111111
`
`1111111111111111111111111111111111111111111111111111111111111
`US007908304B2
`
`(12) United States Patent
`Chao et al.
`
`(10) Patent No.:
`(45) Date of Patent:
`
`US 7,908,304 B2
`Mar. 15,2011
`
`(54) METHOD AND SYSTEM FOR MANAGING
`DISTRIBUTOR INFORMATION
`
`(75)
`
`Inventors: David Chao, Austin, TX (US); Brian
`Blount, Austin, TX (US); Charles
`Erickson, Cedar Park, TX (US); Shari
`Gharavy, Austin, TX (US); Cheng
`Zhou, Austin, TX (US); Joshua Toub,
`Austin, TX (US)
`
`(73) Assignee: Versata Development Group, Inc.,
`Austin, TX (US)
`
`( *) Notice:
`
`Subject to any disclaimer, the term of this
`patent is extended or adjusted under 35
`U.S.c. 154(b) by 1198 days.
`
`(21) Appl. No.: 09/810,514
`
`(22) Filed:
`
`Mar. 15, 2001
`
`(65)
`
`(51)
`
`(52)
`(58)
`
`Prior Publication Data
`
`US 2002/0133383 Al
`
`Sep. 19,2002
`
`Int. Cl.
`(2006.01)
`G06F 17/30
`U.S. Cl. ............................. 707/945; 235/376; 70517
`Field of Classification Search ....... 707/9,999.001,
`707/999.009,923,930,944,945,950,999.945,
`707/999.93; 71111; 70517,10,26; 235/375,
`235/376
`See application file for complete search history.
`
`(56)
`
`References Cited
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`
`Primary Examiner - Andrew Joseph Rudy
`(74) Attorney, Agent, or Firm - Hamilton & Terrile, LLP;
`Kent B. Chambers
`
`ABSTRACT
`(57)
`An embodiment of the invention provides a system that
`enables financial services companies to manage and track
`information about a sales force. The system includes compo(cid:173)
`nents for managing distributors information, for validating
`and tracking licenses and credentials, for creating customized
`contracts, and for maintaining compensation structures. The
`system allows for configuring compensations, providing
`financial services companies a toolkit for creating and mod(cid:173)
`eling their complex commission schedules used to compen(cid:173)
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`backbone and multiple data sources. The processing modules
`carry out information processing using one or more data
`processing engines. The data processing provides the tools to
`fetch data from the databases and process it.
`
`46 Claims, 4 Drawing Sheets
`
`150
`
`Userlntetfaces
`
`--------130----------
`
`Ex. 1001 01/16
`
`

`

`US 7,908,304 B2
`Page 2
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`
`Ex. 1001 02/16
`
`

`

`US 7,908,304 B2
`Page 3
`
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`Trademark Office by Wheeler et a!.
`* cited by examiner
`
`Ex. 1001 03/16
`
`

`

`c---
`
`150
`~
`
`User Interfaces
`
`Figure 1
`- - - - - - - - - -
`
`110 \
`
`140
`
`Distributor
`Administration
`115
`
`Distributor Management System (OMS)
`, - - - - - - - - - " ,
`, ,..---------,
`License &
`Debt
`Appointments
`Management
`116
`118
`
`Selling Agreements ill
`
`Net Pay ill
`
`Commission
`Workbench
`113
`
`User
`Manager
`
`I
`
`Other
`Applications
`110
`
`L
`
`I
`
`•
`
`140
`
`I
`
`i
`:
`V-
`I
`:
`
`... - ------ -----------1
`,
`I
`,
`:
`
`,
`
`,
`i Reporting
`~ Engine
`!
`142
`:
`,
`i Commerce
`
`H' Configuration
`
`I
`I
`
`Engine
`:
`i
`144
`I i Process /
`Ll Workflow
`r:
`Engine
`i
`146
`I L ________________ _
`
`•
`
`I
`
`I
`
`•
`-.
`
`125
`
`Commission
`Engine
`
`Backbone
`
`120
`
`1
`
`I
`
`-
`D
`lstnbution
`Compensation
`Producer
`Data/Rules 132
`Data 133
`~
`
`/
`
`- - - - - -
`
`/ ~ ~ ~- ~
`
`I
`130---------------------------
`
`Process Rules
`136
`'-----= -----
`
`Report Data
`137
`"-----=-
`
`L-
`lcense
`Appointment
`Data 135
`
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`
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`
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`
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`
`\C = QO
`
`W = ~ = N
`
`Ex. 1001 04/16
`
`

`

`u.s. Patent
`
`Mar. 15,2011
`
`Sheet 2 of 4
`
`US 7,908,304 B2
`
`REQUEST PROCESSING FROM
`MODULE
`
`NO
`
`START ENGINE THROUGH BACKBONE
`
`ENGINE REQUEST DATA THROUGH
`BACKBONE
`
`BACKBONE FETCHES DATA FROM
`DATABASES
`
`ENGINE PROCESS DATA
`
`MODULE COMPLETES PROCESSING
`
`Figure 2
`
`220
`
`230
`
`240
`
`250
`
`260
`
`270
`
`280
`
`BACKBONE UPDATES DATABASES
`
`290
`
`Ex. 1001 05/16
`
`

`

`u.s. Patent
`
`Mar. 15,2011
`
`Sheet 3 of 4
`
`US 7,908,304 B2
`
`Figure 3
`
`Selling Agreements 117
`
`H
`
`, r
`
`Commission
`Workbench
`113
`-
`
`---
`
`.. ~
`
`1 r
`
`....
`....
`
`Commission
`Engine
`
`V 310
`
`I
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`I
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`I
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`
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`
`125
`
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`
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`
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`
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`
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`Data/Rules
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`
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`
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`Data
`
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`
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`
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`
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`Selling
`Agreement
`__ Data/Rules-,
`
`...
`.. JII'
`
`130
`
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`
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`
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`
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`
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`
`Ex. 1001 06/16
`
`

`

`426
`
`SERVER
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`
`INTERNET
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`
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`
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`
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`
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`
`417
`
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`
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`
`413
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`
`VIDEO
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`
`414
`
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`
`415
`
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`
`420
`
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`
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`
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`
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`
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`
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`
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`
`421
`
`411
`
`MOUSE
`
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`
`MASS
`STORAGE
`
`412
`V
`
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`400
`
`FIGURE 4
`
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`
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`
`423
`
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`
`SERVER
`
`d
`rJl
`-....l
`
`\c = QO
`
`W = ~ = N
`
`Ex. 1001 07/16
`
`

`

`US 7,908,304 B2
`
`1
`METHOD AND SYSTEM FOR MANAGING
`DISTRIBUTOR INFORMATION
`
`FIELD OF THE INVENTION
`
`This invention relates to the field of computer technology.
`More specifically, the invention relates to a method and sys(cid:173)
`tem for managing distributor information.
`Portions of the disclosure of this patent document contain
`material that is subject to copyright protection. The copyright
`owner has no objection to the facsimile reproduction by any(cid:173)
`one of the patent document or the patent disclosure as it
`appears in the Patent and Trademark Office file or records, but
`otherwise reserves all copyrights whatsoever.
`
`BACKGROUND
`
`Managing sales and distribution channels has become a
`difficult task in today's business enviroument where it is
`necessary to quickly and fairly administer incentives for 20
`salespeople and distribution channel partners while coping
`with regulatory issues. To keep revenues growing and keep up
`with customer demands, financial services providers have to
`move quickly even when regulation, competition and new
`sales distribution channels inhibit growth. Management is 25
`expected to provide new opportunities for improved revenues
`and margins, while providing customers with better, faster
`information and services.
`The distribution channel model within the financial ser(cid:173)
`vices industry is very complex. Products are sold across mul(cid:173)
`tiple distribution channels and the workforce is very fluid,
`with individual distributors working for multiple companies
`and engaging in multiple agreements with service providers.
`There are regulatory constraints on the sales force in that all
`distributors who sell products must be licensed and
`appointed, or authorized, to sell those products. Financial
`services companies must track all of this information about
`their sales force, maintain a history of all of this information,
`provide incentive based compensation to their sales force, and
`calculate their compensation based upon numerous variables.
`Consequently, any plan for distribution channel management
`must consider the number of channels, the number of dis(cid:173)
`tributors, compensation complexity, regulatory and licensing
`requirements and the number and types of products that will
`be sold.
`Financial service companies are being driven by increased
`competition to consider the use of independent agents in
`place of captive sales staff. Firms may wish to enhance and
`reward cross distribution channel interactions. They must be
`able to enhance distributor reporting and communication and
`effectively manage independent brokers and captive sales
`staff. They must reduce the time required to market new
`products and implement new compensation plans and differ(cid:173)
`entiate themselves based on services offered to customers. In
`addition, they must be able to rapidly integrate new distribu(cid:173)
`tion channel acquisitions and grow distribution capabilities,
`while reducing administration costs.
`Cost avoidance is essential as mergers and acquisitions
`have led to many disparate systems, some of which are anti(cid:173)
`quated. Firms must reduce implementation time for new 60
`products and compensation plans on these antiquated systems
`and reduce the potential for overpayment. The goal must be a
`reduction in the overall cost of administration. Accordingly,
`these companies must interact with the producers (of sales)
`using preferred methods and quickly model new and creative 65
`compensation plans, while consolidating compensation
`administration systems.
`
`2
`In order to provide sales representatives with an incentive
`to sell as much as possible, or to sell more of a desired product
`or products at certain prices, sales organizations create incen(cid:173)
`tive plans where commissions are provided or offered to the
`sales representatives when specific sales goals or targets are
`achieved during particular period of time. In addition, an
`incentive plan may apportion credit to everyone on a sales
`representative's sales team, to the representative's manager,
`or someone other than the sales representative himself. Sales
`10 representatives typically receive compensation based on a
`salary, the hours worked, and/or on the goods or services sold.
`When basing compensation on transactions, specifically on
`the goods or services sold, sales representatives receive a
`commission that can be based on profits, net sales, the number
`15 of products sold, or some other variable. Other primary com(cid:173)
`pensationincludes gross dealer concessions. Secondary com(cid:173)
`pensation includes expense allowances, persistency bonuses
`and overrides that can be allocated among sales teams and
`accumulated over time if desired.
`Sales compensation for direct and indirect channels can be
`one of the most effective levers for aligning sales perfor(cid:173)
`mance with business goals. Unfortunately, designing and
`administering effective incentive programs is a difficult man(cid:173)
`agement challenge. The management of a business can spend
`a great deal of time and money in developing incentive plans.
`In the prior art, the creation and distribution of incentive plans
`is a slow process that is prone to error. It can take months to
`implement a new compensation plan, and dependencies on
`computer software can frustrate sales managers who want to
`30 make even simple changes. Moreover, a lack of measurement
`tools can make it impossible to develop a "closed loop",
`continuous improvement process. Businesses must be able to
`design, process, and communicate sophisticated incentive
`programs that drive revenue growth across all sales channels.
`35 Businesses need to streamline the administration of quotas,
`territories, and commissions, and also require tools to mea(cid:173)
`sure and improve the effectiveness of incentive programs.
`This would greatly simplify the management challenge of
`aligning tactical business performance with strategic objec-
`40 tives, making it possible to react more quickly and effectively
`to changes in market and competitive conditions.
`Quotas are a necessary component of most sales compen(cid:173)
`sation plans, yet they are notoriously difficult to administer,
`especially when they involve multiple hierarchies. Not only is
`45 it easy to introduce problems like double counting and under(cid:173)
`or over-payment, but also changes typically require long turn(cid:173)
`around times while they are implemented by changes in com(cid:173)
`puter software. The management of sales quotas is difficult
`and there is a need to be able to manage them easily and
`50 accurately, allowing business users to assign quotas by terri(cid:173)
`tory or position and across multiple hierarchies. Managers
`also require a capability to accurately track sales results and
`forecast future performance. Needed elements include the
`ability to tie quotas between positions and sales teams or
`55 positions and territories, make sales projections, a provision
`for quick and easy quota setting and editing, and a simple
`interface for use from the field.
`Managing sales territories involves analyzing past results,
`assigning territories, and forecasting future sales perfor(cid:173)
`mance. For most organizations, it is a difficult and time(cid:173)
`consuming process with the result that it is commonly only
`undertaken once a year. Unfortunately, market conditions
`change continuously, making it practically impossible to keep
`sales territories aligned with business needs for more than a
`short period of time. A more automated process for territory
`management is needed to allow large sales organizations to
`keep up with the market.
`
`Ex. 1001 08/16
`
`

`

`US 7,908,304 B2
`
`3
`Another need of finns in financial services is an ability to
`manage sales producer payment accounts by defining mul(cid:173)
`tiple accounts per representative, setting up payment rules for
`each account and procedures for adjustments. Loan issuance
`against customer accounts must also be managed. Loan and
`repayment schedules, and appropriate records, must be main(cid:173)
`tained. As a part of this activity, it is necessary to track eligible
`compensation against parameters established for the loan and
`to be able to track collection of the loan and initiate charge(cid:173)
`back and from the producer if appropriate.
`In the area of distributor administration, finns also would
`like to manage a shared repository for all producer infonna(cid:173)
`tion, including personal infonnation, professional infonna(cid:173)
`tion and preferences. There is a need to provide a view of the
`roles played by individuals with an organization, and active 15
`selling agreements and reporting relationships. Finns would
`like a centralized distributor repository in order to be able to
`view, report and compensate producer relationships individu(cid:173)
`ally and holistically. In addition, they must reduce errors or
`miscalculations leading to overpayment. At the same time, 20
`these firms must assist new agent distribution chaunels in
`learning how to sell new types of products and create new
`distribution capabilities for existing products.
`Credential management is a critical issue for many finns.
`They must
`track professional accreditation
`including 25
`licenses, appointments, National Association of Securities
`Dealers (NASD) registration and continuing education
`requirements for the maintenance of these professional
`accreditations to ensure that they are represented by appro(cid:173)
`priately credentialed representatives. This need is made more 30
`acute by constantly changing government rules and regula(cid:173)
`tions, as well as by different regulations imposed by the
`different jurisdictions in which a firm operates. Finns must
`determine when renewal processing is required and manage
`new and renewal application processes to ensure regulatory 35
`compliance in every jurisdiction. A further problem is pre(cid:173)
`sented by representatives who may move from jurisdiction to
`jurisdiction in the course of their representation of a firm.
`Further, there is substantial turnover in representation result(cid:173)
`ing in a continuing need to ascertain the credentials of new 40
`representatives as well as to maintain contact with fonner
`representatives in the event that issues arise from their fonner
`representation.
`In order to appropriately manage their representatives,
`finns must also be able to create customized contracts and 45
`selling agreements by combining reusable compensation
`components and personalizing agreement templates to fit
`individual producers. A selling contract defines a hierarchy of
`sales people that can sell products under that contract and it
`defines what products can be sold under that agreement. The 50
`selling contract also specifies commission schedules and
`identifies which sales people participate under a particular
`commission schedule. As multiple versions of such agree(cid:173)
`ments may come into use over time, a procedure is needed to
`allow multiple users to maintain agreements through version- 55
`ing, or version control, and a method must be provided to
`manage the approval process for agreement components and
`templates.
`Any distribution management channel solution, in order to
`be useful, must have a capability for error correction, includ- 60
`ing manually inputting and adjusting all transaction infonna(cid:173)
`tion, making retroactive adjustments and viewing and man(cid:173)
`aging ledger items. Other features that are desirable include
`the ability to cancel and rerun transactions.
`Many financial services firms would like to be able to
`communicate distribution channel management infonnation
`over the Internet so that producers can view the state of their
`
`4
`relationship with a firm, including profile information,
`licenses, appointments, product information, contract and
`compensation infonnation. Finns would also like to be able to
`perfonn modeling and "what if' analysis and have the ability
`to capture historical data to make strategic decisions about the
`effectiveness of future plans. A set of Web-based incentive
`management products that can be deployed to practically any
`sales or distribution channel would be useful. Such tools
`could greatly simplify the burden of designing, forecasting,
`10 launching, measuring, and refining incentives programs.
`Computer software is necessary to implement the solution
`to these problems and fulfill the perceived needs just
`described. Such software commonly utilizes multiple related
`functions and data structures. To encapsulate these related
`functions and data structures, the software often utilizes a
`standard object oriented programming (OOP) language
`approach.
`In conclusion, there is a need for a solution, implemented
`on a computer in an object oriented programming environ(cid:173)
`ment, that manages the contracts between the manufacturers
`of a product, which may include financial services, and the
`distributors of their product in an industry where there is
`multiple channel selling, a fluid workforce, and regulatory
`constraints. This solution should track infonnation, such as
`contact points, payment methods, and the organizational hier-
`archies, on all parties in the system. It must manage regula(cid:173)
`tory information and ensure that distributors are licensed and
`appointed to sell the products manufactured, or distributed,
`by the provider. In addition, the solution must allow for com(cid:173)
`pensation configuration and provide financial services com-
`panies with a toolkit for creating and modeling their complex
`commission schedules used to compensate their sales forces.
`This should include a provision for charge-back of commis(cid:173)
`sions if appropriate. Also, the solution must model contracts
`between the financial services company, or provider, and the
`distributors who sell the products. The solution must calcu(cid:173)
`late compensation for all distributors and should allow for
`access through the Internet.
`
`SUMMARY OF THE INVENTION
`
`The invention provides a method and system for managing
`contracts between manufactures of a product and the distribu(cid:173)
`tors of their product in an industry comprising multiple chan(cid:173)
`nel selling, a fluid workforce, and regulatory constraints. An
`embodiment of the invention provides a system that enables
`financial services companies to track infonnation about their
`sales force, maintain a history of all of the infonnation, pro(cid:173)
`vide incentive based compensation to their sales force, and
`calculate their compensation based upon numerous variables.
`The system referred to hereinafter as Distributor Manage(cid:173)
`ment System Suite (DMSS) comprises a suite of applications
`that provide tracking information, such as contact points,
`payment methods, and organizational hierarchies on all par(cid:173)
`ties in the system, managing regulatory infonnation and
`ensuring that distributors are licensed and appointed to sell
`the products manufactured by the provider. The DMSS pro(cid:173)
`vides financial services institutions with the means to main(cid:173)
`tain distributor records, contracts, and commissions. The
`DMSS includes components for managing infonnation
`related to distributors, validating and tracking licenses, cre(cid:173)
`ating customized contracts, and maintaining compensation
`structures. The infonnation stored in the DMSS database
`65 includes contract components and rules, distributor financial
`information, bonus schedules, and license and appointment
`data.
`
`Ex. 1001 09/16
`
`

`

`US 7,908,304 B2
`
`5
`In an embodiment of the invention, the DMSS allows for
`configuring compensations, providing financial services
`companies a toolkit for creating and modeling their complex
`commission schedules used to compensate their sales force.
`The DMSS provides modeling capabilities for agreements
`and contracts between a financial services company or pro(cid:173)
`vider and the distributors who sell products. In an embodi(cid:173)
`ment of the invention, the DMSS calculates compensations
`for all distributors, processes payment and manages dept.
`In an embodiment of the invention, the DMSS comprises
`several components comprising management modules, a
`backbone, one or more data processing engines, databases,
`and storage management components. The backbone allows
`for data exchange between components of the DMSS com(cid:173)
`prising module-to-engine and engine-to-database data
`exchange.
`In an embodiment of the invention, the DMSS comprises
`data processing engines. These system components are
`designed to draw infonnation from the DMSS databases,
`process the information, and store the result in a database for
`further use by the DMSS modules and engines.
`In an embodiment of the invention, the DMSS is composed
`of several modules comprising a dist