In my last blog, I spoke about the hidden gem in SAP’s portfolio. In this segment, I want to talk about what SAP’s Incentive and Commissions Management (ICM) delivers as standard functions that many of our customers are looking from a solution in this space.
Let’s try first to understand the stage and players for implementing the solution. Typically, ICM solution doesn’t have a single business process owner. More often than not, we find that 3 different business areas have substantial inputs while defining this area (Figure 1).
Figure 1 – Who owns this process?
The answer to the question, who owns the commissions process differs from institution to institution. But why bring this up in a solution discussion? The reason is the solution needs to adapt to the ownership and influencers of the process.
Let’s look at each individual process area and its influence and how the solution supports their specific requirements.
Human Resources and Compensation Plan Design:
I have gathered from HR colleagues that a compensation plan, especially the variable portion, is an ever changing struggle between fair compensation and meeting company goals. Compensation plans are typically delivered as yearly documents and often need new elements, SPIFFs, incentives, targets etc. through their lifetime.
The ICM solution needs to allow for flexible yearly set up and allow for changes as the plans progress. It needs to have the capability to build functionality as new plan elements are introduced.
ICM allows customers to build solution by packages and deliver plans using contract templates
Figure 2 – Selecting only functions you need now
SAP’s ICM solution allows you to select functions (as in Figure 2) as packages and install them. If your compensation plan requirements change, go back and pick packages and set them up. It’s that easy.
Figure 3 – Defining Templates by jobs, regions, roles etc
The contracts can be set up as templates and all rules are set up at the template level. This allows for a cascading functionality, especially useful when you need to do a mass adjustment, add a new product line or other changes that affect a population of sales reps.
Sales Operations and new initiatives:
Looking at customer sales operations over the years it has been clear to me that this business area is in constant flux and changes need to be considered and applied in a very small window.
Ability to quickly change and introduce new Terms & Conditions quickly and preferably without the need for IT support.
Business Rules Framework was introduced in ICM couple of years back. The idea was to enable business teams to do the adjustment. The idea was if users are familiar with writing Macros on excel, they should be able to handle this tool (Figure 4). The process is implemented using very simple and consistent web dynpro UI and allows for setting up and maintaining rules…. wait for it… without IT support.
Figure 4 – Write Formula and Create Tables as you see fit
Finance, IT audit and Payroll:
This group is always wanting to ensure that they can always quantify when, why and who performed changes to compensation models. Also, when something is changed, re-calculated, adjusted, there is a clear and concise way to reviewing and managing those functions.
Ability to store all changes (however mundane) throughout the process and ability to review it.
SAP ICM offers many different ways of doing this, let’s break them down by area and look at these individually.
- Configuration and Master data:
- This portion is managed by a dual axis based version concept. This allows for changes data to be stored, even when the user action is to delete and is especially useful in the recalculation scenarios.
- Transactional data:
- Commission Calculations – Each calculation is stored as its own version.
- Commission Document – Depending on status of settlement the document can be invalidated or reversed by posting another document.
Having looked at what the solution offers, I would like to place a plug in for services. SAP services has been one of the pioneers in implementing the ICM solution, we have over the years we have been able use all this solution can offer and accelerate the time to go live with some best practices and years of implementation experiences. Customers have gotten much better Return On Investment (ROI) for this solution using the services team to unlock its potential. What kind of accelerators SAP services offers, and what can we do to help you unlock the solution potential, I hope to cover that in my next blog.