IBM - Sales Incentive Program of the Year
Company: IBM, Armonk, NY
Company Description: IBM is a values-based enterprise of individuals who create & apply technology to make the world work better. Today, more than 400,000 IBM employees around the world invent and integrate hardware, software and services to help forward-thinking enterprises, institutions and people succeed on a smarter planet.
Nomination Category: Sales Awards Achievement Categories
Nomination Sub Category: Sales Incentive Program of the Year
Nomination Title: IBM Global Sales Incentives Finance
Which will you submit for your nomination in this category, a video of up to five (5) minutes in length, explaining the nominated achievement since July 1, 2018, OR a written essay of up to 650 words describing the same? (Choose one): An essay/case study of up to 650 words
IBM employs nearly 30K sellers who are paid commissions on performance against a combination of several different financial measurements encompassing the depth and breadth of IBM product offerings. IBM also operates under tight timelines for quarterly reporting allowing 5 days for the booking of commission expense and liabilities for all resources across 200+ countries. Given the materiality of the commission activity, entries are subject to extensive scrutiny and liability estimates are expected to land within a +/- 5% margin of error to avoid material misstatements.
In addition to the inherent complexity, the Global Sales Incentives (GSI) Finance Team (~80 analysts worldwide) was further challenged by a highly manual reporting and journal booking processes. The commission calculations were executed through a combination of tools and spreadsheets for different types of plans. These were consolidated manually through non-standardized excel spreadsheets at the geography level for journal bookings. Given the manual, error-prone nature of the process and focus on the accuracy of the commission entries, analysts spent a significant amount of time verifying manual calculations and fixing data entries. This left no time to provide analysis to senior management on commission trends to enable real time decisions. In addition, the manual nature of the process required significant amounts of overtime hours to complete the reporting process each quarter resulting in poor employee morale and difficulties in attracting and retaining top talent to the team.
To address these challenges, the GSI finance team executed a complete transformation of the Sales Incentive financial process to improve efficiency and productivity by automating manual tasks and enabling a shift to higher value activities. The key to the transformation vision was the Commissions Expense Accrual (CEA) Tool which is an automated cloud-based, business intelligence enabledsolution for end-to-end commission expense calculations. The CEA tool was conceived entirely in-house through the collaboration of key members of the GSI Finance Team working with IT and took 1.5 years from conception to deployment.
Significant benefits from the commission reporting process transformation:
-Commission accrual accuracy increased by 1 percentage point from 3% variance to 2%, resulting in a $20M direct bottom line improvement to IBM pre-tax income
-60% reduction in manual operational tasks enabling shift to higher value analysis
-4 days improvement in reporting cycle time to senior leadership
-20 hours reduction in overtime hours worked per analyst per quarter close. Total improvement of ~ 4500 overtime hours/year
In order to drive further transformation on the end-to-end process, an additional solution integrated with the CEA tool has been developed utilizing Robotics Process Automation (RPA) BluePrism technology to automate the commission booking process. The Ledger Booking Automation (LBA) solution was designed in-house by key members of the GSI Finance Team in 7 months. It was deployed world-wide in 2Q of 2019.
Significant benefits from the commission booking automation:
-Cycle time improvement of 15 minutes per ledger entry, resulting in more than 320 hours/year savings and up to 75% reduction in manual ledger booking tasks;
-7 points improvement in ledger booking accuracy from 93% to almost 100% virtually eliminating the need for time consuming corrective entries and improving the quality of expense forecasts;
-100 hours/year savings due to automated backup document storage.
Both CEA tool and LBA solution have received very high user satisfaction ratings (as evidenced by the supporting testimonials) and this innovative process transformation has been recognized internally within IBM and externally:
-GSI Finance was recognized with a 2019 Best in Biz Award as Finance Team of the Year;
-Commission finance team leader received Best of IBM honor in 2019 (Top 350 out of 350k IBM employees);
-CEA tool was recognized with a 2019 Stevie Customer Service Award and a 2019 Stevie International Business Award.
Finally, worth mentioning that one year after the deployment of CEA tool, the team’s employee engagement was ranked “best in class”, the highest possible rating within IBM, evidencing the improvement on employees’ morale.