Understanding Prior Period Processing (PPP)

Prior period processing is the means by which Incent allows you to reprocess prior periods
to generate retroactive adjustments to results, known as prior period adjustments
(PPA). These adjustments might become necessary because of changes to compensation
plans, updates to transactional data (such as orders), or the evolution of reference
data in your organization.

Reference data includes items such as rules, formulas, rate tables, exchange rates,
quotas, or other plan design elements, as well as person records and organization
hierarchy, among other information.

When PPP is run, all changes are applied to a new version of the results, which are
rolled forward to the current period. This maintains the integrity of your original results which were used to pay your team—and allows you to show a comparison between
the original and later calculations, as these calculations might affect incentives. Further, prior period processing maintains comprehensive audit details.

important: PPP does not change the payment history in Incent. Payments completed
in closed periods remain unchanged. Instead, PPP allows administrators to recalculate
payments and bring that payment information forward into the current period.

PPP can store up to 12 versions of any period. This means that you can reprocess the
prior 11 periods to adjust for changes. For example, if the current period is June, you could reprocess results starting with the prior July. After processing is complete, you can show how the July data was calculated in August, September, and so on, using the “As of” option in the Results area of Incent, displaying each of those versions of July data and what changed over time.

Prior period processing relies on the following Incent components (explained in
detailed later in this section):

• Batch types
• External processes
• Process groups

The following shows the relationship between the components:

Prior Period Processing Components

note: Prior period processing is disabled by default. Contact Xactly Support to have
PPP enabled for your organization.

When to Use Prior Period Processing

Consider using PPP in the following situations, among others:

• Order data is found to be incomplete or incorrect, updated order data is
available, and recalculations are needed to determine accurate incentives
and balances
• Compensation plans change mid-year, and updates need to be applied retroactively
to closed periods
• Acquisitions, divestitures, and restructuring result in new territory assignments or
territory reassignments that require retroactive application to address the new
business configuration

Note that prior period processing is distinct and different from clawbacks. Specifically, clawbacks allow you to update payments in the current period. For example, a client might cancel a contract in the current period. In this case, you can use a clawback to adjust the commissions paid. This contrasts with PPP, which allows you to make corrections in prior periods and then apply those changes retroactively through subsequent periods (leading to the current period).

note: PPP can produce negative adjustments. Consider whether your organization
has a business policy that supports negative adjustments. Also, be aware that the
Unfinalize operation is not available for periods in which PPP has been run.

Understanding Process Groups

Process groups capture the structure and order of incentive processing in Incent,
and are the building blocks of PPP. Process groups enable you to orchestrate processing steps within incent, and to manage and edit processes over time to adjust
to changing needs. Process groups are essentially the recipe—the steps—required
to transform a raw data file into finalized incentives.

For example, you might define a process group to calculate a SPIF (Sales Performance
Incentive Fund) on a quarterly basis or create a process group that performs
calculations every day.

When you create a process group, you specify individual steps for each Incent
function. You can then monitor each step in the process queue when it is run. For
instance, a typical process group might use the Incent calculate credits feature to
aggregate order details and then process incentives from aggregated credits.

This progress group would then contain the following steps (in order):

1. Calculate credits from uploaded sales order data

2. Aggregate calculated credits (by person, in this case)

3. Calculate incentive from the aggregated data

note: Xactly recommends creating multiple process groups, each with a small set
of steps. This makes process groups easier to maintain and update. In addition,
consider creating process groups in which the last process is a calculation. Doing
so allows you to run a single major calculation at a time, reviewing results as
needed.

When defining a process group, you specify the plan year and whether to include
the group within single period processing (SPP). You can think of SPP as a parent
group of process groups that you can add to the process queue to process a single
period. Process groups also support versioning, which enables you to specify
effective dates for the process group.

Each step within a process group further enables you to specify the frequency in
which the step should be run (monthly, quarterly, or yearly). When the process
group is run, steps are then matched against your organization’s calendar and run
accordingly.

An organization can define up to 50 process groups containing as many as 20
steps. Typically each step completes a single action, such as calculating credits or
incentives, previewing balances, resetting batches to pre-credits or pre-incentives,
sending an email, or running an external process.

note: See the Xactly Incent Reference Guide for a complete list of actions.

After defining one or more process groups, you can add a process group to the
process queue as a single operation. At this point, process groups appear in the
queue and can be monitored in the same fashion as any other process. Incent
also provides advanced search capabilities to administrators and sales users.

Understanding Batch Types

Batch types are an optional feature that administrators can use to organize transactions into groups that require the same processing. Using batch types, you can
construct process groups that automatically process multiple batches (since each
step in a process group processes a specific batch type).

A batch type can be associated with any number of batches, though batch
types are less useful in cases when other, built-in filters are available in Incent. For example, batch types should not be period-specific. Incent offers a default batch
type with which all batches are automatically associated (in cases when a single
batch type is sufficient for your organization).

note: Batch types are associated with a transaction type, which provides insight
into how batches are used with Incent.

Understanding External Processes

External processes are an optional capability that allows you to name and specify
custom scripts that run within Xactly DELTA. Using external processes, you can
extend the capabilities of Incent by having DELTA processes run as steps within
process groups. In effect, Incent then becomes the controller of these external
jobs, which you can then monitor and manage using the Incent process queue.
Similar to DELTA processes, external processes can include optional parameters.
You can set the default value of parameters during configuration, and can
optionally edit these values when adding the process group to the queue (just
before run-time).

External processes are often used to update reference data in Incent, allowing
Incent to perform calculations based on the latest information within your organization.

note: External processes are generally created by Xactly Professional Services.
After the external process is configured, you can include and manage the processes
within process groups independently without requiring assistance from Xactly

Using Prior Period Processing

Prior period processing is easy to use, but requires that you complete the following
steps, in order:

1. Contact Xactly Support to enable prior period processing for your organization.

After PPP has been enabled by Xactly Support, enable the
PRIOR_PERIOD_ADJUSTMENT preference in the Setup > Preference area of
Incent.

note: After PPP has been enabled for your organization using the
PRIOR_PERIOD_ADJUSTMENT preference, it cannot be disabled. You are not
required to use PPP, however, you cannot disable the capability after it is
enabled.

2. Enable the BALANCE_CARRY_FORWARD preference in the Setup > Preference
area.
This allows Incent to create prior period adjustments that carry balances forward
to the current open period. This is an essential component of prior period
processing.

3. Specify the process groups that should be included in prior period processing
by selecting the Prior Period Processing (PPP) option when defining or editing a
process group (in the Setup > Configure > Process Groups area).
Admins with Read-Write capability for the Setup Tab > Process Groups privilege
in the Setup > Roles area are able to select the process groups to include
when PPP is run.

Process groups are essential to using prior period processing, and offer you the
ability to create a consistent set of instructions for reprocessing. As part of
defining the process groups, you can engage Xactly Professional Services to
update your DELTA processes to enable their use as external process steps
within your process groups.

You can specify the order in which process groups are processed by setting
the priority in the Setup > Configure > Process Groups area. The process groups
are processed in the order in which they appear on this page.

4. Download the changes to prior periods to determine whether prior period processing
is necessary.

You can download changes as a Microsoft Excel spreadsheet in the Orders >
Process Status > PPP area of Incent. The spreadsheet identifies all changes in
the system since the last time you ran PPP. You can then use this information to
determine the appropriate PPP range. The Orders > Process Status > PPP area
also displays how many times you have run PPP for the period.

5. Ensure that commission releases are up-to-date.
If you have held commissions, you need to release the commissions before
running PPP.

6. Verify that prior periods are finalized (closed) up to the current period.
PPP recalculates from the oldest period you select to the first open period in
your environment

7. Run PPP in the Orders > Process Status > PPP area of Incent.
PPP reprocesses closed periods and creates new versions of the results using
the instructions you provided in the selected process groups.

Admins with Read-Write capability for the Orders Tab > Process Status privilege
in the Setup > Roles area are able to run prior period processing using the process
queue.

As with any process added to the process queue, PPP must finish before the
next process can start. You might therefore want to start a longer PPP run during
non-critical times.

note: While PPP allows you to reprocess up to 12 periods, you should restrict the
range of periods to reprocess to the minimum necessary. Xactly recommends
only running PPP for three prior periods or less, where applicable.

Also, the number of times you can run PPP for a period is restricted. Xactly recommends running PPP as part of your reconciliation process at the end of a
quarter or just before preparing your payment files.

Finally, refrain from making changes to reference data—such as rules, formulas,
rate tables, exchange rates, quotas, or other plan design elements, as well
as person records and organization hierarchy— while PPP is running as these
changes could inadvertently be used as part of the reprocessing.

8. Monitor the prior period processing using the process queue.

9. Check the prior period adjustments completed during prior period processing.
You can use the Orders > Process Status > PPP area to review the aggregates
of changes over a period of time, drill down for details, and filter across result
types (as well as people, earning groups, and business groups). You can use
this information to gain insight into how changes impact compensation and
identify potentially systematic problems if too many changes are evident.

Specifically, the Orders > Process Status > PPP area displays a grid representing
a period and the optional prior periods. Blue shaded cells are the first open
period—this is typically the period you are currently calculating. White cells
represent past periods with icons showing what has happened in each period,
as follows:

• An “O” identifies the current open period
• An unlocked Icon  shows that you have run PPP for those periods, but
they are not yet finalized
• A locked icon shows you that the period is completed and closed.