Calculation of Commission and Incentives is one such business process which is triggered across various industries. Accordingly, the events and objects which trigger commission calculation also vary.
For example, In Insurance Industry sale of a Policy leads to commission calculation whereas in Manufacturing Industry creation of Sales Order might lead to trigger of commission calculation. In examples stated above, Object which triggers and delivers information for commission calculation is Policy and Sales Order respectively.
Obviously, attributes on which commission is to be based will also then change across industries.
For example, Policy commission can be based on Line of Business (Motor, Health etc.) and Total Gross Written Premium for Policy whereas in Manufacturing industry commission for Sales Order might be based on Sales Order Value and Material ID for each item.
Above 2 statements necessitates the need of Incentive Commission solution which can cater to requirements of various industries and the same time allow them to easily model their business objects on which commission incentive rules are to be based.
SAP FS-ICM is one such solution which by way of its flexible architecture can address these requirements. Let’s see how:
FS-ICM enables customers to create and model various business object types based on their requirements on which commission needs to be calculated. Once Business Objects are identified, then one can go to FS-ICM customizing and model these business objects using simple design tool.
Considering our examples stated above for various industries, one can arrive at following objects:
- POL – For business object Policy as commission is to be calculated for Total Gross Written Premium at Policy level and attribute Line of Business( Motor, Health etc. ) which is also present at Policy Level( considering only mono line policies ).
- SOH( Sales Order Header) as main object and SOI( Sales Order Item ) as dependent Object – For Manufacturing Industry scenario where Commission is calculated for Sales Order Value present in each item and rates are fetched on Material ID present in Sales Order Item
The required objects and dependent objects can be created in ICM using intuitive Sub Object Design Tool in ICM as illustrated in figure below:
Figure 1: Defining Policy and Sales Order Object Hierarchy
Once business objects and their hierarchy are modeled, next step would be to add all commission relevant attributes to these business objects. This will ensure that required data from upstream system is passed to ICM for the purpose of commission calculation.
To enable commission calculation w.r.t to example provided, for Policy Object one need to add fields for Gross Written Premium and Line of Business attributes to POL object; and for Sales Order Item (SOI) fields like Sales Order Value and Material ID along with some other attributes which might be used for reporting are required.
This is achieved in ICM using Construction Tool. Using Construction tool, one can add attributes to their business objects simply by dragging and dropping required fields.
Figure 2: Addition of Attributes to Policy Object
Figure 3: Addition of Attributes to Sales Order Item Object
Attributes added to objects like above can then be further used in ICM to receive data from upstream system and to derive commission rates based on different values.
This is how SAP FS-ICM is able to support various commission\ incentive scenarios cutting across multiple industries, and that’s why the title of the blog is “SAP FS-ICM (Incentives and Commission Management) – One size fits all” 🙂