SAP Commissions: Understanding and Using Variables, Part 1
In my time as an SAP Commissions trainer, many of my students have observed that Variables are a difficult concept to learn. In reality, Variables are not only very easy, they are incredibly powerful and important for the creation of efficient compensation plans.
In this three part series, I’ll cover what you need to know about Variables: what they do, how to use them, and some best practices. At the end of each post, you’ll find links to some helpful videos.
In this first part, I’ll focus on what Variables are, where you can use Variables, and why Variables are important for good plan design.
In Part 2, I’ll look at the “how”; in other words, the steps you’ll take when creating plans that use Variables.
In Part 3, I’ll discuss recommendations and best practices that you can use to make sure your plans are optimized for success, not only now but as your organization scales.
Let’s start with a fictional company called Bikes in Motion. They make…you guessed it…bikes. They sell these bikes all of the world, but for this example, I’m going to focus on three great Sales Representatives: Terry, who covers all sales in the Eastern United States, Joyce, who covers the Central region, and Gene, who covers the Western region. We’ll learn more about how each of our Sales Reps is compensated as we go through this scenario.
What is a Variable?
A Variable in SAP Commissions is very different from the variables you’ve worked with in algebra or in object-oriented programming. In SAP Commissions, a Variable is a placeholder. A Variable is placed in a compensation rule whenever you have a scenario in which payees in a plan have different values.
Let’s look at an example.
Remember our three sales reps: Terry, Joyce, and Gene? Each of them has a different sales territory, but other than that, their compensation structure is basically the same. This means we want all of them to use the same compensation plan, using a Territory Variable where the sales Territory would go.
When do I use Variables?
As we just saw, you use Variables when you have different values in a plan for different payees. You might be wondering, what kinds of values?
If you are already familiar with SAP Commissions, you know that when you build a compensation plan, you use Compensation Elements as building blocks. These building blocks include Territories, Fixed Values, Rate Tables, Formulas, Quotas and Lookup Tables.
Of these, four have a Variable equivalent: Territories, Fixed Values, Rate Tables, and Lookup Tables.
Using the same example from above, when I’m building my Credit Rule, I’d use a Territory Variable as a placeholder for the Territory,
Why use Variables?
At this point, I’m often asked what the real advantage of using Variables is. Wouldn’t it be easier to just have a condition in the rules?
Well, sure, if you only have a couple of payees. In that case, you could have a separate Credit Rule for each payee, with a separate Territory in each rule. But what if you have or fifty payees, or 50,000? Managing that many rules would be unsustainable.
The answer, then, is to do the following. We’ll explore the details on this in the next few parts of this series.
- Create, or import, your actual compensation elements. In our example, that means we would create a Territory for each of our three Sales Representatives. Fixed Values, Rate Tables, and Lookup Tables would also be created at this point.
- Create a Variable that will act as a placeholder for each Compensation Element
- When building the rules, insert the Variable in place of the Compensation Element
- After creating all the plans and rules, assign the Variable to the appropriate Compensation Element for each payee.
Here are some helpful videos on these topics.
Introduction to Variables in SAP Commissions
Using Variables in Compensation Plans
Now that we’ve see the advantages of Variables, check out Part 2 to learn the steps to incorporate them into your compensation plans.