The 2008 CRM Market Awards: Market Leaders -- Incentive Management

THE MARKET
Making its CRM Market Leader debut this year, the incentive management category goes by many names, including sales compensation management—but by any name, it’s full of pure-play vendors that pack a punch. Due to accountability pressures created by regulations such as Sarbanes-Oxley, and the inability of spreadsheet-based incentive strategies to drive revenue, companies have been looking to incentive management providers to cure sales and service compensation hang-ups. Increased interest has sparked more intense competition among vendors, driving a growth rate of 20 percent in a market that’s now expected to hit the $300 million level this year. Analysts agree that we’ll soon see a wave of consolidation, and Michael Dunne, research vice president at Gartner, says there’s more to come from this exciting space. “We’re seeing more diversity now,” he says. “This is a secure market with momentum.”

THE LEADERS
Once a leader in on-premises incentive management, Centive has recreated itself as a purely on-demand vendor. After deploying the multitenant, on-demand solution Centive Compel in May 2005 and subsequently selling CompCentral in September 2006, Centive now only offers software-as-a-service (SaaS) solutions. This product plan has allowed the vendor to secure a strong hold on the lower end of the market, albeit limiting flexibility for larger organizations. Recent partnerships with software giants, such as ADP and Salesforce.com, speak of even bigger things to come. “They have a great future,” says Denis Pombriant, founder and managing principal at CRM consultancy Beagle Research Group.

Somewhat of a stalwart in the incentive management marketplace, Synygy was early to the game. The company has since found its primary strength in what Jim Dickie, managing partner at CSO Insights, describes as “offer[ing] managed services for large firms.” In 2004, Synygy realigned its focus to target its sales compensation management solutions to organizations with over 1,000 salespeople. This new direction paid off with record-level revenue at the beginning of 2008, and has allowed the company to secure a stronghold in the pharmaceutical market and to enjoy international success with offices in Europe and Asia.

Founded in 2003, Varicent Software is one of the smallest and youngest firms to make this year’s debut leaderboard. In just the past few years, however, this Canadian-based vendor has been making a great deal of noise in the United States. Pete Marston, a CRM analyst at Forrester Research, says that Varicent has “some marquee clients in [its] portfolio and [has] been growing customer size at 100 percent year-over-year.” Smaller companies should note that Varicent offers only on-premises and hosted options, but strong reporting and analytics capabilities have helped the company more than prove its worth in tangling with the big boys.

Xactly is also relatively new to the incentive management game, releasing Xactly Intent in 2005. “Formed by ex-Callidus people, they built their product from scratch to be an on-demand solution,” Pombriant explains. Focused solely on SaaS, with help from partner Salesforce.com, Xactly has been swiftly building buzz in the marketplace, announcing a tripled subscriber base in 2007 alone. In April 2008, the company released a revamped analytics product, thereby pushing other vendors to do the same. China Martens, senior analyst for The 451 Group, says the vendor has “delivered well on its roadmap,” a plan which secured it the highest score (3.8) for company direction.

THE WINNER
It may not be a surprise that Callidus Software nabbed the top spot—it’s long been a pioneer in the incentive management market, dating back to the release of its flagship solution, TrueComp, in 2003. Marston says the company “is widely considered the 800-pound gorilla in this space. It holds strong market share and offers an abundance of deployment options.” Callidus has continued to push the market forward, as it did with the release of TrueComp on-demand in spring 2006 and in more-recent strides, such as its January 2008 acquisition of Compensation Technologies. But while excellence in depth of functionality as well as company direction will make it tough to dethrone this king of the compensation jungle, the competitors are certainly closing the gap.  —Jessica Sebor

one to watch : incentive management
With a broader set of software offerings than many leading vendors can claim, Oracle has the advantage of a large number of existing users who will pick up its E-Business Suite ICM module due to ease of migration. However, the software giant has been slower in time-to-market than smaller and more nimble vendors, and its direction has been blurry. Even after picking up Motiva through its purchase of Siebel, The 451 Group’s Martens says Oracle still “appears to be pushing its
E-Business Suite.” That said, by consolidating technologies and perhaps acquiring new ones, Oracle is set to become a more formidable competitor in this space.

To view the other 2008 Market Leader categories, click here.

To view the rest of the 2008 CRM Market Awards, click here.

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