I was recently asked to give a presentation to a company with my considered opinion on the State of the SPM Market.  I think an acceptable conclusion - even the preferred one for some members of the audience - might have been, “We’re doomed!  Abandon ship!!  Save the women and children!!!”

And hey - it is a conclusion reasonable people might draw.  First of all, there is this pesky problem of the economy, which some of you might have noticed is, um, lousy.  But I have to feel that it won’t always be, although I have no insider information that might make anyone else believe this.

A more interesting reason to despair is that we can’t even completely agree on what SPM is - or even what to call it.  Or where it lives - finance lives in Finance, but SPM (or EIM or ICM or BPS or you name it) lives in Sales Ops, Finance, even HR.  Or someplace else.

What functionality should be included in a complete off the shelf SPM application?  Ask a dozen finance people what functions a G/L system should have and you won’t get much disagreement.  But ask a dozen comp people (or vendors) what they expect to see and they will spec out 13 different sets of features and functions.  And it’s hard to get everyone to agree on where the boundaries of SPM are.  Sales order entry?  Might be in, might be out, depending on who you ask.  Crediting transactions to payees?  Seems like it ought to be in, but isn’t invariably.  What about actual payment - writing the checks or managing the EFT?  Most of the SPM system vendors are quick to exclude that, but many customers regard it as part of the SPM system and feelings sometimes get hurt when the discussion of which system should own that takes place.  Eventually, natural selection in the marketplace will channel the various products into looking and acting more and more like each other, with similar sets of functionality that model similar kinds of best compensation practices, but it hasn’t happened yet.

So there are many reasons to despair.  But there are also reasons to be optimistic.  Not least is the fact that any part of a business that funnels as much as 20% of a company’s revenue (depending on the industry and sales model) through its systems had better have solid systems to run it through.  Excel, or an unsupported legacy system covered in duct tape and riddled with hacks, is not likely to suffice.  Words like “compliance” and “SOX” raise their ugly heads.  From my perspective, bulletproof, supportable, maintainable software is a must, and I think most medium-to-large companies will find it cheaper to buy it than to build it.

If you grant the logic of that kind of thinking, the market is practically untapped, even after a decade in the lives of the latest set of packaged applications.  The number of companies that have implemented off-the-shelf comp systems is barely a blip.  More and more of them will, because more and more of them will realize that they have it to do, and that the benefits outweigh the costs.  Which means the state of the market is hopeful.

I think…

[tags]Incentive Compensation, Incentive Compensation Management[/tags]