Jim Parker discusses streamlining Novell's quota setting process. Novell is a global infrastructure software company with $1 billion in annual revenue. Previously, Novell's quota setting process was inefficient, inflexible, and inconsistent, involving 50 people over 4-5 months. Novell implemented a new centralized process using the TrueQuota software system. This standardized the methodology, provided automated linkages between quotas, and reduced the Americas process to under a week. The new process and system improved accuracy, flexibility, and management visibility into quotas.

1. Streamlining the Quota Process
Jim Parker
Director, Global Sales Compensation
Novell, Inc.

2. About Novell
• Global infrastructure software and services company
• We help customers lower costs, manage complexity,
and mitigate risk, allowing them to focus on business
innovation and growth
• We provide global leadership in:
Enterprise-wide operating systems based on Linux and
•
OpenSource
• Security and systems management services required to
operate and i
d integrate mixed-source environments
id i
• $1 billion annual revenue; 4,000 employees; 800
incentive-based employees in 40 countries
© 2007 Novell Inc. – Proprietary & Confidential

3. The Widow Maker
© 2007 Novell Inc. – Proprietary & Confidential

4. Quota management market trends
• Majority of companies leverage quota-based incentives
77% h
have quota-based sales i
tb d l incentive plans
ti l
•
• Use a combination of quota-setting methodologies
69% use territory potential/opportunity
•
• 65% use sales management projections
• 60% refer to historical data
• And they change them frequently
56% of organizations adjust q
g j quotas during the y
g year
•
• Changes in territories or customer base (39%)
• Shifts in business, economy, or industry (33%)
Source: Hewitt Associates; Market Study of 224 Large Corporations, June 2001
© 2007 Novell Inc. – Proprietary & Confidential

5. Common quota-setting pain points
• Inefficient
Lack insight to trends and historical data
•
Very tedious and time-consuming task for sales management and
•
finance
Manual process with many handoffs and corrections
•
Inconsistent and unorganized process
•
Inaccurate
•
No standardized quota setting methodology
quota-setting
•
Insufficient data and few analytical tools
•
Difficult to assess quota-setting consistency and fairness
•
Inflexible
•
Difficult to adjust to market and/or organizational changes
•
Difficult to get continuous performance feedback
•
© 2007 Novell Inc. – Proprietary & Confidential

6. The way it was . . .
• Inefficient
Manual, spreadsheet based
Manual spreadsheet-based process
•
60 worksheets from Board to rep
•
De-centralized, time-intensive, labor-intensive
•
50 people involved over 4-5 months for 800 sales people in 40 countries
pp pp
•
Multiple consolidations and manual validations
•
• Inflexible
Lack of Management visibility to status of quota-setting process and quota
•
coverage
Quota changes time-consuming and cumbersome, particularly in EMEA
•
No automated linkage between related or dependent quotas
•
Low sales rep confidence in validity of quota; numerous quota disputes
•
© 2007 Novell Inc. – Proprietary & Confidential

7. The way it was . . . continued
Inconsistent/Inaccurate
Limited f
Li it d enforcement of sales strategy, coverage model, or comp
tf l tt dl
•
plans
Inconsistent application of quota-setting methodology
•
Significant differences in quotas for same roles and pay levels
•
(E/R, E/Q)
Multiple, divergent sources of historical data
•
Calculation/clerical errors
•
Limited enforcement of quota transfer when accounts or territories
•
moved
© 2007 Novell Inc. – Proprietary & Confidential

8. Quota-setting process and methodologies
(2) Roll-down
(3) Roll-across
(5) Assignment, Feedback,
(4) Reconciliation
Adjustment, Signoff
(1)
( ) Roll-up
Methodologies
•Role based (e/r)
•Role-based
•Territory/opportunity-based
Territory
•Roll-up
(Named accounts,
•Roll-down
Postal codes, Industries,
•Roll across
•Roll-across
Lines of business, etc.)
© 2007 Novell Inc. – Proprietary & Confidential

9. Corporate planning and quota-setting
Quota
Coverage
Assignments
Compensation Plans
Sales Strategy / Coverage Model
Financial Plan
Corporate Strategy
© 2007 Novell Inc. – Proprietary & Confidential

10. Corporate planning and quota-setting
Quota
Widow makers
Coverage
Assignments
Compensation Plans
Sales Strategy / Coverage Model
Financial Plan
Corporate Strategy
© 2007 Novell Inc. – Proprietary & Confidential

11. The Solution: Business Process Change + TrueQuota
Standard process and methodologies, managed by a shared
service organization
Global quota process owner, who is part of the Global
•
Commissions team
Centralized process (80%) with field review and fine tuning (20%)
(80%),
•
Consistent quota-setting methodologies by role across the globe;
•
standard policies for changes, uplifts, discounts
“Quota Handbook to provide transparency to sales managers
Quota Handbook” managers,
•
reps, and finance
Standard quotas for similar roles and pay levels
•
Proactive management reporting (
g p g (status, q
, quota coverage, E/R)
g, )
•
© 2007 Novell Inc. – Proprietary & Confidential

12. The Solution: Business Process Change + TrueQuota
TrueQuota: Rules-based system and single data source
Single
Si l system f all quotas, f
t for ll t from corporate fi
t financial plan t
i l l to
•
individual rep quotas
System enforced compliance with the coverage model, comp
•
plans,
plans and policies
Automated link between related quotas—change once, update
•
everywhere
Management approval via electronic workflow
•
Quota vs. financial plan reporting; in-depth quota analysis
•
Online quota delivery and acknowledgement
•
Direct integration with TrueComp
•
* Features in red are not yet available in TrueQuota
© 2007 Novell Inc. – Proprietary & Confidential

13. The Implementation
• Tool/vendor selection
• C llid
Callidus
• Lattice Engines
• Synygy
•RRequirements, solutioning, implementation
i lii il i
• 4 months start to finish
• Two full-time consultants (1.5 FTEs); 1.5 Novell FTEs
• Staged roll-out (Americas, EMEA, APAC)
• On-time (mostly) and on-budget
• Hardware and software
Three servers (dev, test, prod); HP 4 processor boxes
•
• Oracle database; Tomcat webserver
• TrueQuota (Hyperion Planning) based on number of payees
© 2007 Novell Inc. – Proprietary & Confidential

14. The Results
Americas Quota-setting Process
S
Suggested quotas automatically calculated f all employees
td t t ti ll l l t d for ll l
•
based on role/plan
• All adjustments captured, documented, and reported
• Process time
• 4 business days for first-line review, adjustment, and approval
• 1 day for Americas CFO analysis and sign-off
• 1 day for Americas President review and sign off
sign-off
• 1 day for CFO/EVP review and sign-off
Quota setting for EMEA and APAC begins this week
Q if d bi hi k
© 2007 Novell Inc. – Proprietary & Confidential

15. Critical Success Factors
• Management buy-in
• C t li d process
Centralized
• Dedicated resource who understands the big picture
• Up-stream processes well-defined and deadlines met
• Clearly-defined, well-designed methodologies/mechanics
• Solid implementation team; application experts
© 2007 Novell Inc. – Proprietary & Confidential

16. Q&A
jim.parker@novell.com
© 2007 Novell Inc. – Proprietary & Confidential