There are dozens of Compensation Management Software available which can be categorized in two groups: on-premise and hosted solutions.
On-premise applications usually require dedicated hardware, and the company is responsible for keeping the application running, to apply upgrades when required, to ensure data security, etc. On-premise applications can further be categorized into turnkey solutions and high-end solutions, with offerings filling in the spectrum in between. Turn-key solutions include common incentive plans and work with limited integration efforts; these solutions are geared towards companies with few payees. High-end solutions require expensive hardware and very involved efforts from a team of compensation specialists and data integrators; these solutions are typically geared towards organizations with more than 1,000 payees.
Hosted solutions are also called software-as-a-service (SaaS) offerings and are usually geared towards companies with fewer than 500 payees. The biggest advantage of hosted solutions is that the vendor will provide all the required implementation work and be responsible for the upgrades. They can be a good alternative when on-premise solutions are too expensive or when in-house technical expertise is not available.
With fewer than 100 payees, it may be more efficient to handle compensation manually, using simple spreadsheets. However, when the number of payees grows beyond 100, or if the compensation models are very complex, Incentive Compensation Management (ICM) applications should be considered.
I will talk about different sales performance and incentive management applications later.