“Two roads diverged in a wood, and I – I took the one less traveled by, and that has made all the difference.” — Robert Frost Like a great trip, where both the journey and the destination were wonderful, the value of an activation is in both the process and the destination. For a little context, where I work we call the implementation process of gathering the ICM (Incentive Compensation Management) requirements, designing how to automate the processes and plans, configuring the system, importing the customer’s data, building the plans, testing and then going live: activation. Lately, I’ve been doing a lot of work determining how to calculate the ROI of activating an ICM system for our customers. In doing this I examined and documented three main types of ROI: cost, revenue and risk. When I broke those down into subsets I was short on ROI to support risk reduction until I realized that real value of an activation is not just in automating calculations and processes, saving time and money, delivering data visibility or even eliminating errors. There is a great deal of value in the process of going through setting all this up. There is also significant value in the training and the FRD (Functional Requirements Document). Just training more than one person, going through the FRD and writing everything down is worth tens of thousands in risk mitigation not to mention process improvement. Often unrecognized is the real value of explaining the compensation processes to outside eyes, having it all documented in an organized way, and then getting trained by people who work with these sorts of processes all the time, automating them across many different industries. Having the documentation certainly lowers the risk any business has if paying their sales staff is entirely manual and only known by one or at most two people in the entire organization. Having a system that can do all this manual work and pretty much anybody can run with just a little help lowers the risks to the business even further. Think what might happen to any business if the one person who knows how to calculate what to pay the sales staff wins the lottery and doesn’t come back to work so the sales people don’t get paid. After that, how long would it be before they were paid correctly and could this result in lawsuits? That along should keep business owners and managers awake at night. I also find quite interesting how the “value” equation has changed almost completely in ICM in just over 5 years. Back in the day when I was doing training for another company, all our customers spent at least $10,000 to $25,000, sometimes far more, on training for the implementation. They usually sent two or three people to a week of training for over three grand a seat each, plus travel, hotel and meals. They may also have sent one or two people to the courses on administration, moving and storing data in the Datamart and/or advanced compensation plans as well. Hiring an expert for two or three weeks to document a company’s compensation processes, as we do in every FRD for each activation, would typically cost between $10K to $20K if done separately. Whether they realize or understand it, much less place real value on it or not, it is apparent that our customers (and anyone who implements another ICM system) actually get somewhere between $20K and $50K of business value from every activation. This is just in training and FRD alone even before the value of the automation, plans, engine, calculations, reports or dashboards is considered. That is pretty remarkable considering that our activations can actually start at under $20K for some customers. Whether they see, understand or value any of that is our job, in sales, communicate to them now that we have done the analysis and realize it ourselves.
