Build or Buy: How to Decide on the Right Incentive Compensation Management Platform for Your Business

Incentive compensation management (ICM) is a critical business process that involves the calculation, tracking, and payment of variable pay to sales reps, channel partners, and other employees based on their performance. In today's competitive business landscape, companies need to have an effective ICM platform that helps them motivate and retain their top performers, drive revenue growth, and reduce administrative costs.

One of the biggest decisions that companies face when implementing an ICM platform is whether to build or buy the software. Building a custom ICM platform from scratch can give companies more control over the customization, but it can also be costly and time-consuming. On the other hand, buying an off-the-shelf ICM platform can be quicker and more cost-effective, but may not provide all the features and capabilities that a company needs.

So, how can companies make the right choice for their ICM platform? Here are some key factors to consider:

1. Cost
   Building a custom ICM platform can be expensive, as it requires a significant investment in software development resources, infrastructure, and ongoing maintenance. According to a study by the Aberdeen Group, the average cost of building an ICM platform from scratch is around $1.5 million. In contrast, buying an off-the-shelf ICM platform can cost anywhere from $300,000 to $700,000, depending on the vendor and the scope of the implementation.
   
   
2. Time to Market
   Building a custom ICM platform can take anywhere from 6 to 18 months, depending on the complexity and scope of the project. During this time, companies may not have access to critical data and insights that can help them make informed decisions about their incentive compensation plans. Buying an off-the-shelf ICM platform, on the other hand, can be deployed in a matter of weeks or months, allowing companies to start tracking and paying incentives much sooner.
   
   
3. Functionality and Customization
   Custom ICM platforms can be limited in providing a company with flexibility and customization, as it grows. A well-implemented off-the-shelf ICM platform, provides all the functionality and features that a company needs, and additional customization or integration with other systems.
   
   
4. Maintenance and Support
   Maintaining and supporting a custom ICM platform can be a significant ongoing expense for companies, as they need to allocate resources to ensure that the platform is running smoothly, and that any issues or bugs are addressed promptly. With an off-the-shelf ICM platform, maintenance and support are typically included in the vendor's service agreement, reducing the burden on the company's IT department.

The decision to build or buy an ICM platform depends on a company's specific needs, budget, and timeline. Companies need to carefully evaluate the pros and cons of both options and determine which approach will provide the best return on investment and support their business goals.

Ultimately, the key to successful ICM implementation is to ensure that the platform aligns with the company's sales and performance management strategies, and that it can provide the necessary insights and analytics to help managers make informed decisions about their incentive compensation plans.

Regardless of whether a company decides to build or buy its ICM platform, it's important to have a clear roadmap and implementation plan in place, and to work with a vendor or development team that has deep expertise in incentive compensation management and understands the unique challenges and requirements of the business.

As the business landscape continues to evolve, and sales teams become increasingly dispersed and diverse, having an effective ICM platform is more important than ever. By making the right choice between build vs. buy, companies can ensure that they have the tools and insights they need to motivate and retain their top performers, drive revenue growth, and stay ahead of the competition.
 To learn more about how to align your corporate strategy with sales incentives reach out to Team Intangent to get you started with a sales performance management solution.