Disruptive innovation happens when established companies innovate not to address the needs of their mainstream customers but to capture more profitable high-end customers. In doing this, they ignore the less profitable lower end of the market, leaving an opening for new entrants to support the needs of that audience with a more targeted set of features. These emerging companies eventually move into the mainstream and take a leadership position. This is happening in the sales performance management (SPM) category.
Until recently, cost and implementation complexity limited SPM solutions to mostly large companies with complex use cases. The vendors supporting this category were established and trusted to handle such complex sets of requirements. In the four years since our last Forrester Wave™ evaluation, new entrants have emerged that provide new solutions using modern technology, changing the equation and generating value for a new set of customers. Per Forrester’s Winter Sales Survey, 2022, only 25% of companies plan to implement an SPM solution, but 88% of the groups seeking implementation come from companies with less than $1 billion in revenue. SPM vendors now have an affordable solution to address the needs of smaller companies, which is generating the investment needed to disrupt the established market. SPM customers need to be aware of this dynamic and look for three things when selecting a provider:
- A modern calculation engine. Determining seller compensation is a data-intensive process that can lead to long delays as administrators wait for their systems to execute calculations. Increases in processing power are improving the ability to calculate large amounts of data. Legacy processing architecture is being replaced by new technology that significantly increases performance by processing in memory and in real time to limit the need to consider order and sequence of imports. Although all vendors are progressing to include these capabilities, they are in different phases of the journey. Some are in transition, and others started with these capabilities as their foundation.
- No-code configuration tools. SPM solutions handle complex tasks such as plan design and approval that include many variations in use cases. SPM vendors manage complexity through simplified administrator interfaces that are easy to understand and configure. These solutions also allow users to create and configure their own workflow and design data transformations without having to code or pay professional services companies to do it.
- Support beyond the features provided in the solution. Although there has been progress in making SPM solutions easier to use, this work is complicated. An SPM solution must have a customer success team to help users maximize their SPM investment. Each vendor has its own set of capabilities that range from a dedicated resource to an online resource library. Evaluate these options to ensure that your company has enough support to make the most of your chosen solution.
Disruptive innovation leads to more price competition and solutions that are built to support the needs of all customers. It also opens markets to companies that previously were priced out of these solutions. To learn more about the SPM vendors shaping this dynamic category, you can read our recently released SPM Wave evaluation or contact an expert by clicking here.