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Magic Quadrant for Sales PerformanceManagement21 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 shouldfocus on sales incentive compensation in the short term, but also support use cases for salesenablement and corporate performance management in the midterm. This report will help them select avendor.

Market Definition/DescriptionThis document was revised on 22 January 2016. The document you are viewing is the correctedversion. For more information, see the Corrections page on gartner.com.

Sales performance management (SPM) software comprises tools and process functions that automateand unite back­office sales processes. It is implemented to improve sales execution and operationalefficiency. Capabilities include sales incentive compensation management (ICM), objective/quotamanagement and territory management, as well as talent management functions likeappraisal/evaluation management, training, hiring/onboarding, sales coaching systems andgamification. SPM solutions also provide modeling and analytics capabilities to help businesses evaluatesales assumptions and trends in sales outcomes. For more details of this market, see "Hype Cycle forCRM Sales, 2015."

SPM has existed in point solutions for many years, led by well­established, mature ICM and learningmanagement systems (LMSs). In the past five years, however, organizations have adopted SPMsolutions as part of sales enablement and sales excellence initiatives. Companies have upgraded theirICM systems with SaaS­based systems that link complementary processes, such as quota and territorymanagement, into a single operational system. Additionally, companies have improved their onboardingand training efforts with knowledge systems that replace traditional LMS systems with training systemsthat feature crowdsourced knowledge, social interactions and mobile access.

SPM accelerates representatives' time­to­value curves by providing better targeting insights, betterappraisals, and better training processes. This means that SPM has become the bridge that linkscompanies' go­to­market efforts with the execution of those plans at the territory and representativelevels.

For more information, see "Hype Cycle for CRM Sales, 2015."

Magic Quadrant

Figure 1. Magic Quadrant for Sales Performance Management

STRATEGIC PLANNING ASSUMPTIONS

By 2017, 15% of organizations will use crowdsourcedbenchmarks to design their incentive compensationplans.

By 2018, 20% of large B2B organizations will usebusiness graph techniques to improve their salesexecution.

ACRONYM KEY AND GLOSSARY TERMS

BI business intelligence

CPM corporate performance management

HCM human capital management

ICM incentive compensation management

LMS learning management system

SFA sales force automation

SMB small or midsize business

SPM sales performance management

EVIDENCE

Gartner collected input from several hundred referencecustomers (who had been identified by the vendors)using a formal online survey, as well as from inquiriesfrom Gartner clients evaluating the vendors' products.We also interviewed vendors and attended productdemonstrations. In addition, we interviewed businessconsultancies and system integrators.

EVALUATION CRITERIA DEFINITIONS

Ability to ExecuteProduct/Service: Core goods and services offered bythe vendor for the defined market. This includescurrent product/service capabilities, quality, featuresets, skills and so on, whether offered natively orthrough OEM agreements/partnerships as defined inthe market definition and detailed in the subcriteria.

Overall Viability: Viability includes an assessment ofthe overall organization's financial health, the financialand practical success of the business unit, and thelikelihood that the individual business unit will continueinvesting in the product, will continue offering theproduct and will advance the state of the art within theorganization's portfolio of products.

Sales Execution/Pricing: The vendor's capabilities inall presales activities and the structure that supportsthem. This includes deal management, pricing andnegotiation, presales support, and the overalleffectiveness of the sales channel.

Market Responsiveness/Record: Ability to respond,change direction, be flexible and achieve competitivesuccess as opportunities develop, competitors act,customer needs evolve and market dynamics change.This criterion also considers the vendor's history ofresponsiveness.

Marketing Execution: The clarity, quality, creativityand efficacy of programs designed to deliver theorganization's message to influence the market,promote the brand and business, increase awarenessof the products, and establish a positive identificationwith the product/brand and organization in the minds

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Source: Gartner (January 2016)

Vendor Strengths and CautionsAnaplanAnaplan has moved from the Visionaries quadrant to the Challengers quadrant, partly based onevidence of improved sales execution and customer experience, and partly because the pace of its SPMinnovation in the past year has been less than that of the leading SPM vendors. Anaplan offers threeSPM modules in the Anaplan for Sales product: they span incentive compensation, territories, quotasand segmentation. Anaplan's strength is its unified planning capabilities, which puts it on the leadingedge of corporate performance management (CPM) and SPM integration. Anaplan has a patented in­memory technology that delivers strong calculation performance. It has rearchitected its technicalarchitecture to improve scalability and to componentize the user interface. It continues to acquiresignificant enterprise clients, spanning diverse industries. It has added McKinsey & Company as a newstrategic consulting partner.

Strengths

Unique model­centric approach: Anaplan will be attractive to companies that need tocoordinate and unify companywide financial, marketing, sales and operational plans, or that havecompanywide CPM initiatives.

Customer experience: Reference customers scored Anaplan very highly for overall customersatisfaction, and especially for customer service and professional services.

Capabilities: Anaplan scored comparatively highly for incentive compensation, quota assignmentand modeling capabilities.

Cautions

Market segmentation: Anaplan will not be appropriate for small or midsize businesses (SMBs)that are not already integrating SPM and CPM modeling processes, or that do not have complexoperational processes.

Capabilities: Whereas most SPM buyers purchase ICM capabilities first, Anaplan's clients typicallypurchase Anaplan for Sales to improve their territory­planning and quota­planning processes first.Prospective customers looking for incentive compensation examples from Anaplan's referencecustomers should bear this in mind.

Talent management: Anaplan does not offer talent management SPM features such as coaching,training and gamification.

beqomBeqom returns to the Challengers quadrant this year on the strength of its ICM solution and productimprovements. Beqom targets only large enterprises in Europe and North America. It offers a single,SaaS­only SPM product, also named beqom, that spans all of the major SPM capabilities. Beqom has

of buyers. This "mind share" can be driven by acombination of publicity, promotional initiatives,thought leadership, word of mouth and sales activities.

Customer Experience: Relationships, products andservices/programs that enable clients to be successfulwith the products evaluated. Specifically, this includesthe ways customers receive technical support oraccount support. This can also include ancillary tools,customer support programs (and the quality thereof),availability of user groups, service­level agreementsand so on.

Operations: The ability of the organization to meet itsgoals and commitments. Factors include the quality ofthe organizational structure, including skills,experiences, programs, systems and other vehiclesthat enable the organization to operate effectively andefficiently on an ongoing basis.

Completeness of VisionMarket Understanding: Ability of the vendor tounderstand buyers' wants and needs and to translatethose into products and services. Vendors that showthe highest degree of vision listen to and understandbuyers' wants and needs, and can shape or enhancethose with their added vision.

Marketing Strategy: A clear, differentiated set ofmessages consistently communicated throughout theorganization and externalized through the website,advertising, customer programs and positioningstatements.

Sales Strategy: The strategy for selling products thatuses the appropriate network of direct and indirectsales, marketing, service, and communication affiliatesthat extend the scope and depth of market reach,skills, expertise, technologies, services and thecustomer base.

Offering (Product) Strategy: The vendor's approachto product development and delivery that emphasizesdifferentiation, functionality, methodology and featuresets as they map to current and future requirements.

Business Model: The soundness and logic of thevendor's underlying business proposition.

Vertical/Industry Strategy: The vendor's strategyto direct resources, skills and offerings to meet thespecific needs of individual market segments, includingvertical markets.

Innovation: Direct, related, complementary andsynergistic layouts of resources, expertise or capital forinvestment, consolidation, defensive or pre­emptivepurposes.

Geographic Strategy: The vendor's strategy to directresources, skills and offerings to meet the specificneeds of geographies outside the "home" or nativegeography, either directly or through partners,channels and subsidiaries as appropriate for thatgeography and market.

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acquired enterprise clients from primarily B2C industries like retail and hospitality, but it has alsoacquired B2B technology clients. Beqom also has a product partnership with Microsoft, which will bemeaningful to companies that have invested in Microsoft Azure and Microsoft Dynamics. In the pastyear, beqom has stabilized its product release schedule. In 2015, beqom introduced a newrepresentative performance calibration module and a new analytics suite.

Strengths

Market understanding: Beqom is one of only two vendors in the SPM market that bundle allprofessional service costs into the cost of the first­year contract, an option that will be attractive tocustomers looking for price­certainty.

Technical architecture: Beqom's SaaS technical architecture for data processing is robust andcan manage complex sales compensation and quota plans.

Customer experience: Beqom's reference customers identified several strong productcapabilities, including the ability to customize the object model to match back­office data modelsand the ability to integrate with Microsoft's business intelligence (BI) suite.

Cautions

Enhancements: Beqom recently invested in a new user interface, but the SPM user interface anddashboards still lag behind those of comparable SPM vendors — a limitation that has also beennoted by current customers using the legacy on­premises version.

Customer experience: Reference customers expressed concerns about product quality, such asthe difficultly of customizing the user interface. Furthermore, beqom received comparatively lowsatisfaction scores for its incentive compensation capabilities.

Sales execution: In the past year, beqom has acquired considerably fewer new clients than otherSPM vendors, and appeared on comparatively few buyer shortlists because it focuses on largerenterprise prospects. These factors account for beqom's slight dip on the Ability to Execute axis.

CallidusCloudCallidusCloud remains in the Leaders Quadrant on the strength of its comprehensive SPM suite,presence on buyers' shortlists and continued commitment to product improvements. Its position withinthis quadrant, however, has slipped slightly, on the basis of customer experience scores and input fromits customers. CallidusCloud has a mature ICM product, suitable for complex compensation modeling,crediting calculations, and real­time reporting via mobile apps. In 2015, CallidusCloud introduced twosignificant new products: Producer Pro and ThunderBridge. The former product is an integrated SPMoffering for insurance carriers, while ThunderBridge is a big data and advanced analytics solution. In2015, CallidusCloud secured a significant number of new clients, which built on the strong sales resultsit reported in 2014.

Strengths

Enhancements: CallidusCloud is a leader in SPM product innovation, as shown by the quality ofits Producer Pro and ThunderBridge offerings, and by improvements to its quota functions, such asweighted quota allocation.

Customer experience: Reference customers commended the ability of CallidusCloud's softwareto conduct complex incentive compensation calculations, build comparative models and customizeworkflow processes.

Capabilities: CallidusCloud offers a strong set of operational monitoring and investigativecapabilities in a new feature called Research Views. It offers visibility into every user edit actionand the ability to trace payout amounts back to the original transaction.

Cautions

Implementation: Prospective customers should have a firm understanding of their data­processing volumes before negotiating with CallidusCloud. Like other SaaS vendors' products,CallidusCloud Sales Performance is sold on a per­user license basis, but the vendor appliesmonthly fees for excess costs for data storage overruns.

References: Reference customers identified issues with accessing consulting experts and gettingpriority issues resolved in a timely manner.

Customer experience: Reference customers gave CallidusCloud below­average scores forcustomer satisfaction and product quality. CallidusCloud made organizational changes in late 2015to address these issues, but the changes occurred too late in the year for Gartner to evaluate theirimpact.

IBMIBM 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 anSPM solution that covers compensation, quota and territory management, and SPM analytics. IBMoffers multitenant SaaS, single­tenant SaaS and on­premises ICM solutions. It also offers Kenexa fortalent management, primarily as a SaaS solution. Although IBM targets large enterprises, it alsoappears on the shortlists of midsize companies. It offers strong functionality for modeling plans andmanaging complex crediting requirements. It has also delivered innovative SPM functionality forincentive compensation, such as IBM Watson Analytics for sales execution analysis, QueryPath andCalculation Performance Reporting.

Strengths

Roadmap: IBM maintains a strong product release schedule. It also has a comprehensive productroadmap for analytics, operational processes and integration with CPM solutions.

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Capabilities: QueryPath and the Calculation Performance Reporting package are market­leadingcapabilities that allow plan administrators to monitor and improve query and calculationperformance 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 torearchitect its ICM solution as a native SaaS platform. This means that customers can neitherbuild custom applications that run on the IBM platform nor purchase SPM modules from ametadata marketplace.

Capabilities: IBM's reference clients mentioned occasional functional issues, such as difficultiesusing the dispute management module and making prior­period adjustments to previouslycalculated 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 SolutionsIncentives Solutions has improved its position in the Niche Players quadrant based on its level ofcustomer satisfaction and the quality of its SPM capabilities. Incentives Solutions is an EMEA­basedcompany with SPM capabilities suitable for midsize companies and applicable to both B2B and B2Cselling. Incentives Solutions is one of the few vendors that offers incentive compensation and talentmanagement capabilities in a single integrated suite. It is one of only four SPM vendors to offer aproduct built specifically for insurance and financial services. It is also the only SPM vendor aggressivelybuilding business in Latin America. The company expanded its partner network in 2015 and continuedto deliver innovative enhancements, including behavioral analytics for sales. Its roadmap for advancedanalytics and employee management remains strong.

Strengths

Analytics: Incentives Solutions is a leader in SPM advanced analytics. It is one of the few vendorsto offer predictive and prescriptive analytical capabilities, and it is at the forefront of salesbehavioral analytics.

Capabilities: Incentives Solutions offers unique modeling capabilities. These include the ability foradministrators to optimize quota assignments with sensitivity analysis.

Customer experience: Reference customers gave Incentives Solutions very high marks forcustomer satisfaction, service quality and product quality.

Cautions

Sales execution: Incentives Solutions has not built as strong an organization or presence inNorth America as other vendors in this Magic Quadrant.

Customer experience: Reference customers expressed concerns about the ability to customizethe user interface. Financial services clients noted that Incentives Solutions' system requires asignificant amount of time and internal resources to maintain.

Capabilities: Incentives Solutions does not offer native training and coaching capabilities, whichare key components of SPM.

Nice SystemsNice Systems remains a Challenger due to the breadth of its SPM offering, which covers all the SPMcapabilities, including incentive compensation, quota management, training, appraisals andgamification. Nice has strong ICM capabilities, driven by an in­memory calculation engine that canhandle the type of calculation volumes and crediting rules that are common to enterprises. Nice will beattractive to organizations that are looking to optimize their sales operational processes, usingprocesses such as those used for workforce optimization, customer retention and surveying customers.In 2015, Nice improved its sales execution and secured business with a significant high­tech retailerand a large insurance carrier, but Nice must enhance its SPM sales and marketing execution to improveits position in the Magic Quadrant.

Strengths

Capabilities: Nice is one of only two SPM vendors in this Magic Quadrant that also offercapabilities for sales operation automation, which will be relevant to companies that arepurchasing SPM software to improve operational efficiency.

Incentive compensation: Nice's SPM system is architected for complex incentive compensationcapabilities. The in­memory calculation capabilities give users nearly instantaneous calculationperformance, which is important for organizations that need to produce hourly attainment reports.

Customer experience: Reference clients commended the scalability and adaptability of Nice'srules management, the high performance of its incentive compensation calculations, and thequality of its talent management functions.

Cautions

Customer experience: Reference customers expressed dissatisfaction with the quality of Nice'simplementation services, release schedules and upgrades.

Sales execution: Nice scores comparatively poorly for Ability to Execute because of concernsabout its sales and marketing execution. Its product appears on very few competitive shortlists ofSPM buyers, and SPM is not a central component of the company's contact center technology.

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Partners: Prospective customers should be aware that Nice has 135 implementation partnersworldwide, but, unlike the leading SPM vendors, it does not maintain a partner certificationprogram for its implementers.

OptymyzeOptymyze has entered the Leaders quadrant on the strength of its sales execution and customerexperience. The Optymyze Sales Performance product has a full set of SPM capabilities, applicable tomultiple industries, including insurance, healthcare, retail and technology. Its solution is built on aproprietary platform­as­a­service technology that also enables clients to build custom businessprocesses and extend the product's base capabilities. In 2015, Optymyze changed its go­to­marketstrategy by adding a larger direct­sales organization, adding a professional services team, andintroducing an on­demand managed service offering for sales operations processes. Optymyzeexpanded its partnerships in 2015 by adding Cognizant and Cornerstone OnDemand.

Strengths

Implementation: Optymyze is one of only a small number of SPM vendors that includesimplementation costs in the cost of the software contract. This makes Optymyze an attractiveoption for companies seeking cost­certainty.

Capabilities: Optymyze is one of only two vendors that have built a solution for sales operationeffectiveness, an offering relevant to companies that need to improve operational processes.

Customer experience: Reference clients commended the flexibility and customizationcapabilities of Optymyze Application Studio, which enables them to build custom processes.

Cautions

Marketing execution: Compared with other leading SPM vendors, Optymyze appears on fewershortlists of Gartner clients and on fewer shortlists drawn up by the reference customers surveyedfor this Magic Quadrant.

Geographic strategy: Optymyze has secured less business from clients outside North Americathan other leading vendors, which is a consideration for software buyers in Asia/Pacific and LatinAmerica.

Capabilities: Reference customers expressed concerns about Optymyze's single­sign­oncapabilities, user interface compatibility with some browser versions, and date versioning.

OracleOracle has moved from the Challengers quadrant to the Leaders quadrant, thanks to improved salesexecution, an increase in the number of SaaS SPM implementations, and the release of SPM analyticalinnovations. Incentive compensation, quota management and territory management are available inthe Enterprise and Premium versions of Oracle Sales Cloud, but the SaaS SPM modules, as well asother SPM components, can be used independently of Oracle Sales Cloud. Oracle SPM solutions offerprebuilt connectors to integrate with other enterprise solutions, such as Salesforce, Siebel andPeopleSoft applications. In the past year, Oracle has more than doubled the number of clients usingincentive compensation modules. Oracle has a relevant vision for linking SPM, sales force automation(SFA) and CPM processes. Oracle only provides SPM SaaS via virtualization, and does not have amultitenant delivery model, which is a consideration for companies seeking multitenant SaaS solutions.

Strengths

Capabilities: Oracle was the first SPM vendor to release industry­specific solutions for banking,communications and manufacturing that combine CRM and SPM functions in a single product.

Analytics: Oracle offers notable advanced analytics, including the Sales Predictor and Crystal Ballproducts for predictive analytics, as well as functions like territory assignments based on predictedmarket potential.

Customer experience: Reference customers credited the quality of Oracle's talent managementcapabilities and ability to handle large calculation volumes.

Cautions

Technical architecture: Oracle's SPM offerings are integrated but are spread over differenttechnology products. Oracle has migrated incentive compensation, quota management andterritory management to Oracle Fusion, which puts it on a par with Oracle Sales Cloud, but talentmanagement functions like the LMS are not yet built on Oracle Fusion.

Operations: Compared with other SPM software providers, clients of Oracle cited more concernsabout the quality of SaaS technical operations, such as the management of product refreshes andupgrades.

Customer experience: Reference customers also expressed concern about missing functionalcapabilities, such as cross­subject­area reporting, BI functionality and the ability to analyze theaggregated results of compensation models.

SalesforceSalesforce remains a Visionary, due to the social coaching, appraisal and gamification capabilities of itsWork.com product. Work.com is available in two separate offerings. The first, called Recognition andSkills, is available with all Sales Cloud licenses. The second product, called Goals, Coaching,Performance and Calibration, is available only with a Work.com license. When Work.com is used inconjunction with Sales Cloud, users gain an attractive set of SPM capabilities. In 2015, Salesforceupdated the Work.com interface to match the Aloha interface and improved the usability of theSalesforce1 Work.com application. Salesforce also provides native territory management and quotamanagement functions that are bundled into Sales Cloud.

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Strengths

Territory management: Salesforce has continued to enhance its territory management moduleby adding deep territory cloning, territory planning collaboration and territory assignmentpreviews.

Capabilities: Discrete sales actions, like closing deals or passing product certification, can beautomatically associated with annual objectives.

Customer experience: Reference customers noted the positive impact that Work.com has hadon their sales appraisal and coaching processes, and particularly how badges and rewards enableusers to recognize the work of their peers.

Cautions

Incentive compensation: Prospective customers should be aware that Salesforce does not offeran incentive compensation module. This means that ICM buyers must evaluate third­party ICMsolutions.

Customer experience: Reference customers gave Salesforce comparatively low customersatisfaction and service quality scores. They expressed concerns about Work.com's pricing and theability to customize Work.com's processes to match their evaluation processes.

Capabilities: Salesforce has not yet updated Work.com for the Lightning Experience, a new userinterface platform released in late 2015. This is a consideration for companies that want to embedother applications or custom­built Work.com components into Work.com.

SAPSAP remains in the Challengers quadrant, but its position has shifted because its product vision andcustomer experience quality have declined, relative to those of competitors in this Magic Quadrant.SAP's SPM functions are available in three different products. Territory management and quotamanagement functions are native to SAP Cloud for Sales. Talent management functions are availablevia SAP SuccessFactors. SAP also has a native, on­premises ICM product. In addition, SAP haspartnerships with Vistex for on­premises ICM and with Xactly for SaaS­based ICM. SAP has improved itsJam collaboration tool for SPM processes by adding a type of process automation functionality notoffered by other SPM vendors. When Jam is used with SuccessFactors software, companies can buildand deploy process templates that automate common operational processes, such as new­hireonboarding and coaching.

Strengths

Territory management: SAP offers strong territory management capabilities, includingmanagement of complex territory hierarches, visual territory maps, territory collaboration andterritory assignments for individual accounts.

Onboarding: The SPM process templates in SAP Jam show promise for aspects of SPM talentmanagement automation in SuccessFactors, such as onboarding and training.

References: SAP's reference clients commended the depth of integration with SAP ERP and SAPBI systems.

Cautions

Marketing execution: SAP ICM is marketed and sold only to existing and prospective SAPclients.

Capabilities: Reference customers identified issues with customizing the SAP Cloud for Salesproduct and with building test environments that capture all the customizations built into theproduction instance.

References: Clients gave SAP comparatively low scores for service quality, ICM functionality,ease of upgrade and overall customer satisfaction.

VistexVistex debuts in this Magic Quadrant as a Niche Player. It merits this position because its primary SPMproduct, SAP Incentive Administration, is available only to SAP clients and because it is marketed andsold to SAP clients only via a partnership agreement with SAP. SAP Incentive Compensation by Vistex isan incentive compensation, quota management and territory management system that installs in SAPERP software. It can be deployed on­premises, as single­tenant software managed by SAP, or as SaaSmanaged by Vistex at its data centers. In the past year, Vistex released its first SaaS­based product,the Vistex Go­to­Market Suite, which will also be offered through its SAP partnership.

Strengths

Integration: The on­premises product, SAP Incentive Administration, is certified for SAP BusinessSuite ERP Central Component (ECC) 6.0 Enhancement Pack 5 and newer releases, and for SAPBusiness Suite powered by SAP Hana and SAP S/4Hana.

Capabilities: Vistex clients appreciate the scalablity and performance of SAP IncentiveAdministration. Vistex also offers industry­specific templates.

Customer experience: Reference customers commended the quality of integration with SAPapplications for synchronizing data and business rules, and the higher level of configurability thanis available from SAP itself.

Cautions

Market segmentation: Vistex Go­to­Market Suite is not yet a viable solution for companies usingnon­SAP ERP and CRM systems.

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Capabilities: Vistex bundles all its SPM capabilities into a single product, which is a considerationfor companies that would prefer to buy only a single capability, such as incentive compensation.

Customer experience: Vistex's reference customers stated that setup is complicated and thatcomplex­rule definition may require an Advanced Business Application Programming (ABAP)programmer.

XactlyXactly remains a Leader, based on its continued strength in terms of customer satisfaction, productimprovement and sales execution, but its Ability to Execute has declined slightly in the past year, dueto service quality issues. Xactly Incent is a pure­play SaaS SPM solution for midsize and largeenterprises, offering ICM, quota management and territory management capabilities. In the past year,Xactly has updated its go­to­market approach by targeting larger enterprises and by investing moresales resources in Europe and Asia. In addition to its direct sales efforts, Xactly has acquired newcustomers via partnerships with SAP and Salesforce. Xactly has augmented its Insights opt­in databenchmarking service by adding eleven verticals, including for the financial services, media and medicaldevice industries.

Strengths

Customer experience: Xactly received the highest customer satisfaction scores of the leadingSPM vendors in terms of revenue. Clients commended the quality of its customer support,customer advisory board and commitment to deploying enhancements submitted by customers.

Enhancements: By deploying new functions every month, Xactly has one of the strongestproduct release schedules in the SPM market.

Product segmentation: Xactly is the only leading SPM vendor to offer a product specifically forSMBs. Xactly Incent Express is a cost­effective SMB­only solution built on Salesforce's Force.complatform and available on the Salesforce AppExchange.

Cautions

Operations: Xactly suffered a SaaS service degredation in early 2015. It resolved the problem byadding another production pod, but, given Xactly's recent growth, Gartner considers systemperformance to be a mild concern in the short term.

Talent management capabilities: Xactly offers only limited talent management solutions. Itannounced new talent management functions for coaching and appraisals in late 2015, butGartner has not evaluated these functions because their announcement occurred after the end ofour research for this Magic Quadrant.

Customer experience: Xactly reference clients identified issues with functionality in terms ofbuilding complex incentive compensation models that match their requirements.

ZohoZoho is a pure­play SaaS CRM vendor of a low­cost, freemium SFA solution for SMBs. It is a NichePlayer because it offers a limited set of incentive compensation, territory management and quotamanagement capabilities, and because it lags behind other vendors in this Magic Quadrant in terms ofcustomer experience and sales execution. Its SPM capabilities are embedded in Zoho CRM, anenterprise CRM product. As a well­established vendor of SFA solutions for SMBs, Zoho can serve as aprimary data source for external ICM and coaching solutions. It provides essential functions that SMBsvalue, such as basic sales compensation workflow approvals on incentive compensation payout levels.In addition, Zoho released a new gamification system called Zoho Motivator in late 2015.

Strengths

Pricing and contracting: At $35 per user per month (list price) for a CRM enterprise license,Zoho's price is affordable for SMB's that need basic SPM functions such as territory management.Zoho offers monthly contracts, which is uncommon in the SPM industry.

Customer experience: Reference customers commended the configurability of Zoho'stechnology and its ease of deployment.

Capabilities: With Zoho's territory management feature, users can automate account­to­territoryassignments and build territory­level forecasts.

Cautions

Capabilities: Zoho's incentive compensation management solution does not offer the same depthof functionality as that of the leading vendors.

Customer experience: Reference customers expressed concerns about the quality of Zoho'sproduct information and the best practices that it shares with them.

Gamification: Reference customers gave Zoho comparatively low scores for gamification,compared with other SPM vendors.

Vendors Added and DroppedWe review and adjust our inclusion criteria for Magic Quadrants as markets change. As a result of theseadjustments, the mix of vendors in any Magic Quadrant may change over time. A vendor's appearancein a Magic Quadrant one year and not the next does not necessarily indicate that we have changed ouropinion of that vendor. It may be a reflection of a change in the market and, therefore, changedevaluation criteria, or of a change of focus by that vendor.

AddedVistex

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DroppedNone

Inclusion and Exclusion CriteriaTo be included in this Magic Quadrant, vendors must have satisfied the following criteria as of October2015. 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 SPM­specific sales overthe past 12 months

Offer a prepackaged SPM software product that includes an ICM application as a core componentor that has demonstrated integration with ICM vendor(s)

Offer a prepackaged SPM software product that contains at least three components of SPM, out ofICM, territory management, objective and quota management, appraisal/evaluation management,training management, hiring/onboarding systems, sales coaching management, sales performanceanalytics 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 multipleindustries

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 thesemarkets

Evaluation CriteriaAbility to ExecuteProduct or Service: SPM applications include capabilities for ICM, territory management, objectiveand quota management, appraisal and evaluation management, training management, hiring andonboarding, sales coaching management and gamification (see "Get to Know the Key SPM TechnologiesBefore Determining Your Strategic Approach").

Different sales organizations require different levels of depth and complexity of capabilities. Vendorsthat support a wide range of complexity have greater market potential and are rated accordingly. Thisis primarily a cross­industry Magic Quadrant, focusing on vendors' ability to serve several distinctindustry sectors. In many cases, an SPM application will combine several functional components, someof which require third­party vendors. A key evaluation criterion is how well an SPM vendor's applicationintegrates with third­party products and customer data sources. This is measured primarily by thenumber and complexity of data and application integrations, as demonstrated by live customerdeployments. Vendors that have fostered an ecosystem of value­added application suppliers andpartners will score well in this subcategory.

Overall Viability: Key aspects of this criterion are the vendor's ability to ensure continued vitality of aproduct, including support of current and future releases, as well as to provide a clear roadmap for thenext three years. The vendor must have the cash on hand and consistent revenue growth during fourquarters to fund employee burn rates and to generate profits.

Sales Execution/Pricing: The vendor must provide global sales and distribution coverage that alignswith its marketing messages. The provider must have specific experience and success selling SPMapplications to sales buying centers (that is, the VP of sales or the VP of sales operations), as well as toIT leaders.

Market Responsiveness/Record: This criterion assesses the vendor's ability to respond, changedirection, 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 historyof responsiveness to customers and to market dynamics.

Marketing Execution: This criterion assesses the clarity, quality, creativity and efficacy of programsdesigned to deliver the organization's message in order to influence the market, promote the brand andbusiness, increase awareness of the products, and establish a positive identification with theproduct/brand and organization in the minds of buyers. This mind share can be driven by a combinationof publicity, promotional, thought leadership, word­of­mouth and sales activities.

Customer Experience: Feedback from active customers on generally available SPM releases duringthe past 12 to 18 months is an important consideration. Sources of feedback include vendor­suppliedreference customers, Gartner inquiries and other customer­facing interactions, such as at Gartnerconferences. Customers' experiences are evaluated based on the vendor's ability to help them achievepositive business value, as well as sustained user adoption, quality, implementation and ongoingsupport.

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 anongoing basis. For SaaS offerings, Gartner evaluates the vendor's ability to manage operationalinfrastructure requirements, and to provide post­sales usage and adoption support.

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Table 1. Ability to Execute EvaluationCriteria

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

Source: Gartner (January 2016)

Completeness of VisionMarket Understanding: This criterion assesses the vendor's ability to understand buyers' needs andto translate these needs into products and services for the SPM market. Vendors that show the highestdegree 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 businesscapabilities and operational efficiency improvements. Vendors demonstrate a strategic understanding ofSPM capability trends and ongoing vendor dynamics within the SPM space. In addition, the vendordemonstrates 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 ofSPM messages consistently communicated throughout the organization, and externalized through thewebsite, advertising, customer programs and positioning.

Sales Strategy: This criterion assesses the vendor's strategy for selling SPM solutions that uses theappropriate network of direct and indirect sales, marketing, service, and communications affiliates thatextend the scope and depth of market reach, skills, expertise, technologies, services and the customerbase.

Offering (Product) Strategy: Vendors must demonstrate a vision for SPM capabilities that crossesthe 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 quotamanagement, appraisal and evaluation management, training management, hiring and onboarding,sales coaching management, gamification and SPM analytics. The product strategy can be acombination of organic development, acquisition and/or ecosystems. However, for ecosystems, Gartnerpays close attention to the quality and support of third­party vendors.

Business Model: Vendors should have a clear business plan for how they will be successful in the SPMmarket. The business plan should include appropriate levels of investment to achieve profitability andhealthy revenue growth during a three­ to five­year period. Sales channel and partnership strategiesare important considerations for this criterion.

Vertical/Industry Strategy: If vendors offer industry­specific solutions, they are rated on theirquality in terms of ability to address SPM use cases and/or their ability to provide industry­specificmetadata incentive compensation or quota attainment templates.

Innovation: Vendors must demonstrate a commitment to investment in new SPM areas, such as smartdevice applications, analytics, complementary process extensions and SaaS delivery model.

Geographic Strategy: This criterion assesses the vendor's alignment of resources, skills and offeringsto meet the specific needs of geographies outside its "home" or native geography, either directly orthrough partners, channels and subsidiaries, as appropriate for that geography and market.

Table 2. Completeness of VisionEvaluation Criteria

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

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Source: Gartner (January 2016)

Quadrant DescriptionsLeadersLeaders demonstrate a market­defining vision of how technology can help top sales executives achievebusiness objectives. Leaders have the ability to execute against that vision through products, servicesand demonstrated solid business results in the form of revenue and earnings. Leaders have significantsuccessful customer deployments in North America, EMEA and Asia/Pacific in a wide variety ofindustries, with proofs of organizational deployments above 500 users. Leaders are often what otherproviders in the market measure themselves against.

ChallengersChallengers are often larger than most (but not all) Niche Players, and they demonstrate a highervolume of new business for SPM. These vendors have the size to compete worldwide, but, in somecases, they may not be able to execute equally well in all geographies. They understand the evolvingneeds of a sales organization, but they may not lead customers into new functional areas with theirstrong functional vision. Challengers tend to have a good technological vision for architecture and otherIT organizational considerations, but they have not won the hearts and minds of top sales executivesand/or IT leaders.

VisionariesVisionaries 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. Theyinfluence the direction of the SPM market, but they are limited in terms of sales execution, operationalexecution or consistent record of customer success.

Niche PlayersNiche Players offer products for SPM functionality, but may lack some functional components, may notdemonstrate an ability to consistently handle deployments of more than 500 users across multiplegeographies, and may lack strong business execution in the SPM market on a large scale. Niche Playersmay offer portfolios for a specific industry or specific software ecosystem. They demonstrateweaknesses in one or more important areas with regard to supporting cross­industry requirements,such as sales training and coaching management. Despite these shortcomings, Niche Players often offerthe best solutions to meet the needs of particular sales organizations, industries or organizational sizes,in view of the price/value ratio of their solutions.

ContextThis Magic Quadrant covers a wide cross­section of vendors, including those that offer different deliverymodels (such as on­premises, hosted and SaaS), and differing levels of functional breadth andsophistication. Whichever provider you are considering, ask yourself, "Will this vendor help my salesorganization sell more effectively? Will my sales organization motivate the vendor to achieve highexpectations, and to undertake training and coaching that will enhance its skill set?" In many cases, asales organization must evaluate not just a vendor's suite of product offerings, but also the ecosystemof 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 soletool for creating a vendor shortlist. Use it as part of your due diligence and in conjunction withdiscussions with Gartner analysts. It is important to explore the market further to assess the capacity ofeach vendor to address your unique business problems and technical concerns. Depending on thecomplexity and scale of your requirements, your shortlist may be unique.

For this Magic Quadrant, Gartner collected end­user data from two sources: interactions with Gartnerclients and the results of a primary research survey conducted specifically for this Magic Quadrant. Thesurvey had 98 respondents, drawn from end­user clients identified by the software vendors included inthis analysis.

Magic Quadrants are snapshots in time. To be fair and complete in its analysis, Gartner stops collectingdata for Magic Quadrants at a consistent time. For this Magic Quadrant, the cutoff date was October2015.

Market OverviewThe SPM market remained mature in 2015, growing to more than $2.7 billion as measured by spendingon 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 software­onlyportion of the market, to which the largest SPM vendors contribute, came to over $715 million, and thatit will grow to $1.54 billion in 2019.

A Gartner primary research survey, conducted for this Magic Quadrant in 2015, of 98 referencecustomers 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.

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10% were using appraisal solutions.

7% were using onboarding functionality.

Since the previous survey, conducted in 2013, product adoption percentages have changed in threemeaningful 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 surveyresults reported above, buyer inquiries submitted to Gartner, and vendors' product development. In2015, more than 70% of Gartner's SPM inquiries included incentive compensation.

Software buyers are predominantly concerned about scalability and complexity. Companies selectincentive compensation tools to manage complex sales hierarchies. In the 2015 survey, 79% of theorganizations used a combination of geography, matrix and sales overlaps to design their salesorganization.

Talent management functions for sales, such as appraisals and coaching, continue to lag behind ICMadoption because they have not yet become mission­critical. As indicated above, only 13% of surveyedorganizations have implemented training functionality from SPM vendors. Gartner notes, however, thatcompanies are increasingly focusing on sales enablement, which is a collection of processes and toolsthat includes functions like sales training, coaching and onboarding.

Analytics is an important component of SPM, but buyers will find more similarities than differencesacross vendors. Most vendors provide standard reports and dashboards for incentive compensation,territory alignments and quota attainment levels. Less common are advanced SPM analytics thatconnect sales execution with sales outcomes, using predictive analytics to build nonobviouscorrelations. Some vendors, like CallidusCloud, IBM, Optymyze and Oracle, have taken initial steps inthis 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 singlevendor. For example, over half of Gartner's inquiries included questions about incentive compensationand quota management in the same conversation. Taken together, these results indicate that the SPMmarket 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 moreorganizations deploying SPM as a part of a comprehensive business strategy, one that directly unitesgo­to­market strategy with sales enablement processes and sales execution systems. With an SPMprogram, buyers can recognize the transformational benefits of SPM beyond the narrow concept ofmerely buying a compensation calculation engine or a training LMS. By using systems that link thebiggest drivers of sales representatives — incentive compensation plans and sales training — companiesgain a continual view into their sales operations and sales execution processes.

To reach the Plateau, software vendors also must demonstrate how their SPM solutions directlyintegrate with SFA systems. When vendors state that their software integrates with an SFA system,they are typically referring to either prebuilt connectors or report­level integration. Far less common ismeaningful integration for quotas, forecasts, business processes and business rules, such asopportunity splits.

In terms of the future of SPM, Gartner expects the market to become increasingly data­intensive,replacing the process­intensive focus that has predominated so far. Soon, companies will be able tocapture and analyze accurate, rich data about representative behavior, taking an operational view of alltheir sales processes. The time is approaching when sales operations will be able to monitor salesactivity with the same detail as manufacturing processes. By applying emerging advanced analyticalcapabilities, like big data and predictive analytics, companies will be more able to estimate outcomesand thereby make immediate, fact­based adjustments to their sales execution, incentive compensation,training and go­to­market plans.

SPM solutions are also becoming more industry­specific. CallidusCloud has released its first industry­specific solution, Producer Pro, for insurance companies, joining IBM and SAP's vertical solutions. Oraclehas released the first product that combines SFA and SPM functions in a single vertical product.CallidusCloud, Optymyze and beqom have released sets of industry­specific compensation plantemplates. 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 matureICM processes. Leading implementers include Accenture, Canidium, Deloitte, IBM Global BusinessServices 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 beeffective, but SPM is particularly relevant to CPM because it provides information that bridges salesplanning and sales execution. However, as with all integrated planning solutions, aspects ofgovernance, such as model sharing, data integration and analytics, should be managed formally.

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