IBM And Callidus Ally On Incentive Compensation Solutions

As part of its broader strategy toward marketing through verticals, IBM has entered a global strategic alliance with Callidus Software to deliver incentive compensation management products and installations for insurance and other financial services industries.

“IBM is definitely verticalizing in several areas,” states Sue Russell, business partner-business development executive for IBM, who is based in Baltimore. Within financial services, IBM particularly is focusing on insurance, banking and financial markets, she explains.

According to a joint announcement, the companies combined efforts “will enable companies to reduce costs by automating and improving the processes involved in aligning employee performance with business strategy. This can allow organizations to increase sales and grow revenue.”

Callidus Software, based in Manchester, Conn., says it provides enterprise incentive management products designed to improve business results via automated management of a companys total compensationfrom variable compensation to base salary, stocks and MBOs.

IBM bills itself as “the worlds largest information technology company.”

According to Russell, IBM will utilize the business products from Callidus, then add its own business consulting services, as well as systems integration and project management skills. The combined offering will be sold through IBMs solutions sales operations, Business Consulting Services operations and insurance services operations.

“We will be the primary implementer,” says Russell. She adds that IBM is targeting the “top 50 to 75 insurance companies worldwide” (both life and property-casualty insurers) as primary markets for the combined offering. “The application will be running on IBM hardware and software,” she notes.

Russell says IBM already is doing several combined installations in the insurance industry, providing front-end commission consulting and acting as the primary systems integrator.

“Callidus brings their application and expertise as well,” she adds. “We saw this trend of more and more companies being interested in flexible compensation structures and more demand for more sophisticated commission and bonus structures.

“One key in the Callidus implementations is that insurance companies are finding quick returns due to a reduction in errors with a more streamlined and efficient system,” she continues.

According to Chuck Johnston, director, industry marketing, for Callidus, the agreement involves “no major investment in our organization from IBM.

“Everyone in the world is an IBM partner in one way or another,” Johnston continues. The alliance, however, has “moved the relationship up another level. For us, that is critical, because were a software company and having a partner like IBM is key.”

Johnston says Callidus is “growing by leaps and bounds. If we had to do all the installation [of solutions], it would become a limiting factor for us. [IBM is] making the investment to be familiar with our technology,” he notes. “We are their recommendation of choice and we are their only partner in this space.”

According to Johnston, the IBM agreement puts Callidus at an attention level that is “second only to the SAPs and Siebels of the world.”

Johnston says the current insurance installations (neither Callidus nor IBM would name the companies involved) are “going well.” One key challenge, he notes, is “how will you continue to handle products you had 20 years ago? You still have to service them, and they may have commissions associated with them. The goal of the software is consolidation.

“Your compensation system has a huge impact on your application architecturereally making changes to the way you manage data,” says Johnston. “Were meeting a real need in the industry.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, November 14, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.