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ADP Gets Into Sales Rep Pay

November 6, 2007
Related Topics: Compensation Design and Communication, Strategic Planning, Workforce Planning, Latest News
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ADP has entered the growing market for software to manage the compensation of sales professionals, the company said Monday, November 5.

The payroll and HR outsourcing specialist said its national account services unit is offering “sales incentive compensation management” software through a partnership with application maker Centive.

Neil McEwen, a sourcing advisor with PA Consulting Group, says ADP’s move follows the example of other outsourcers who have been adding software products to spur growth. The Centive application also should help Roseland, New Jersey-based ADP generate more revenue from customers who now use the company as a payroll “bureau.” The check-cutting business “was low margin to start with, and it’s even lower margin,” McEwen says. “As the market matures, you need to segment.”

ADP said its incentive compensation management product is designed to help organizations track, manage and report on sales compensation. In addition to calculating commissions and bonuses, users of the software can access real-time sales data, model compensation plans and forecast anticipated commission-based pay, ADP said. The tool also can help clients with Sarbanes-Oxley Act compliance when it comes to commission accounting, ADP said.

ADP will host Burlington, Massachusetts-based Centive’s Compel software and deliver it to customers over the Web.

“Automated incentive compensation management is a natural extension of ADP’s business. We are one of the first in the HR and payroll industry to offer this solution as part of a full suite of flexible, easy-to-use on-demand offerings,” Regina Lee, president of ADP National Account Services, said in a statement.

Research firm Gartner estimates that the market for sales incentive compensation management software grew by at least 15 percent last year, to $250 million. The market for such applications “is attracting significant interest from organizations of varying sizes and in different industries, and is expected to grow at a similar rate in 2007,” Gartner wrote in a July report. “Sales ICM applications should help organizations gain efficiencies, insights and versatility in creating, deploying and administering compensation plans meant to guide and motivate direct and indirect sales personnel.”

Centive was one of four vendors receiving a “promising” rating in the Gartner study. Three vendors scored higher, with “positive” ratings. They were Callidus Software, Synygy and Oracle, with its E-Business Suite.

Christa Degnan Manning, analyst with advisory firm AMR Research, says ADP likely went with Centive because of Centive’s focus on the midsize market, which also is ADP’s core customer set. The deal is great for Centive given the strength of ADP’s sales force, Degnan Manning says.

But the partnership does not help ADP customers when it comes to pulling all their workforce-related data together. Such integration can be key to insights and better decisions about employees.

Degnan Manning says the Centive incentive management application potentially adds another “silo” of information to ADP clients, who also may have distinct applications for recruiting and tracking basic personnel information.

“I don’t know if it’s a big win for ADP customers,” she says.

Greg Secord, vice president of marketing and business development for ADP’s national account services unit, says ADP is taking integration seriously in the Centive deal. The first “integration point” involves a link between the Centive application and ADP payroll software, Secord said. “It will expand over time,” he says.

—Ed Frauenheim

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