensation plans, creating and scheduling automated maintenance tasks, and configuring the system directly. In its quest to broaden the product’s reach to less IT-savvy users, the new UI features more workspace, and an improved layout and presentation based on customers' feedback.

In July 2008, Varicent announced that its newly released Varicent SPM 5.0 features integration with Microsoft PerformancePoint Server 2007 and Microsoft Office SharePoint Server.  The combined solution makes it possible for organizations to deliver a holistic solution for both SPM and corporate performance management (CPM). Specifically, Varicent SPM 5.0 now:

  • Offers synchronization of SPM data – including details on territories, quotas, incentive compensation and related analytics – with Microsoft PerformancePoint Server;

  • Includes Microsoft Office SharePoint Server dashboards, providing customers with a single, integrated source of corporate information; and

  • Enables Varicent SPM 5.0's Quota Planning module directly in the financial planning mode of Microsoft PerformancePoint Server, delivering a single application for both financial and quota planning.

Varicent, previously a Microsoft Certified Partner, has now achieved a Gold Certified Partner status in the Microsoft Partner Program. This distinction shows that Varicent has demonstrated proficiency with Microsoft-based technologies.

Varicent’s Current State of Affairs

Varicent SPM is a relatively new offering (started in 2003), so gaining visibility and getting in more competitive selections has been its primary challenge to this point. In some instances, providing a number of reference clients of a certain size and in a certain industry quickly can be somewhat problematic, in comparison to better established players like Callidus Software or Oracle Incentive Compensation (OIC).  

Also, having thus far supported only English and being primarily present in North America have been additional limitations for the vendor.  While this is true, Varicent has achieved significant traction in the marketplace, including triple digit revenue growth year-over-year for the last four years and is tracking to do the same in 2008.

2008 would mark the year of expansion in terms of management team, board members and rank-and-file employees, as well as international expansion into the Europe, Middle East and Africa (EMEA) region. In addition to the above-mentioned Microsoft Gold certification, Varicent has announced partnerships with Deloitte Consulting, Revelwood and Merador and signed its first Fortune 10 customer.

In late April 2008 Varicent announced the general availability of Varicent SPM 5.0, which introduced:

  • a newly designed UI that allows organizations to more broadly deploy Web-based SPM reporting, analysis and dashboards throughout the enterprise;

  • enhanced workflow, data collection, task management and audit capabilities to better manage and control complex variable pay plans and processes;

  • improved dispute resolution functionality for faster, real-time management and tracking of field inquiries;

  • a Web Form builder so business users have more flexibility in the design and rollout of Web-based input templates, performance scorecards and compensation reports (both with quantitative and qualitative metrics); and

  • Varicent Composer, a new graphical management capability that gives business users visibility and control of sales performance management business processes.

Besides new UI, broader reach is hoped to be bolstered via the Web Form builder and input templates. These tools enable flexible design of reports, performance scorecards, wizard driven template creation, and data validation fields. The remaining new features (bullet points) from the list above will be fleshed out shortly.

Key Tenets of Varicent's Success thus far

Varicent wins most often when prospective customers value the speed, flexibility, and visibility of their EIM/SPM processes.  When it comes to “speed,” Varicent SPM is designed to be administered and maintained by business users (process owners) with minimal IT staff involvement.

Given the vendor’s financials management focus and heritage (rather than its focus coming from the HR management pedigree of many competitors), the product also has advanced dispute resolution, modeling, reporting, analytics and other capabilities that give organizations the ability to make quicker business decisions and speed in terms of performance management.

As indicated earlier, Varicent SPM 5.0 includes a new simplified UI designed for various business professionals across the enterprise: sales representatives, management, finance, HR personnel and executives. The new UI enhances the human interaction and usability of the solution, which makes the product accessible to more casual users who need to gain insight into sales productivity, profitability and performance.

Existing and New Flexibility and Visibility Enablers

As for “flexibility,” Varicent SPM was designed to meet the broad requirements of mid-size companies to large Fortune 500 enterprises.  The product can scale from hundreds to tens of thousands of users, and has advanced workflow management capabilities out-of-the-box that can be tailored to organizations business specifics. It has other notable capabilities including the above-mentioned Varicent Composer, which is a graphical visual application manager that gives system users insight into incentive calculations, business rules and data flows.

Varicent SPM 5.0 includes built-in business rules, and supports the creation and maintenance of any type of unique or customized business process flow. Companies can also easily configure their own approach to payment approvals, retroactive period adjustments, exception alerts, performance scorecards, management by objectives (MBO) management, field inquiries, document sign-offs, data collection and reporting.

The new Workflow module can be based on groups and/or hierarchy trees. In a drag-and-drop manner, users can create  workflows for managing plans, reports, Web forms, documents signoffs and inquiries. Workflow management can help with inquiry and dispute updates and with faster, real-time management and tracking of field inquiries.

For its part, Varicent Composer enables system administrators to create and edit dynamic graphical representations of calculations, business rules and data flows, thereby giving them greater visibility and control over incentive compensation rules, territory assignments, deal crediting, adjustments, overlays and exceptions which are usually buried deep in custom configuration or code. This new visual illustration tool, with the drag-and-drop and drill down ability (all the way to database tables) provides a visual representation of the entire process from source data through to final compensation payouts.

As a recap, Varicent SPM’s flexibility makes it easier for end users to learn, set up, manage and show complex calculations, business rules and data flows. Users and companies thereby gain more insight and control over incentive compensation rules, territory assignments, deal crediting, adjustments, overlays, exceptions, and so on.

Final Thoughts

Last but not least, in terms of “visibility,” Varicent gives business users greater visibility into plan and organizational changes with notable audit capabilities and the Varicent Mobile module (in a partnership with Vaultus, and currently the only SPM hand-held offering in the market, to my knowledge).

Meeting the increasing need for better visibility and compliance, Varicent SPM 5.0 introduced enhanced audit and security mechanisms for more system control, better audit trails and improved user activity tracking. Users can drill into summarized audit reports to get detailed transactional information. The solution's audit reporting and analytics capabilities are designed to meet ever-changing compliance and audit requirements.

As said in Part I, Varicent is headquartered in Toronto, with direct sales and reseller partners throughout North America and EMEA, and a reseller partner in Australia. This way, Varicent has its system users in more than 20 countries around the world. To facilitate global requirements Varicent has multi-currency input and payout capabilities, multi-rate set functionality and supports both centralized and decentralized (e.g., geographic based) SPM processes and systems.

Varicent SPM is distributed in English and a language translation support layer is provided to translate the application into other required languages. The vendor has mentioned translations for six languages in process at this stage.

Varicent has both traditional on-premise and more modern on-demand (albeit in a single-tenant hosted manner) offering.  The vendor claims to not have a deployment mode preference and believes the choice should best meet the customer’s business requirements.  Whether on-demand, or on-premise, Varicent delivers the same comprehensive SPM functionality  (i.e., Incentive Calculation Engine, Workflow, Territory Management, Quota Planning, Performance Analytics and Mobile Handheld capabilities).  Varicent also lets organizations switch from one mode to the other, in both directions, as business needs change.

Hence, dear readers, what are your views, comments, opinions, etc. about Varicent’s moves and abut the EIM/SPM software market in general? We would also be interested in your experiences with this nascent software category (if you are an existing user) or in your current (possibly painful) practices, and your general interest to evaluate these solutions as prospective customers.
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