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Top-Down and Bottom-Up Quota Setting Methodologies in SAP Territory and Quota

3 min read


SAP Territory and Quota (T&Q) allows users to distribute quotas through their organization's territory hierarchy.  A quota setting methodology determines how this process plays out.  In creating a new territory program within T&Q, users can decide to distribute through either a Top-Down or Bottom-up methodology.


Table of Contents



Top-Down

The top-down method is recommended for organizations that already have a growth target and want to find the optimal way to achieve it.  In this method, a single quota for the organization is set for the root of the territory hierarchy.  This quota can then be allocated in a number of ways between the territories directly below the root territory.  Those territories in turn divide up their number to their child territories until the root territory's quota is divided up among the organization.  SAP T&Q can optionally assist with the quota allocation by recommending values based on the strength of each child territory, thus allowing for a quota best-fit.  This reduces turnover by keeping goals achievable while still meeting company goals.


Bottom-Up

The bottom-up method starts with leaf-level territories.  SAP T&Q generates quota values based on each leaf territory's historical strength and a target growth percent.  Quota values can then be adjusted with attrition relief buffers and uncharacteristically large transactions in a territory's history can be excluded to get a fairer quota value.  Values are then rolled up through the territory hierarchy to parent territories.  Workflows can be added to this process so that quotas are submitted to parent territories for approval.






Conclusion

This article introduced you to the functionality and purposes of the Top-Down and Bottom-Up quota methodologies. Which one best suits your organization?

The video below will help you dive deeper on allocating quotas within SAP T&Q:


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