1. Improving Variable Sales Compensation Forecasting Accuracy for Financial Plans and Budgets with Callidus Geoffrey Long Services Director CIS Corporate

3. Some Common Trends and Impact on Planning

5. Planning Variable Compensation One client, with up to 7 or 8 different distribution “types”, tried to create the calculations for the variable compensation related to the different types in their planning application. The data volume was too great to be confidently maintained, slowing the planning process and the system .

7. Tactics That Support Strategy One client segmented markets by socio-economic Level, by channel and within traditional channel, by customer size. The planning system included channel and geographic market allowing simulations of pricing changes and differences across these segments.

9. Profitability One client developed their plan and planning system around brand profitability. As a secondary parameter, key customer (large chains) profitability excluding indirect distribution was required. Another client was trying to measure customer profitability with three possible distribution channels: direct to the store, direct to a customer distribution center and indirect via third party distributors.

10. Planning Practice

11. Typical Solution Executive Management Sales Management Compensation Analyst Compensation Admin Sales Executive Finance Dept IDC Market Trends Report 3-5 Yr Sales Trends Excel Set Top Down Targets Excel Structure Sales Teams CRM Balance Territories Database Set Sales Quotas Excel Develop Models Excel Examine Quotas Excel Set Compensation Plans Excel/Custom 3-5 Yr Sales Trends Excel Manage Plan Acceptance HR System Set up Plan Calcs Excel/Custom Validate & Calculate Excel/Custom Issue Resolution Manual/Email Comp Statements Excel/Custom Examine Statements Excel Initiate Comp Issues Manual/Email Settle Comp Issues Manual/Email Extract to G/L Financials Comp Payments AP / Payroll Settle Comp Issues Manual/Email

13. Planning Cycles and Stages 24 hours start to finish Budget owners based on capability and responsibility Uncertainty and risk Time horizon beyond year-end Detailed capital budget Minimum detail Event driven Detailed cost center expenses Focused, simple, clear, accountability Not a budget “do-over” Tactics that drive strategy Hard side: Numbers, target setting exercise Fast and Transparent Test Management Assumptions Soft side: Mission, vision, values Objective look at where we are today Resource Allocation Definition, goals/means and targets Forecasting/Rolling Estimate Budgeting or Operational Planning Strategic Planning

14. Planning Cycles and Stages 24 hours start to finish Budget owners based on capability and responsibility Uncertainty and risk Time horizon beyond year-end Detailed capital budget Minimum detail Event driven Detailed cost center expenses Focused, simple, clear, accountability Not a budget “do-over” Tactics that drive strategy Hard side: Numbers, target setting exercise Fast and Transparent Test management assumptions Soft side: Mission, vision, values Objective look at where we are today Resource allocation Definition, goals/means and targets Forecasting/Rolling Estimate Budgeting or Operational Planning Strategic Planning

15. Planning Cycles and Stages 24 hours start to finish Budget owners based on capability and responsibility Uncertainty and risk Time horizon beyond year-end Detailed capital budget Minimum detail Event driven Detailed cost center expenses Focused, simple, clear, accountability Not a budget “do-over” Tactics that drive strategy Hard side: Numbers, target setting exercise Fast and transparent Test management assumptions Soft side: Mission, vision, values Objective look at where we are today Resource allocation Definition, goals/means and targets Forecasting/Rolling Estimate Budgeting or Operational Planning Strategic Planning

16. Fast and Transparent One client had a business unit that would develop approximately 100 simulations or scenarios per forecast. This requires very fast processes and systems and an optimized view of the important details. Another business unit in the same client recorded events such as price change, currency devaluation, etc. and the planning system logged the “events” so that management could quickly assess risks and potential opportunities.

18. Control Functionality One client used their ERP for detailed account and cost center budgeting and a planning tool for simulations and forecasting. New forecast numbers were put through to the ERP to make sure that new forecasts were adhered to by cost center managers, thereby controlling costs in an integrated way based on new forecasts.

19. Callidus Solution Settle Comp Issues TrueResolution Executive Management Sales Management Compensation Analyst Compensation Admin Sales Executive Finance Dept IDC Market Trends TrueAnalytics 3-5 Yr Sales Trends TrueAnalytics Set Top Down Targets Quota Mgmt Structure Sales Teams TrueComp Balance Territories Terr Align Set Sales Quotas TrueComp Develop Models TrueComp Examine Quotas TrueComp Set Compensation Plans TrueComp 3-5 Yr Sales Trends TrueInfo Manage Plan Acceptance TrueResolution Set up Plan Calcs TrueComp Validate & Calculate TrueComp Issue Resolution TrueResolution Comp Statements TrueInfo Examine Statements True Info Initiate Comp Issues TrueResolution Settle Comp Issues TrueResolution Extract to G/L TrueComp Comp Payments TrueComp