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As a CEO, balancing your company’s immediate needs with its long-term growth is both paramount and challenging, especially in a startup. Challenging questions such as whether you should invest aggressively in long-term initiatives or take the less expensive, more conservative approach. The “build versus buy” decision, for example, is a significant one that many companies face when addressing their software needs.
"To build, or not to build" is the question! This conundrum often pops up when you need to add technology to your stack. Most times, building something as intricate, detailed, and functional as an incentive automation platform requires a lot of time and resources. And most companies might consider directing these resources towards building their core revenue-generating product as opposed to an in-house version of a product that is readily available off the counter. But it isn’t that straightforward either.
Historically, building custom software has been expensive and time-consuming — 53% of projects cost 189% of the original estimate and organizations cancel 31% of build projects.
Despite these dangerous numbers, organizations often resort to building custom software. But there are a few inherent challenges with building software in-house and relying on them for critical tasks that may potentially create chaos or are rendered useless.
Here are a few reasons why the struggles go beyond building an incentive automation software and have got to do a lot with maintenance.
1. Not agile
Most organizations operate within a fast-changing business landscape. Their sales teams have sales promotions, product launches, pricing changes and new territories to launch.
To respond to ever-changing business needs, sales incentive programs must be highly dynamic. After all, sales commission programs drive sales behaviors. For this reason, making changes to your sales commission program should be quick and easy.
However, without a deep understanding of various sales incentive plans and their underlying logical structure, it’s quite difficult to create a flexible system where requested changes and new requirements are incorporated quickly. Most in-house incentive calculation software's require significant code overhaul or re-design – even for little changes that make the entire process slow.
And you can’t afford to wait several weeks for your tech team to make changes or entirely redesign your in-house automation. Most tech teams are quite busy building the software that brings revenue to the organization and any changes to the existing systems automatically get deprioritized. Getting them to deliver changes to your in-house solution at the speed you need can be exhausting.
It hardly makes any sense if your tech team decides to make minor edits in the sales programs 12 weeks after you request edits.
2. Data security and legal compliance
Sales incentive data is highly sensitive data. To calculate sales incentives, your system must have access to all business transactions. It also requires access to additional confidential data, such as employee salaries, compensation structure, etc.
It is critical to have a system in place which properly controls user access to incentive plans, commission-related data, and payouts. Having a system that allows you to give access to information based on their roles and seniority is very important.
CEO/CHRO/Head of compensation - Complete access-Super admin
Sales Head - Team performance / Dashboard visibility - Admin
Program execution/Implementation managers - Program admin
Sales team lead - Manager access
Sales reps - User access
However, implementing adequate access control is just a first step. You also need to think about data retention, secure reporting, and change management. It’s unlikely that your tech team will keep up with requests to make changes to incentive plans for minor edits let alone making significant changes to the entire software. It’s even more unlikely they will have time to implement proper encryption, data retention policies, a comprehensive audit log, payment gateways in case they allow payment automation which is a rare functionality in the case of software built in-house.
Inevitably, adequate data security will get in the way of delivering an agile, dynamic, responsive sales commission program and thus, an incentive calculation software. This may force you to compromise on agility vs. security – leading to difficult decisions and delays.
3. Vulnerable solution
Designing a comprehensive, flexible sales incentive calculation solution requires a unique architecture. It should be based on a data processing pipeline. It should break down the commission calculation process into independent phases such as sourcing, filtering, slicing, calculating, apportioning, and then displaying.
Most tech teams will deliver a “working solution” fairly quickly. However, as additional requirements like adding cumulative tiers, split commissions, product and geography-based competitions are added, your in-house solution may start falling apart. You might have to then choose between the two most dangerous things, implementing a quick fix or resorting to extensive system re-architecture to accommodate even minor changes. (We’ve warned you about the 31% project drop, haven't we?)
You may also have disagreements with your tech team as they explain that “this type of change will take 8 weeks” or that “we don’t support this type of calculation”. Also, you can expect some (or many) hidden costs down the road (we did warn you about the 189% project cost).
All these limitations make the in-house-built incentive calculation software a move of part automation at best and chaotic at worst.
It makes your in-house-built incentive calculation software a glorious spreadsheet at best.
If you’ve decided to build an in-house sales commission automation, you already understand the cost of not automating sales commissions. And the costs are huge. And a lot is at stake. But the biggest thing at stake is the opportunity.
This is exactly where Compass can help you.
Compass is a one-stop solution, which is a no-code software that program administrators use to create complex incentive programs. They do this through a basic structure by defining variables and the outline of logic. Compass has another unique feature that saves the user from the painstaking effort of sending it to individual WhatsApp chats & groups, it automatically disseminates the results to 100+ WhatsApp groups.
At Compass, our only mission is to help the sales fraternity sell, meaningfully.
With Xoxoday Compass, you can select game templates from a plethora of options, define KPIs, and create logic with rules, variables, and conditions, without coding. Drive behaviors that power business results with engaging sales programs. Compass is an unorthodox product built for orthodox problems in the most orthodox function, sales.