Magic Quadrant for Sales Performance Management

21 January 2016 ID:G00274059

Analyst(s): Tad Travis

VIEW SUMMARY
The SPM software market grew 10% in 2015 to about $715 million. IT leaders supporting sales
should focus on sales incentive compensation in the short term, but also support use cases for sales
enablement and corporate performance management in the midterm. This report will help them
select a vendor.

Market Definition/Description
This document was revised on 22 January 2016. The document you are viewing is the corrected
version. For more information, see the Corrections page on gartner.com.
Sales performance management (SPM) software comprises tools and process functions that automate
and unite back-office sales processes. It is implemented to improve sales execution and operational
efficiency. Capabilities include sales incentive compensation management (ICM), objective/quota
management and territory management, as well as talent management functions like
appraisal/evaluation management, training, hiring/onboarding, sales coaching systems and
gamification. SPM solutions also provide modeling and analytics capabilities to help businesses
evaluate sales assumptions and trends in sales outcomes. For more details of this market, see "Hype
Cycle for CRM Sales, 2015."
SPM has existed in point solutions for many years, led by well-established, mature ICM and learning
management systems (LMSs). In the past five years, however, organizations have adopted SPM
solutions as part of sales enablement and sales excellence initiatives. Companies have upgraded their
ICM systems with SaaS-based systems that link complementary processes, such as quota and
territory management, into a single operational system. Additionally, companies have improved their
onboarding and training efforts with knowledge systems that replace traditional LMS systems with
training systems that feature crowdsourced knowledge, social interactions and mobile access.
SPM accelerates representatives' time-to-value curves by providing better targeting insights, better
appraisals, and better training processes. This means that SPM has become the bridge that links
companies' go-to-market efforts with the execution of those plans at the territory and representative
levels.
For more information, see "Hype Cycle for CRM Sales, 2015."

Magic Quadrant
Figure 1. Magic Quadrant for Sales Performance Management

Source: Gartner (January 2016)

Vendor Strengths and Cautions

IBM
IBM has improved its position in the Leaders quadrant on the strength of its customer experience,
product quality and the new functionality in the IBM Sales Performance Management suite. This is an
SPM solution that covers compensation, quota and territory management, and SPM analytics. IBM
offers multitenant SaaS, single-tenant SaaS and on-premises ICM solutions. It also offers Kenexa for
talent management, primarily as a SaaS solution. Although IBM targets large enterprises, it also
appears on the shortlists of midsize companies. It offers strong functionality for modeling plans and
managing complex crediting requirements. It has also delivered innovative SPM functionality for
incentive compensation, such as IBM Watson Analytics for sales execution analysis, QueryPath and
Calculation Performance Reporting.

Strengths

Roadmap: IBM maintains a strong product release schedule. It also has a comprehensive
product roadmap for analytics, operational processes and integration with CPM solutions.
Capabilities: QueryPath and the Calculation Performance Reporting package are marketleading capabilities that allow plan administrators to monitor and improve query and calculation
performance times.
Customer experience: Clients credited IBM for its ease of use, customization capabilities,
modeling flexibility and audit trail functions.
Cautions
Technical architecture: Unlike some of the other leading SPM vendors, IBM has yet to
rearchitect its ICM solution as a native SaaS platform. This means that customers can neither build
custom applications that run on the IBM platform nor purchase SPM modules from a metadata
marketplace.
Capabilities: IBM's reference clients mentioned occasional functional issues, such as
difficulties using the dispute management module and making prior-period adjustments to previously
calculated incentive compensation plans.
Customer experience: IBM's reference customers gave it comparatively low scores for
pricing, ease of product upgrade and time to implement.

Incentives Solutions
Incentives Solutions has improved its position in the Niche Players quadrant based on its level of
customer satisfaction and the quality of its SPM capabilities. Incentives Solutions is an EMEA-based
company with SPM capabilities suitable for midsize companies and applicable to both B2B and B2C
selling. Incentives Solutions is one of the few vendors that offers incentive compensation and talent
management capabilities in a single integrated suite. It is one of only four SPM vendors to offer a
product built specifically for insurance and financial services. It is also the only SPM vendor
aggressively building business in Latin America. The company expanded its partner network in 2015
and continued to deliver innovative enhancements, including behavioral analytics for sales. Its
roadmap for advanced analytics and employee management remains strong.
Strengths

Analytics: Incentives Solutions is a leader in SPM advanced analytics. It is one of the few
vendors to offer predictive and prescriptive analytical capabilities, and it is at the forefront of sales
behavioral analytics.
Capabilities: Incentives Solutions offers unique modeling capabilities. These include the
ability for administrators to optimize quota assignments with sensitivity analysis.
Customer experience: Reference customers gave Incentives Solutions very high marks for
customer satisfaction, service quality and product quality.
Cautions
Sales execution: Incentives Solutions has not built as strong an organization or presence in
North America as other vendors in this Magic Quadrant.
Customer experience: Reference customers expressed concerns about the ability to
customize the user interface. Financial services clients noted that Incentives Solutions' system
requires a significant amount of time and internal resources to maintain.
Capabilities: Incentives Solutions does not offer native training and coaching capabilities,
which are key components of SPM.

Inclusion and Exclusion Criteria

To be included in this Magic Quadrant, vendors must have satisfied the following criteria as of October
2015. Each vendor must:
Have revenue of at least $10,000,000 in the past 12 months of operations
Have revenue from SPM software sales that makes up at least 33% of its SPM-specific sales
over the past 12 months
Offer a prepackaged SPM software product that includes an ICM application as a core
component or that has demonstrated integration with ICM vendor(s)

Offer a prepackaged SPM software product that contains at least three components of SPM,
out of ICM, territory management, objective and quota management, appraisal/evaluation
management, training management, hiring/onboarding systems, sales coaching management, sales
performance analytics and gamification
Have five signed, new named accounts for sales SPM software in the past 12 months
Have a visible, demonstrated sales presence and sales traction, with SPM offerings in multiple
industries
Have sufficient cash to fund at least one year of business operations at the current burn rate
Have a documented presence for global sales and support coverage in at least two major
markets (out of North America, EMEA and Asia/Pacific), or significant regional coverage within these
markets

Evaluation Criteria
Ability to Execute
Product or Service: SPM applications include capabilities for ICM, territory management, objective
and quota management, appraisal and evaluation management, training management, hiring and
onboarding, sales coaching management and gamification (see "Get to Know the Key SPM
Technologies Before Determining Your Strategic Approach").
Different sales organizations require different levels of depth and complexity of capabilities. Vendors
that support a wide range of complexity have greater market potential and are rated accordingly. This
is primarily a cross-industry Magic Quadrant, focusing on vendors' ability to serve several distinct
industry sectors. In many cases, an SPM application will combine several functional components,
some of which require third-party vendors. A key evaluation criterion is how well an SPM vendor's
application integrates with third-party products and customer data sources. This is measured
primarily by the number and complexity of data and application integrations, as demonstrated by live
customer deployments. Vendors that have fostered an ecosystem of value-added application
suppliers and partners will score well in this subcategory.
Overall Viability: Key aspects of this criterion are the vendor's ability to ensure continued vitality of
a product, including support of current and future releases, as well as to provide a clear roadmap for
the next three years. The vendor must have the cash on hand and consistent revenue growth during
four quarters to fund employee burn rates and to generate profits.
Sales Execution/Pricing: The vendor must provide global sales and distribution coverage that
aligns with its marketing messages. The provider must have specific experience and success selling
SPM applications to sales buying centers (that is, the VP of sales or the VP of sales operations), as
well as to IT leaders.
Market Responsiveness/Record: This criterion assesses the vendor's ability to respond, change
direction, be flexible and achieve competitive success as opportunities develop, competitors act,
customer needs evolve and market dynamics change. This criterion also considers the vendor's
history of responsiveness to customers and to market dynamics.
Marketing Execution: This criterion assesses the clarity, quality, creativity and efficacy of programs
designed to deliver the organization's message in order to influence the market, promote the brand
and business, increase awareness of the products, and establish a positive identification with the
product/brand and organization in the minds of buyers. This mind share can be driven by a
combination of publicity, promotional, thought leadership, word-of-mouth and sales activities.
Customer Experience: Feedback from active customers on generally available SPM releases during
the past 12 to 18 months is an important consideration. Sources of feedback include vendor-supplied
reference customers, Gartner inquiries and other customer-facing interactions, such as at Gartner
conferences. Customers' experiences are evaluated based on the vendor's ability to help them
achieve positive business value, as well as sustained user adoption, quality, implementation and
ongoing support.
Operations: This criterion assesses the ability of the vendor to meet its goals and commitments.
Factors include the quality of its organizational structure, including skills, experiences, programs,
systems and other vehicles that enable the organization to operate effectively and efficiently on an

ongoing basis. For SaaS offerings, Gartner evaluates the vendor's ability to manage operational
infrastructure requirements, and to provide post-sales usage and adoption support.
Evaluation Criteria

Weighting

Product or Service

High

Overall Viability

Medium

Sales Execution/Pricing

Medium

Market Responsiveness/Record

High

Marketing Execution

Low

Customer Experience

High

Operations

Medium

Table 1. Ability to Execute Evaluation Criteria

Source: Gartner (January 2016)

Completeness of Vision
Market Understanding: This criterion assesses the vendor's ability to understand buyers' needs and
to translate these needs into products and services for the SPM market. Vendors that show the
highest degree of vision listen and respond to buyers' current demands with consistent product
enhancements. They also have a clearly defined product roadmap, one that delivers both
transformative SPM business capabilities and operational efficiency improvements. Vendors
demonstrate a strategic understanding of SPM capability trends and ongoing vendor dynamics within
the SPM space. In addition, the vendor demonstrates an understanding of SPM positioning with
buyers' overall CRM, SFA and ERP strategies.
Marketing Strategy: This criterion assesses whether the vendor provides a clear, differentiated set
of SPM messages consistently communicated throughout the organization, and externalized through
the website, advertising, customer programs and positioning.
Sales Strategy: This criterion assesses the vendor's strategy for selling SPM solutions that uses the
appropriate network of direct and indirect sales, marketing, service, and communications affiliates
that extend the scope and depth of market reach, skills, expertise, technologies, services and the
customer base.
Offering (Product) Strategy: Vendors must demonstrate a vision for SPM capabilities that crosses
the breadth and depth of the SPM market; this is critical for meeting the needs of a maturing market.
Subcriteria include the vendors' vision for ICM, territory management, objective and quota
management, appraisal and evaluation management, training management, hiring and onboarding,
sales coaching management, gamification and SPM analytics. The product strategy can be a
combination of organic development, acquisition and/or ecosystems. However, for ecosystems,
Gartner pays close attention to the quality and support of third-party vendors.
Business Model: Vendors should have a clear business plan for how they will be successful in the
SPM market. The business plan should include appropriate levels of investment to achieve profitability
and healthy revenue growth during a three- to five-year period. Sales channel and partnership
strategies are important considerations for this criterion.
Vertical/Industry Strategy: If vendors offer industry-specific solutions, they are rated on their
quality in terms of ability to address SPM use cases and/or their ability to provide industry-specific
metadata incentive compensation or quota attainment templates.
Innovation: Vendors must demonstrate a commitment to investment in new SPM areas, such as
smart device applications, analytics, complementary process extensions and SaaS delivery model.
Geographic Strategy: This criterion assesses the vendor's alignment of resources, skills and
offerings to meet the specific needs of geographies outside its "home" or native geography, either
directly or through partners, channels and subsidiaries, as appropriate for that geography and
market.

Evaluation Criteria

Weighting

Market Understanding

High

Marketing Strategy

Medium

Sales Strategy

Medium

Offering (Product) Strategy

High

Business Model

Medium

Vertical/Industry Strategy

Low

Innovation

High

Geographic Strategy

Medium

Table 2. Completeness of Vision Evaluation Criteria

Source: Gartner (January 2016)

Quadrant Descriptions
Leaders
Leaders demonstrate a market-defining vision of how technology can help top sales executives
achieve business objectives. Leaders have the ability to execute against that vision through products,
services and demonstrated solid business results in the form of revenue and earnings. Leaders have
significant successful customer deployments in North America, EMEA and Asia/Pacific in a wide
variety of industries, with proofs of organizational deployments above 500 users. Leaders are often
what other providers in the market measure themselves against.

Challengers
Challengers are often larger than most (but not all) Niche Players, and they demonstrate a higher
volume of new business for SPM. These vendors have the size to compete worldwide, but, in some
cases, they may not be able to execute equally well in all geographies. They understand the evolving
needs of a sales organization, but they may not lead customers into new functional areas with their
strong functional vision. Challengers tend to have a good technological vision for architecture and
other IT organizational considerations, but they have not won the hearts and minds of top sales
executives and/or IT leaders.

Visionaries
Visionaries are ahead of most competitors in delivering innovative products and/or delivery models.
They anticipate emerging and changing sales needs, and they move the market into new areas. They
influence the direction of the SPM market, but they are limited in terms of sales execution,
operational execution or consistent record of customer success.

Niche Players
Niche Players offer products for SPM functionality, but may lack some functional components, may
not demonstrate an ability to consistently handle deployments of more than 500 users across
multiple geographies, and may lack strong business execution in the SPM market on a large scale.
Niche Players may offer portfolios for a specific industry or specific software ecosystem. They
demonstrate weaknesses in one or more important areas with regard to supporting cross-industry
requirements, such as sales training and coaching management. Despite these shortcomings, Niche
Players often offer the best solutions to meet the needs of particular sales organizations, industries or
organizational sizes, in view of the price/value ratio of their solutions.

Context
This Magic Quadrant covers a wide cross-section of vendors, including those that offer different
delivery models (such as on-premises, hosted and SaaS), and differing levels of functional breadth
and sophistication. Whichever provider you are considering, ask yourself, "Will this vendor help my

sales organization sell more effectively? Will my sales organization motivate the vendor to achieve
high expectations, and to undertake training and coaching that will enhance its skill set?" In many
cases, a sales organization must evaluate not just a vendor's suite of product offerings, but also the
ecosystem of providers that can fill in gaps in that vendor's capabilities.
Use this Magic Quadrant as one point of reference for your evaluations. It is not intended to be the
sole tool for creating a vendor shortlist. Use it as part of your due diligence and in conjunction with
discussions with Gartner analysts. It is important to explore the market further to assess the capacity
of each vendor to address your unique business problems and technical concerns. Depending on the
complexity and scale of your requirements, your shortlist may be unique.
For this Magic Quadrant, Gartner collected end-user data from two sources: interactions with Gartner
clients and the results of a primary research survey conducted specifically for this Magic Quadrant.
The survey had 98 respondents, drawn from end-user clients identified by the software vendors
included in this analysis.
Magic Quadrants are snapshots in time. To be fair and complete in its analysis, Gartner stops
collecting data for Magic Quadrants at a consistent time. For this Magic Quadrant, the cutoff date was
October 2015.

Market Overview

The SPM market remained mature in 2015, growing to more than $2.7 billion as measured by
spending on all software, consulting, and managed services across SPM and human capital
management (HCM) providers (where HCM functions are used for sales processes). Gartner
estimates that the software-only portion of the market, to which the largest SPM vendors contribute,
came to over $715 million, and that it will grow to $1.54 billion in 2019.
A Gartner primary research survey, conducted for this Magic Quadrant in 2015, of 98 reference
customers that were using at least one SPM component found that:
73% were using ICM components.
38% were using territory management functionality.
36% were using quota and objective management functionality.
13% were using learning or training functionality.
13% were using gamification solutions.
11% were using coaching solutions.
10% were using appraisal solutions.
7% were using onboarding functionality.
Since the previous survey, conducted in 2013, product adoption percentages have changed in three
meaningful ways:
Gamification adoption has grown from 2% to 13%.
Territory management adoption has grown from 22% to 38%.
Sales appraisal solutions have dropped to 10% of implementations from 38%.
Incentive compensation remains the predominant driver of the SPM market, as measured by the
survey results reported above, buyer inquiries submitted to Gartner, and vendors' product
development. In 2015, more than 70% of Gartner's SPM inquiries included incentive compensation.
Software buyers are predominantly concerned about scalability and complexity. Companies select
incentive compensation tools to manage complex sales hierarchies. In the 2015 survey, 79% of the
organizations used a combination of geography, matrix and sales overlaps to design their sales
organization.
Talent management functions for sales, such as appraisals and coaching, continue to lag behind ICM
adoption because they have not yet become mission-critical. As indicated above, only 13% of
surveyed organizations have implemented training functionality from SPM vendors. Gartner notes,
however, that companies are increasingly focusing on sales enablement, which is a collection of
processes and tools that includes functions like sales training, coaching and onboarding.
Analytics is an important component of SPM, but buyers will find more similarities than differences
across vendors. Most vendors provide standard reports and dashboards for incentive compensation,
territory alignments and quota attainment levels. Less common are advanced SPM analytics that
connect sales execution with sales outcomes, using predictive analytics to build nonobvious

correlations. Some vendors, like CallidusCloud, IBM, Optymyze and Oracle, have taken initial steps in
this direction, but it is still early days.
Gartner also estimates, based on analysis of clients' inquiries and vendors' feedback, that less than
5% of all companies using at least one SPM solution have implemented the full set of SPM
functionality. However, Gartner has also seen increased interest in purchasing multiple SPM products
from a single vendor. For example, over half of Gartner's inquiries included questions about incentive
compensation and quota management in the same conversation. Taken together, these results
indicate that the SPM market has reached the top of the Peak of Inflated Expectations.
For the SPM market to reach the Plateau of Productivity within five years, Gartner needs to see more
organizations deploying SPM as a part of a comprehensive business strategy, one that directly unites
go-to-market strategy with sales enablement processes and sales execution systems. With an SPM
program, buyers can recognize the transformational benefits of SPM beyond the narrow concept of
merely buying a compensation calculation engine or a training LMS. By using systems that link the
biggest drivers of sales representatives incentive compensation plans and sales training
companies gain a continual view into their sales operations and sales execution processes.
To reach the Plateau, software vendors also must demonstrate how their SPM solutions directly
integrate with SFA systems. When vendors state that their software integrates with an SFA system,
they are typically referring to either prebuilt connectors or report-level integration. Far less common
is meaningful integration for quotas, forecasts, business processes and business rules, such as
opportunity splits.
In terms of the future of SPM, Gartner expects the market to become increasingly data-intensive,
replacing the process-intensive focus that has predominated so far. Soon, companies will be able to
capture and analyze accurate, rich data about representative behavior, taking an operational view of
all their sales processes. The time is approaching when sales operations will be able to monitor sales
activity with the same detail as manufacturing processes. By applying emerging advanced analytical
capabilities, like big data and predictive analytics, companies will be more able to estimate outcomes
and thereby make immediate, fact-based adjustments to their sales execution, incentive
compensation, training and go-to-market plans.
SPM solutions are also becoming more industry-specific. CallidusCloud has released its first industryspecific solution, Producer Pro, for insurance companies, joining IBM and SAP's vertical solutions.
Oracle has released the first product that combines SFA and SPM functions in a single vertical
product. CallidusCloud, Optymyze and beqom have released sets of industry-specific compensation
plan templates. This is a positive trend because it offers software buyers faster time to value.
Buyers are advised to consider using an experienced ICM implementer or plan design consultant,
particularly if they are implementing SPM software for the first time and have not already built
mature ICM processes. Leading implementers include Accenture, Canidium, Deloitte, IBM Global
Business Services and OpenSymmetry. Leading advisory firms include ZS Associates and the
Alexander Group.
Lastly, Gartner notes that SPM has an emerging role in CPM. CPM requires many data sources to be
effective, but SPM is particularly relevant to CPM because it provides information that bridges sales
planning and sales execution. However, as with all integrated planning solutions, aspects of
governance, such as model sharing, data integration and analytics, should be managed formally.