July 20, 2011

The Evolution of Sales Operations

By Kim Wright Wiley

Some day, every VP of sales and sales manager in every industry in every company will have the time to wade through the mass of details and get to the big sales picture. Well, hello, Cinderella. And someday your prince will come. The trouble is, someday never does come.

“People in sales often say, ‘When things calm down, I’m going to take a look at all that,'” says Price Burlington, director of field operations for SAP America. “But they’re so busy with the ongoing pressure of meeting quotas that they let the big-picture stuff drop.”

Thus, the arrival of the sales operation manager, an umbrella position for overseeing all the functions of sales management, including technology adoption, revenue growth, and process efficiency. The sales ops manager supports the VP of sales, handling all those things the VP planned to get to on that calm, stress-free, mythical day in the future.

Sales ops managers have been around since the 1980s, but the position has really exploded in the last five years due to two factors: the increasing sophistication of technology and the economic downturn. A recent report by IDC showed that 1) more leads are needed now to close a deal, 2) 72 percent of companies have seen an increase in the buying cycle, and 3) the rise in sales costs is outpacing revenue growth. It’s no secret that sales departments are under pressure to do more with less, and using technology effectively is a large part of how they hope to do this. But which technology? How will it be implemented and standardized, and how will the effects be measured?

The sales ops manager spends 100 percent of his or her time focused on these big-picture issues. As companies become more global and more technologically sophisticated, the sales ops manager will undoubtedly become an even more pivotal part of the picture.

How Sales Operations Has Evolved

“Twenty years ago, the VP of sales would look to sales ops primarily to crunch numbers,” says Barry Trailer, managing partner of CSO Insights. “Sales ops might, for example, have forecast travel expenses or monitored how well sales were doing versus projected estimates. But from these humble beginnings, the role has evolved. Now the VP of sales looks to the sales ops manager, not just to give the numbers, but to help interpret research.”

“New companies at first are in pure growth mode,” says Burlington, “and then they suddenly get to the point where sales is no longer just about the numbers. They realize they need to streamline their processes, put a CRM system in place, figure out a better way to pay people. There’s also a move toward centralizing functions. Whereas at one time HR might’ve handled certain issues and accounting others, growing companies get to the point at which there’s overlap between what all these different departments are doing. It becomes clear it would be more efficient to have one central team, sales operations, overseeing these functions and serving as the glue to bind it all together.”

Burlington sees this centralization of functions as an important part of efficiency. “Everyone is concerned with driving revenue,” he says, “which often comes down to finding a way to improve productivity without hiring more salespeople. The question has become, how do we make the sales process more efficient without just adding more bodies? The second major problem is that the actual selling process has become more complex, requiring a wider spectrum of technology. We have different kinds of sales specialists all over the world trying to work together, and the process is harder to monitor.”

It’s a double whammy: fewer salespeople in the field and those already- pressured few being overwhelmed by the technology and information-processing aspects of their jobs. Enter sales ops on a white horse to save the day. “Sales ops concentrates on all these behind-the-scenes things, like simplifying processes, setting territories, evaluating compensation, and making sales and marketing align more efficiently,” says Burlington. “That way, our salespeople and sales managers can spend time in the field generating revenue.”

The domain of sales ops varies on a company-by-company basis. John Hieb, worldwide sales operations manager at Maxim, says the position “was developed [at Maxim] strictly based on the needs of the VP of sales.” Hieb continues, “He considered my predecessor his right-hand man and wanted him to do audits and research. The position turned into a formal group when we started looking at CRM tools, and as we’ve taken on more responsibilities, largely tied to data and processes, the group has grown to fifteen people.”

Hieb sits on a lot of committees in order to “pull together the pieces.” He explains, “Let’s say we want to goal our people differently. I need to be there to confirm the system can do this. In the process of attending so many meetings, we develop an understanding about how each group works within itself and relates to each other.”

The Invisible Position

Sales operations managers may be known by many titles – director of field operations, operations analyst, director of sales ops, manager of global sales operations – and the people who hold these positions may have come to them in various ways. There is no direct career path to become a sales ops manager; we spoke to people who had moved from finance, sales, analysis, or marketing to take the role. Since, as Trailer says, “the sales ops manager has fingers in many pies,” it’s nearly impossible for one person to be an expert in all the areas of required knowledge. Most companies develop a sales operations team composed of people with various skills and backgrounds.

Sales ops can also be positioned anywhere. Hieb describes himself as working “fifty feet from the desk of the VP of sales and one hundred feet from the CEO” and says that 70 percent of his team is likewise at headquarters. Burlington, in contrast, lives in the same area as the team he supports, in his case the western team. Some sales ops teams are in constant motion, moving around the globe gathering data on the specific concerns and needs of each sales office.

One of the challenges of the position is that it often falls outside the classic corporate structure. In a small company, the sales ops manager may have other leadership roles within the team. In a larger company, it’s generally considered an adjunct position; the sales ops manager might be considered a peer of other managers or perhaps a support person. Either way, the fact that there’s no clear pecking order means that any directive coming out of sales ops needs to be delivered with tact.

“We don’t manage people, and we can’t bark out orders,” says Burlington. Usually, the sales ops team makes its suggestions to the VP of sales, who delivers as his or her own any decisions made on the basis of those suggestions. In this way, it’s a somewhat invisible position.

Tactical or Strategic Thinking?

While sales operations managers call themselves by many names and cover many functions, there’s one thing on which everyone agrees: The position is moving from a tactical focus to a strategic one.

Michael Gerard, program VP of IDC’s Sales Advisory Practice, says that “sales ops started as a team whose role was to put out fires wherever they erupted. In time, it’s become more strategic and proactive, with sales ops looking for ways to avoid problems before they arise.”

Trailer agrees that the sales ops manager is moving out of the “fire marshal role” and offers two examples of the sort of complex thinking the job now requires. “There’s always the question of whether or not a company is paying the right salary to the sales force,” he says. “You don’t want to drive people off by underpaying them or locking them into unrealistic quotas, but, at the other end of the spectrum, you don’t want to overpay or set the quotas too low. The sales ops team might look at the overall market, explore what part of it remains untapped, and on that basis decide what percentage of that market is realistic for the company to expect to capture. Then that figure is broken into revenue projections by regions and ultimately into individual goals for each salesperson. Fair quotas are based off of that.”

In an era when more meetings are virtual and with the sales force attending from hotel rooms, home offices, and cars, it may fall to sales ops to decide which technology could help the meetings run smoothly and what training the sales force might need to maximize that technology. “There are always some basic questions,” Trailer says. “Are we getting the most out of our people? If not, what do we need to do to help them produce more? The job of the sales ops team is not only to handle the problem that’s right there right now but to project ahead and strategically think what might be needed in the future – how not just to scrape by but to maximize potential.”

“The ultimate goal is to fend off distractions in the field,” says Burlington, “which means removing the obstacles that keep our salespeople from doing what they do best – getting in front of customers and closing sales. We look at the day in the life of a salesperson and ask ourselves how we maximize the amount of time salespeople spend in front of customers and minimize the amount of time they spend handling account issues. Our actions are aimed toward one strategic goal: streamlining the interruptions and reports, making it easier for our people to sell.”

The Future of Sales Ops

“Sales ops is going to grow in importance,” predicts Hieb, “as companies become more global. We need to get better systems and data and keep everyone focused around the same criteria. If you have three hundred or four hundred people in sales scattered around the world, sales managers will do what they believe to be the best thing locally, but it will be impossible to manage expectations globally. You can’t have America handling reservations one way and Korea doing something else.”

“The success of next-generation sales operations teams will depend upon establishing a center-of-excellence organization structure,” agrees Gerard. “A core group develops strategy around a central process – IT, lead management, pricing, sales enablement – and then rolls it out to the sales team all over the world. There may be small teams to help certain regions implement locally, but the point is that the center-of-excellence team develops best practices for the entire company and makes sure those practices are consistent.”

“The sales operations manager’s job is evolving just as sales is evolving,” says Trailer, “and especially as the role of technology in sales is evolving. We use the example of a pyramid to determine which customer activities can be handled by technology and which cannot. Think of how people used to go to a bank and interact with a teller in order to cash a check. Now everyone uses an ATM because we’ve learned that transactions that are rapid, repetitive, and routine are at the bottom of the pyramid and don’t need the human touch. A level up, you might need some human interaction, such as when we phone in to a call center. Finally, at the top of the pyramid are the collaborative activities – managing major accounts, bringing partners and services together – those complex and protracted interactions that must be done by humans and not computers.

“The sales ops manager decides which activities can be handled by technology and which cannot,” says Trailer, “which means he or she must understand the functions done at each level, how to track the transactions, and how each decision affects the cost of sales. In order to do this, he or she needs a bird’s-eye view of the operation as a whole. The sales operations manager of the future will have his or her hands full.”