SPM Sales Performance Management Implementation at LocalTapiola

1. About Local Tapiola

In Finland, having an insurance plan is almost as popular as having a sauna at home; both are said to be good for physical and mental health.

Local Tapiola (or LähiTapiola in Finnish) is the answer to the country’s needs and expectations related to insurance products and schemes. With more than 3,500 employees and 1.6 million customers, it is the second largest insurance company in Finland. It is located in Espoo, a business area just outside Helsinki, and brings together twenty local companies, all under the welcoming Local Tapiola umbrella.

2. Business Needs

Sales Performance Management, above all, involves setting and calculating sales commissions. It’s easy for such processes to become overly complicated, especially when the management of complex credit transactions and sales performance comes into play. Multiply these tasks by several thousand salespeople with different targets, products and performance thresholds, and this process becomes impossible to get a hold of.

Moreover, the study published in "The Complete Guide to Sales Force Incentive Compensation" by A. Zoltners, P. Sinha and S. Lorimer suggests that if you set your targets wrong, for example too aggressive, the sales people get demotivated and achieve less. The diagram below illustrates that compensation law (see page 66 of the referenced book).

Naturally the targets set too low don't help either.

Local Tapiola managed not only to recognise the problem, but also to identify the potential that goes with it.

The challenge was posed by an outdated Cobol-based sales performance management system, which used to serve the company well for many years, but which was eventually identified to have become outdated. Fewer and fewer people within the company understood the system, as it had essentially become a patchwork that too many people had tried to maintain and keep going. Transactions were going in, calculations were going out - that’s all the Compensation Department and Benefits Team knew. Everyone - but the few Cobol programmers - equally puzzled by what was happening.

When Tapiola Local Leadership Team recognised the problem, they immediately decided to find a solution: a modern, cloud-based platform that not only provided easy-to-use parameterisation of calculations, but also a self-service portal for traders that’d also include Business Intelligence reports.

The Management selected GGS team to implement the software and we boldly agreed to face the challenge.

3. Discovery

The one-and-a-half-year-long project began with Discovery Sessions, during which GGS’ team of architects and solution consultants studied the materials that the Client had prepared in advance.

This allowed us to confirm what was already known and clarify what was not known yet. During these initial sessions, we applied quite sophisticated methodology to the project. We gained the necessary business knowledge, developed an implementation plan, and got to know the Client better.

We also learned that cultural differences and relationships between the two teams would play a big role. Finns are very direct and honest when it comes to expressing their opinions, whether they are positive or negative, which made our collaboration full of openness and respect.

4. Implementation & Methodology

Speaking about sophisticated project methodology: LocalTapiola operates in the SAFE methodology - the Scaled Agile Framework - and the same methodology was used for the project delivery. This approach allows the company to be Agile during the project development phase, while maintaining the general structure and being able to monitor processes - both of which are very necessary in the corporate world.

The project began with a stylish whiteboard & pin-to-the-board planning, moving to a series of product increments, and value-delivering sprints in the next steps. Our team visited the client 34 times in just one year. After travel was restricted, we shifted to the online world. Our daily standups, bi-weekly planning, and demos with occasional get-together meetings were all handled online. It's always good to meet face-to-face, but we did our best to make sure quality and delivery weren't compromised by the situation around us.

For those who are interested in SAFE methodology, the graphics below illustrates what it is about:

And here is how a typical session looked like. Magda, the chief SPM Architect at GGS sits first on the right, next to Tymek, a reporting consultant. The LocalTapiola Team is further to the left.

A team of 4-8 GGS consultants, testers, architects, and project managers were involved in the implementation process each day. Along with a similar number of Subject Matter Experts and a Product Owner on the client’s side. Each day and every hour brought us closer to the ultimate success.

These efforts paid off, and the result was a well-planned, well-executed project with no surprises in the final testing and launch phase.

5. System Features

The system features a complex sales hierarchy capable of incorporating both entire sales companies and independent sales agents into its structure. Data for these entities, collected from 20 data sources, including large volumes of sales transactions is made visible and secure. Incorporation of the data makes crediting possible and allows attainment calculations and payout rules to work. The system is also fitted with an administration and calculation module, as well as a reporting and simulation one.

As an SPM (Sales Performance Management), it is capable of daily recalculation but also allows for monthly, quarterly and annual calculation periods - depending on the targets set for the sales teams.

Thanks to the Agile methodology and intensive testing, the client's team knew how to set payout curves, parameterise transaction crediting, perform credit splits, and apply calculation methods by the time the system was ready to go live. In other words: the LocalTapiola Compensation and Benefit team had successfully learned how to operate  the system and were able to use it efficiently even before it was fully deployed. What's more, before shutting down the outdated tool, both systems were kept running in parallel for several months and an extensive comparison of results was performed to ensure that the calculations were correct. And they were!

6. The Challenge

“During the implementation process, many unexpected things can happen, such as last-minute changes in the data structure in the source system, changes in calculation methods or the complex sales structures on which commissions depend.

We managed to overcome these challenges very well thanks to the SAFE methodology, open communication with the Client, and the commitment of both teams. The biggest challenge in this project was the ongoing change in Tapiola's insurance system for life and non-life insurance. This change took place in parallel with the implementation of the SPM system, so the right strategy was key - just like in a game of chess. " - says Magda Czaja, Chief Architect of SPM Solutions at GGS.

We responded to the challenges by communicating more and planning, as shown in the picture below.

Of course, in addition to the colored stickers, whiteboards, and yarn, we used JIRA, too…

Ad this is how we planned the iterations. Always in collaboration with the Client.

7. Results

1. Successfully implemented, tested and launched system, whose implementation was carried out using the Agile methodology with a corporate twist.
2. Correct and time-efficient calculations of sales performances - the calculation engine is parameterized and open for modifications.
3. Insight into the commission calculation process and cash flow for local business owners and stakeholders.
4. Easier and faster access to new commission level settings, introduction of calculation factor updates and changes to calculation methods without the need for any support on the part of the IT team.
5. Achieving the goal of having a modern, adaptable system that can be used for years to come.
6. Creating the possibility to further develop the system to manage sales quotas and sales territories if the need arises in the future.

“I was asked by one of my team members," **** says Jari Collan, Director of Compensation and Benefits at Local Tapiola, - "about what we were going to do at the end of the year in terms of the new system. With the previous one, we would go through a long list of checks and adjustments every year, and we always missed something because it was so complicated." - Mr. Collan further explains - “and it looks like we won’t have to do anything special now. Everything is running in business-as-usual mode , with no excessive effort or hassle at the end of the year, end of the quarter, or at any time. I can say I am 95% happy with the new system and 100% happy with the GGS team. I am confident that they will deliver exactly what we need and communicate with us throughout the process, using our methodology and high standards of system development”. - J. C. concluded.

8. Outcome

• Functional and customizable solution with 12 Compensation Sales Plans and multiple calculation methods.
• Complex sales hierarchy and credit schemes based on reports from local companies that report to the Group.
• Fully audited interface workloads (by tracking attribute changes and handling data quality errors).
• Calculation and tracking of commission compensation at the transaction level.
• Full clarity and understanding of payout calculations. Transparency of cash flow for both administrators and end users.
• Ability to report clawbacks and accruals.
• Simulation engine.
• Daily calculations and recalculations to provide a daily overview of commissions for end users.
• Built-in Business Intelligence reporting.
• Generation of compensation statements and official documents.
• Outbound data provided to the payroll and data warehousing systems.

9. Key Achievements

10. We are happy to help

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We will be happy to assess your situation and needs. Thank You for reading,

Bartek Podolski

GGS Co-Founder