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It is more important than ever for businesses to attract and retain the best talent, and managing compensation effectively is an essential tool for doing so. Obviously companies must pay well to compete, but managing salary, merit pay, variable pay and incentives for employees, tracking their hiring anniversaries and conducting accurate performance appraisals make total compensation management a complex process. All of this must be managed within budget and policy guidelines. As organizations grow and require more employees, the challenges multiply and the difficulty increases. Our benchmark research finds that inconsistent execution is the top impediment to effective compensation management for nearly half (47%) of organizations. Software designed for this purpose can help.
Beqom, which has offered compensation management software since 2009 and previously was known as Excentive International, has advanced its applications to meet these challenges for all business units and especially Human Resources, which typically manages this process. It supports a range of compensation types from salary, merit and bonus pay to long-term incentives and stock options.
Beqom is rated a Hot Vendor in our 2014 Value Index for Total Compensation Management. Each Value Index methodically assesses vendors across seven evaluation categories covering the products and the vendors. Beqom ranks high in several evaluation areas; in particular it tops the list in Capability and ranks second in Manageability. The software’s flexibility in modeling can address all aspects of compensation, including sales compensation, in one application. For example, its ability to handle the variety of crediting from accounts and territories is effective for sales operations teams. In addition its ability to make compensation visually engaging in management of employees and hierarchies and tracking of budgets is simple and engaging. Its ability to define and apply rules and calculation helps support a range of compensation and incentive plans. Its compensation dashboard and reporting simplify oversight and management of compensation. The application has been designed to enable HR and operations professionals to administer and manage compensation processes with minimal IT involvement, which is one reason why it rated so high in Manageability. While beqom does not provide much public information on its advancements from one release to another, and I believe it should do more, it does bring out iterative improvements quarterly through feature packs and makes major new releases annually.
Since the publication of our Value Index, beqom has taken steps to demonstrate its total cost of ownership (TCO), which we found lacking. One unique aspect in which it has invested is to take the complexity of implementation and maintenance costs out of customers’ migration to its software. The company charges a single annual fee to migrate, implement and deploy. Most organizations do not assess costs beyond the use of the software and are surprised by extra fees for migration and implementation. Even in cloud computing there is no magic to migrate a company to a new application environment. Unlike many vendors beqom addresses these issues in procuring software by building in the services needed.
It also is different from others in the market that have integrated compensation management with their talent management suites. While there is value in a unified approach, many organizations don’t want to replace other talent management applications (such as recruiting and performance management) to acquire compensation management through a suite, and beqom’s stand-alone package suits this preference. Even so beqom has integrated its software with talent management applications in customer deployments and can help share compensation information with them.
Our compensation management research finds opportunity for vendors in replacing spreadsheets used for this purpose, which remain prevalent. A large majority (71%) of organizations have found some type of errors in payment that had to be fixed before payment or had to be corrected after the fact. Such problems create challenges in financial accuracy, employee trust and the ability to govern compensation. This is a factor in more finance organizations getting involved to help improve compensation processes; our research finds that in almost one-third of organizations Finance is stepping up to influence improvements. Almost one-fourth of finance departments want direct access to this information for financial planning and analysis. Software such as beqom’s can help organizations replace spreadsheets and more importantly reach the primary goals of compensation management: improvement of efficiency, alignment and performance, which are important to about nine out of 10 participants in our research. Closing the gaps in compensation policies and practices is critical, and managing it effectively and transparently can build confidence and trust among employees.
Seeing is believing with beqom. If you are assessing your current approach and considering changes to simplify compensation management, it is worthwhile to view a demonstration of what it can do.
CEO and Chief Research Officer
We have just released our 2012 Value Index for Total Compensation Management (TCM), in which we evaluate the competency and maturity of vendors and products. Our firm has been researching this category for many years, and our latest benchmark research in total compensation management found some improvement among applications in a field where many organizations still use outdated applications to manage an area with large financial and human capital impacts.
I am excited to bring this research to market again this year. No other research firm performs this level of analysis or follows it up on a regular basis. The Ventana Research methodology utilizes a request for proposal and assessment approach, and each value index takes six months to complete; unlike other analyst firms, we look at the product details that have the most importance to successful adoption and use. In the process we identify best and worst practices that further refine how we assess technology vendors in this category.
Our research, including this Value Index on Total Compensation Management, looks at the complete range of aspects of compensation, from types of pay and benefits to the processes required to manage them and communicate with workers. We examine role-based requirements for an organization, as well as integration with performance and talent management. We look closely at the key product areas – usability, reliability, manageability, adaptability and capability – and also the customer assurance areas of validation and TCO/ROI.
A lot has changed among TCM suppliers in the past year. For instance, Plateau, which we rated Hot in 2011, was acquired by SuccessFactors, which in turn was acquired by SAP. Now SAP is focused on using SuccessFactors offering and placing the product investments on this offering. Taleo was acquired by Oracle and its product was put aside in favor of the newer Oracle Fusion Compensation Management.
This year we found many talent management vendors claiming to manage compensation, but some provide only a place to enter current compensation data for use in performance reviews or provide limited capabilities. These vendors lack a total compensation management approach that can be used across all roles – administrator, management, manager and employee and support the processes, communicated and integration required for meeting these needs and support of talent management.
Our Value Index methodology assesses vendors across the seven categories noted above, each weighted according to its priority to buyers, and sums the results to 100 percent for scoring purposes. We placed a heavier emphasis this year on usability, reliability and manageability, which organizations indicated in our benchmark research are increasingly higher priorities. You can read the details on our methodology and process in the full TCM Value Index report.
Our analysis in the 2012 Value Index found six vendors that provide robust offerings. All six are rated Hot, which is the highest value level and demonstrates maturity of offerings. SuccessFactors ranks at the top, closely followed by Peoplefluent, then SumTotal Systems, Oracle, Excentive and ADP. We noted in our analysis that SuccessFactors and Peoplefluent showed rapid product advancements every quarter, and their focus on usability, manageability and reliability helped raise them above last year’s ratings. Oracle is a vendor to watch, with its latest release of Oracle Fusion Human Capital Management, which includes compensation and is available both on-premises and in the public cloud. New to the Value Index is Excentive, which is dedicated exclusively to total compensation management.
We take a lot of pride in our Value Index, and we believe it is cool to be a Hot vendor. The competitive market for these applications comprises a very mature set of products. Congratulations to the vendors that survived our detailed assessment processes and granular analysis, which represent how organizations assess and select vendors. If you want some further information, you can download the executive summary. We look forward to offering continued guidance to buyers on this critical application category for HR, finance and operations professionals who need to engage and retain employees by taking a comprehensive approach to compensation management and applications.
CEO & Chief Research Officer