EIM The Next CRM?

A few years back, all the famous analysts hailed automated EIM (Enterprise Incentive Management, or ICM, Incentive Compensation Management) software/solutions as the “next big thing”, the “next CRM”, a $6-10 billion annual business for vendors.

It doesn’t seem to have worked out that way. 

Given that incentive compensation is paid to the workforce, analysts and investors assumed that EIM was a human resources “buy”.  But, as a senior HR technology analyst at the HR Executive Technology conference three years ago said from the main stage, in front of 3,000 attendees, confirming what we learned in the early 1990’s: “incentive management is on the fringe of human resources”. 

Why is that?  Why is incentive compensation management automation not the next “CRM”? 

First, as vital as it is to strategy execution, and as spectacularly powerful it is at producing results, EIM is a good degree more demanding to “do” than CRM.  EIM deals with orders of magnitude more information and ongoing administration about the workforce than CRM.  EIM requires vast volumes of detailed sales, relationship and financial transaction data that CRM never has to deal with.  EIM requires deep integration with finance and product management; not a priority of CRM.  And, EIM requires higher velocity turnaround of mission-critical performance information and rigorous payroll-schedule dictated deliverables. 

As an EIM client said: “If we’re a day or so late and 95% accurate with our CRM initiatives, not many make a fuss and no one really notices.  But, if we’re a moment late or any way inaccurate with our incentive reporting, we’d immediately have 900 complaint calls and a category five workforce crisis on our hands; delay, or worse, failure, is simply not an option when it comes to incentives.”

The second major reason EIM is different than CRM is that it requires the involvement of all power centers in an enterprise (CRM ought to, but usually doesn’t).  Except for the smaller enterprises where the CEO is involved in tactical decision-making, the economic buyers of incentive automation are usually any one of 4-5 strategic centers of power in an organization, depending on a range of specific enterprise and broader competitive factors. 

The CFO is involved in the financial-metrics basis of incentive compensation: product, channel and relationship valuations and ROI.  The COO and/or LOB heads are involved typically as the internal customer/consumer: they usually define the incentive plans, and their workforce members are the ones doing the incented work and getting paid.  Human Resources is involved in administering compensation in general and workforce demographic information.  And, Information Systems is generally the provider of the core source data required to calculate the incentive plan results.  CRM tends to involve fewer of these centers, and then with less detail, rigor and intensity.  The CFO doesn’t want to deal with HR functions.  HR doesn’t want to deal with raw source data transactions.  The COO doesn’t want to deal with what the CFO does.  And, IS doesn’t want to design and manage incentive plans or the workforce.

So, enterprise incentive management… on the fringe of human resources, is also on the fringe… let’s say “outskirts”… of the other power centers, too.  Thus, it falls somewhere in between; vital to all, owned by many, governed by who?

So, what has happened to EIM?  It used to have a Wikipedia entry, but no longer.  If you look back a few years to the vendors who used to promote EIM or ICM, now they offer up their solutions as “sales performance management”, “talent management”, “performance management”, “dashboarding & scorecarding”, “business intelligence”, even “CRM”.  What EIM is has been re-packaged.

Another evolution is How EIM is done: EIM has “gone channel”.  It has been recognized as a CEO-level strategic initiative within multiple unique verticals, where solution providers and process consultants have collaborated to create channel- and vertical-specific flavors of EIM, that have comfortably adapted to the enterprise-unique combinations of CFO, COO/LOB, HR and IS priorities and contributions.

Conclusion: EIM is not the next CRM, because EIM demands more, and because it involves more players it is a more complex solution.  But, wow, when fully executed as a core tool of strategy execution, EIM’s Returns on Investment monumentally dwarf those of comparable initiatives.  We’ve documented scores of case studies where EIM has produced first and multi-year ROIs of 3,000-8,000%. Why?  Because humans love to succeed.  And, when they know what the enterprise wants them to do, at what level to perform, and how they win, too, they will.  Simply put, EIM enables that.

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