1. Large Brazilian durable goods retailer
IBM Software
Large Brazilian durable goods retailer
The need:
Business-critical incentive compensation system had 60 rules for calculating bonuses, and provided little flexibility in product promotion. Monthly processing time took hours causing a rush to meet the payroll deadline.
The solution:
The company implemented IBM® WebSphere® ILOG® JRules business rule management system to create a flexible, easy-to-manage incentive compensation system.
“ILOG JRules is helping us refine the compensation rules and see what rules are too difficult to achieve or perhaps not difficult enough. Sales administration is working on being able to do fine-tuning of the rules themselves. And that is a very powerful benefit for us.”
—IT Manager of Corporate Systems, large Brazilian durable goods retailer
Client name: Large Brazilian durable goods retailer
Subtitle: Streamlining compensation program with IBM WebSphere ILOG JRules business rule management system
Company background
By tapping the spending potential of all levels of society, including the very poor, one of Brazil’s largest durable goods retail chains has expanded to 613 stores nationwide. With gross revenues of R$5.7 billion and EBITDA of R$320 million in 2010, the retailer has 21 thousand employees serving 23 million customers.
The retail outlets are catalog stores, where sales representatives use computers to display and sell the company’s goods.
The need
The company’s sales representatives assist most of its sales. About 30 percent of sales representative’s monthly paycheck is flat salary, and the other 70 percent is commission and bonuses. Commissions are a straightforward computation, for example, a percentage over the value of the sale, multiplied by the margin of profit. Bonus calculations are more involved and there are different types of bonuses, subject to different variables. Every month the company offers special bonuses and higher commissions for certain products. Some calculations include percentage of specific item sales and fixed flat sums when exceeding a particular revenue target. Altogether there are 60 rules for calculating commissions and bonuses. Until recently, however, the compensation system was a 15-year-old COBOL program. Processing time for the compensation program took 12 to 18 hours, making the calculation process very tight. If a problem appeared, such as an unexpected or erroneous transaction volume or money value, the IT team would work around the clock to make adjustments and reprocess batches. Making timely updates to the compensation plan to meet constantly changing business needs was a challenge.
The solution
At the recommendation of a Business Partner, the retail chain implemented IBM® WebSphere® ILOG® JRules BRMS. The ILOG JRules solution processes all the transactions for each day and the previous days, running all 60 business rules, to keep a running total of commissions and to determine how bonuses are progressing against monthly goals. The processing for each day takes only 55 minutes, and there’s no longer any rush at the end of the month to meet a two-day window, because the work has been broken up into 30 daily parts. The JRules solution brings unprecedented transparency to the compensation program, saves time, boosts satisfaction for employees and reassures management that written policies are being observed across the board.
The benefit
• Improved employee morale with quick resolution to past compensation adjustments
• Zero downtime for system as opposed to frequent breakdowns previously
• Broke up the monthly hour processing run into more doable daily 55 minute runs
The benefit:
Improved employee morale with quick resolution to past compensation adjustments
Zero downtime for system as opposed to frequent breakdowns previously
Broke up the monthly hour processing run into more doable daily 55 minute runs
Solution components:
IBM® WebSphere® ILOG® JRules business rule management system
WSP14526-USEN-00