Before Keith Hawkyard's employer implemented a Web-based enterprise incentive management (EIM) system, he spent several hours every month leafing thro-ugh paper reports looking for his cancelled accounts.Now, with a new EIM system in place, Hawkyard, who sells automobile and homeowners insurance for San Francisco-based California State Automobile Association (CSAA), spends minutes rather than hours locating those accounts-with more time for follow-up calls to turn those cancellations back into policies.

"I simply go to the Web portal, export the [production] report into Excel, do a search by transaction type, and pull the cancellations right up," he says. "Now, I can use the time I previously spent searching for that information to focus on other activities that will turn into sales."

Since September 2004, Hawkyard and approximately 600 other CSAA direct and field sales agents in 60-plus locations have been using the Web-based system, developed by San Jose, Calif.-based Callidus Software Inc., to view their production reports.

They can see high-level summary information and drill down into details, such as policy numbers and premium credits, and see how that data translates into commissions and incentive pay.

No centralized location

Prior to installing the EIM system, however, CSAA agents received a conglomeration of paper reports and electronic spreadsheets at irregular intervals.

"There was no centralized location for them to go to get the information they needed to monitor their production and make sure they were paid correctly," says Michael Kahns, manager of sales and incentive compensation at CSAA.

That's important, because like any sales-oriented organization, CSAA has specific goals for specific levels of achievement, notes Hawkyard.

"These online reports tell you where you are and what you need to do to get to where you want to be," he says. "If you want to reach a certain level of production, that information is right there in front of you. That's a real motivating factor."

In addition to reducing the time sales reps spend retrieving production, compensation and incentive information, Kahns says the technology also has lightened his group's administrative load, providing more time to add value to the organization.

"My department used to produce a number of hard-copy reports through the legacy system for sales reps and managers," he says. "And we had to manually assemble those reports and distribute them via interoffice mail. Since implementing the Callidus system, manual printing, assembling and mailing has completely gone away."

Kahns' department also no longer has to assemble data from various electronic files into one master incentive pay spreadsheet.

"This was a time-consuming task," he says. We'd have to wait-and keep checking-for these documents to arrive by e-mail. Then we'd have to validate the information in them was correct [using a two-page checklist]. And we had to cut and paste the information from multiple spreadsheets into one large spreadsheet."

That process has been transformed by the EIM technology. Transaction data from various production systems now feeds directly into a data mart, where the system automatically validates its accuracy. Discrepancies are flagged in an error report.

Four-step process

Each transaction then goes through a four-step automated process enabled by a business rules engine: determining who in the organization receives credit for the transaction; how much credit they receive; how much money each person is due for the credit they received; and when that payment should be sent to the accounts payable system.

"If a person is on a quarterly payment plan, the system won't fire a [payment] transaction out until the end of the quarter," says Gregory Wynne, Callidus' director of product and industry marketing. "And if you're calculating compensation on a weekly basis, that money is aggregated in the system until the [quarterly] payment step." In addition, he says, compensation analysts or administrators use the same business rules engine to design all four steps of the process. "So the system is scalable, and these four steps provide a lot of granularity and flexibility in how you actually pay compensation."

Plans for growth

Scalability, granularity and flexibility were three requirements CSAA faced as it planned to grow its business, both in product offerings and states.

With four million members in Northern California, Nevada and Utah, CSAA is collaborating with AAA membership organizations in other states to provide insurance products to their members. Over the past two to three years, CSAA has been providing insurance and travel products in Oregon, Idaho, Arizona and Colorado.

Having an automated, Web-based system in place that quickly accepts new data feeds and automatically determines variable compensation is a critical technology CSAA needed to support its expansion, says Kahns.

In fact, the initiative is part of CSAA's STAR (Strategic Transformation for Accelerating Results) project-an umbrella theme for a multi-phased business and technology initiative led by IBM Corp., which began in 2003. STAR was implemented to help CSAA transform its systems, operations and business processes to align with its plans for growth.

CSAA, which offers auto, life, personal umbrella, homeowners, and renters insurance, also has launched two new products on an accelerated schedule since implementing the new incentive management system-motorcycle and rental property insurance.

"The 'go-live' date for the motorcycle product was in flux, and we received about three month's notice," says Kahns. Before implementing the EIM system, his group had to set up new product compensation administration, reporting and analysis using spreadsheets-which would have been impossible to accomplish in that time frame, he says.

But incorporating the motorcycle product into Callidus within the short time allotted was no problem, according to Kahns.

In fact, CSAA estimates it can now bring new products to market in less than half the time it used to take-from 9-to-12 months down to 3-to-6 months. Similarly, the system enables the organization to modify compensation plans in half the time.

What's more, because sales reps receive their production reports via one convenient Web portal, call volume from reps with questions about their pay has fallen dramatically, says Kahns-between 50% and 75%.

"That means I can focus on higher value compensation analysis and reporting for management. And, it frees up my time to work on change initiatives as we add new states and new products," he says.


* The Business Challenge:

California State Automobile Association (CSAA) had plans to offer new products and expand into more states. To do so, it needed to replace its mix of legacy IT, spreadsheets and paper sales production reports.

* The Solution:

In 2004, CSAA implemented an integrated Callidus and IBM solution, which includes Callidus Software's TrueComp and TrueInformation products running on IBM's Websphere Internet infrastructure software, IBM DB2 Universal Database and eServer pSeries system.

* The Results:

Sales reps receive comprehensive production reports on demand through a Web portal. CSAA has reduced the time it takes to launch new products and compensation plans by 50%. And call volume from CSAA agents inquiring about their commission and incentive pay has dropped by 50% to 75%.

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