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MARKET REMAINS MOSTLY UNTAPPED FOR REWARDING SALES STAFF AND OTHER USES
VENDORS OF INCENTIVE-MANAGE-ment software love to talk about all the uses for their tools beyond the traditional and most-obvious employees, commission-based salespeople.
The reality is that a sliver of companies use these applications outside their sales staff. Yet even within sales, most companies still have plenty of room to improve when it comes to effectively paying employees for performance.
Dan Eldridge, VP of business operations at Amersham Biosciences, which makes information systems for pharmaceutical firms and biotech researchers, says using incentive-management software from Synygy Inc. helped improve job satisfaction for the 180 sales reps and roughly 40 managers and other sales personnel using the software since it was deployed two years ago. Salespeople at the chemical and biotech-equipment supplier spend less time double-checking their compensation, and they understand better what they're rewarded for. For IT staff, there's far less support needed. Eldridge says the software also could be helpful for managing customer-discount programs in the future.
But there's a risk as well. A major advantage of using incentive-management software is that it gives more choices in creating commission plans and more flexibility to change them. Using Synygy's software has allowed Amersham's compensation and incentive plans for sales reps to become "very complex," Eldridge says. He cautions that just because the software can sort through complicated incentives doesn't mean the salespeople will. And if they're unclear on the goals and incentive structure, their focus won't be clear, either.
Sales commissions and other incentive pay in most companies is calculated using spreadsheets or homegrown legacy software. It leads to salespeople spending a lot of time "shadowing" their compensation-double-checking company calculations to make sure they're getting their due. Factors such as these and the relatively small installed base for packaged incentive-management tools explain why some analysts say the sales-force segment remains a largely untapped opportunity.
The enterprise incentive-management software market will about double from more than $1 billion a year now to between $2.1 billion and $2.5 billion in 2005 and 2006, predicts Katherine Jones, managing director of enterprise business applications at research firm the Aberdeen Group, with most of that growth related to sales personnel. She estimates that more than 85% of companies still rely...