Upcoming Webinar: The Business Case for On-Demand Sales Performance Management Analytics

The Business Case for On-Demand Sales Performance Management Analytics with Xactly and THINKStrategies

Tuesday, July 29, 2008 10:00 AM - 11:00 AM PDT

Register to learn more:
https://www1.gotomeeting.com/register/415893690

CRM applications have revolutionized the selling process, organizing pre-sales data that reps and management need to manage the sales pipeline. But what about “post-sales” data? There is a ton of information produced at the time of sale that is effectively orphaned—information on what a customer actually bought, the final price, the commission paid, the territory where it was sold, etc. This is data that, if collected and cleansed, can be used to increase sales performance and maximize profits going forward.

In this Webinar, Xactly’s Karen Steele and THINKStrategies’ Jeff Kaplan will discuss how post-sales analytics can provide new and strategic insight into an organization’s selling patterns, commission spend, product performance, sales rep and team performance, and sales plan effectiveness. They will examine how post-sales data—traditionally scattered across a variety of disparate systems including ERP, HR, and Payroll—can be now be integrated and analyzed with an eye towards enhancing business strategies, changing sales rep behaviors, and super-charging sales organizations.

Participants will take away:

• Best practices for integrating and analyzing post-sales data to optimize sales performance.
• An understanding of how post-sales data can be leveraged daily by reps within their CRM applications to maximize profits – for the company and for themselves.
• A view of the broad scope of business processes that benefit from post-sales analytics – from sales compensation management to territory and quota management to pricing management and sales forecasting/planning.

Speakers:

Karen Steele, Vice President of Marketing, Xactly Corporation
Karen Steele is responsible for managing all aspects of Xactly's worldwide marketing.

Jeff Kaplan, Managing Director, THINKstrategies
Jeff Kaplan is the founder and managing director of THINKstrategies (www.thinkstrategies.com), a strategic consulting firm that helps IT enterprise decision-makers with their sourcing strategies; solution providers with their marketing strategies; and venture firms with their investment strategies.

Register to learn more:
https://www1.gotomeeting.com/register/415893690

Podcast - Common SaaS Misconceptions

Everyone says different things about SaaS, with disagreements going down to the basic definition of what qualifies software as a service. Christopher Cabrera recently spoke with Krissi Danielsson at ebizQ about common SaaS misconceptions. Listen to the podcast below, or read the transcript.

Download file

Customers Take the Wheel

It’s no secret there’s a sea change occurring in enterprise software, as “on-premise” increasingly gives way to “on-demand.” What’s not so evident yet is the shift in power from the vendor to the customer that is occurring as a result of the on-demand revolution. In a recent article posted on ebizQ, I discuss how the growing popularity of on-demand SaaS applications will lead to a more customer-centric and responsive software industry. This is because in the on-demand world, the customer is firmly in the driver’s seat and can pull the plug on the vendor at any time. As opposed to on-premise software implementations, on-demand implementations have no expensive infrastructures and no sunk costs that lock customers in and limit their flexibility to make a change.

Nevertheless, customers need to step warily. As more and more large enterprise software companies test out the SaaS waters with initial on-demand offerings, there’s no guarantee they will support their on-demand customers properly. After decades of locking customers into expensive on-premise software and subjecting them to lengthy implementation cycles and costly upgrades, who’s to say these companies can suddenly and successfully shift gears and become paragons of customer care?

Then there are those vendors who are trying to cash in on the on-demand cachet by offering “hosted on-demand” applications that are really just the same old on-premise applications running remotely, and which have few of the advantages of a genuine on-demand application built on a multi-tenant SaaS model. There are some rude shocks just around the corner for the customers of these guys, who by blurring the truth are setting themselves up to disappoint their clientele.

So as you slide into the driver’s seat and take the wheel in the brave new on-demand world, how do you make sure you’re not going to be fooled and are indeed going to get all the value that you expect? In the ebizQ article, I posit a brief checklist to help customers navigate the maze of on-demand claims and promises. Like any good driver, you’ll want to run down such a list before turning the key. Check out the full article here, and let me know what you think: www.ebizq.net/topics/bpm/features/8567.html

Buyer Beware: “Hosted On-Demand” Is No More Than a Wolf in Sheep’s Clothing

Reeling from tight IT budgets and the consequent popularity of new software-as-a-service (SaaS) offerings, many enterprise software vendors are casting around for ways to dress up their own offerings and perhaps cash in on the cachet of SaaS and on-demand delivery. What several have come up with is the “hosted on-demand” label, which in reality is nothing more than draping the tired old enterprise software wolf in ill-fitting sheep’s clothing. As I’ve said before, enterprise software by any name, hosted or otherwise, is not a substitute for true on-demand. Software vendors taking this re-labeling route are doing a colossal disservice to customers, whether those customers buy into the name game or not.

So, what does “hosted on-demand” have to offer? Disappointments, mostly. What these vendors are doing is simply providing the same old premise-based software in a hosted environment, coupled with a seemingly substantial—but not nearly substantial enough—price break. And under the fleece is the same old ravening wolf. Hosted or not, these are still expensive solutions to implement, and shaving 30 percent or even 40 percent off the typically enormous up-front implementation cost doesn’t change that fact—and there’s still the monthly fees for accessing the hosted software to contend with. These are also typically complicated and inflexible solutions and just because they are now off-premise doesn’t necessarily change that fact.

What may well change, however, is a customer’s support priority. With two models to support—on-premise and hosted—there’s an almost invariable dilution of resources. Which customers do you think a traditional enterprise software company is most likely to make its top priority? And for that matter, what about new functionality, version control, reliability and scalability? On-premise and “hosted on-demand” implementations are identical in that each customer is a discrete box, or technology platform—it’s just that in a hosted implementation, that box has been moved off-site. But with a true on-demand solution, all customers share the exact-same platform. Just as they all share the same low cost-base, they all benefit equally from more rapid introduction of new functionality as well as from identically robust version control, data security, disaster recovery and scalability. In numbers, there is strength.

So buyer beware. Don’t be misled by labels. If you want on-demand, go with pure on-demand solutions, 100 percent purpose built to deliver the full benefits of SaaS. Avoid the nasty shock of being fleeced, and let the wolves go howl.

SaaS IPO Tipping Point?

Could the NetSuite IPO be the beacon for a sea of change between Software as a Service companies and Wall Street? Are the days of trepidation for the SaaS business model, security and viability waning?

As I watch the revenue and sheer number of customers for on-demand companies like Salary.com, DemandTec and NetSuite amass—I say yes. All three companies are demonstrating to the market the benefits of this efficient and cost-effective model and calling Wall Street to attention.

Sure, a lot of companies are founded on a pure SaaS model, but relatively few have reached the public markets successfully. Why is this? It’s because many people are still struggling to understand the SaaS model and failing to truly grasp the fundamental differences between SaaS-based and on-premise software offerings. Investors can't look at SaaS companies through the same lenses they have used for years with traditional enterprise software companies. When I talk to investors, I tell them to focus on two main differences: customer renewal and the revenue dynamic.

First, recognize that SaaS companies are built from the ground up around customer satisfaction and customer renewal. To survive, they must earn the customer’s complete satisfaction every year, and often, every month. This focus is very different from traditional software companies whose first priority is to get to the next million dollar license deal in order to keep Wall Street happy, and whose second priority is to have these customers pay expensive ongoing maintenance and upgrade fees.

The second major difference: because there is no million dollar license fee, the revenue trails traditional software companies. This is actually great for investors because revenue SaaS companies earn is not an artifact from a relatively few very large deals, it comes from hundreds and hundreds of happy customers. This revenue dynamic is also the reason SaaS companies are so attractive and so much more predictable to Wall Street.

Because of the business model differences, it takes a little longer for SaaS vendors to ramp to the revenues that will justify an IPO, but—have no doubt—they are getting there fast. Salary.com, DemandTec and Netsuite are proving that it can be done and are helping to move the SaaS IPO market forward.

From a customer perspective, why SaaS and why now? SaaS offers customers an undisputable value and time to market advantage over traditional enterprise models, including no hardware, no maintenance fees, minimal implementation fees and, most importantly, no software upgrades. This means new features are available to customers instantaneously, as soon as they are live, saving customers from expensive upgrade costs while ensuring they’ll never trail behind on older releases of software.

SaaS is also breathing new life into technologies that were too expensive for the masses in a traditional enterprise model. The fast growing Sales Performance Management market is living proof. Founded on a pure on-demand or SaaS model, Xactly Corporation has quickly amassed more than 70 customers including Salesforce.com, CNet and Polycom—all of whom are now utilizing an on-demand Sales Performance Management platform to create a strategic competitive advantage within their businesses.

For companies like Xactly and investors in the market, the SaaS IPO tipping point may very well be here, and I think it’s about time.

Twin Drivers of Sales Performance: CRM and Sales Compensation Management

Xactly was talking to the CFO at a large financial services company last week who felt that sales and finance were too often disconnected from each other. Consequently, he is working with the vice president of sales to identify a tag-team of cornerstone sales performance management applications: one to capture data leading up to client transactions, the other to record all that happens after the fact. “Pre-sales and post-sales data are two sides of the same coin,” said the CFO.

We’ve talked before in this space about the value of centralizing post-sales data in an on-demand sales compensation management system. Sales and finance executives know that smart decisions are made when key business data is available in a centralized and secure environment.

Likewise, on-demand customer relationship management (CRM) systems are a natural home for pre-sales data. Together, on-demand sales compensation management and on-demand CRM are the twin pillars of sales performance management, an emerging category of software that market research firm Ventana Research estimates will reach $13.5 billion by 2010.

Ventana Research CEO and executive vice president of research Mark Smith has said: "Sales compensation management, under the umbrella of sales performance management, has stepped to the forefront in many organizations. Customers recognize that automating and integrating the business processes between sales and finance can have a significant impact on sales productivity, motivation and efficiency while increasing revenues and profits."

This brings us back to the story of the financial services CFO, a sub-plot of which was his insistence that his on-demand CRM and on-demand sales compensation management applications work together seamlessly to effect this business process integration and help drive optimal sales performance. Xactly gets this. Recently, we announced a partnership with Oracle’s Siebel CRM On Demand, and Xactly is already tightly integrated with on-demand CRM solutions from salesforce.com and RightNow Technologies. Significantly, salesforce.com and RightNow Technologies are also Xactly customers.

These deals speak volumes about Xactly’s commitment to delivering a complete solution to customers. They also say a lot about which on-demand sales compensation management solution the on-demand CRM leaders believe is the best. Unlike its competitors, Xactly is intent on helping companies protect and extend the value of their CRM investments. And on-demand CRM vendors are placing their bets and checkbooks accordingly.

Why SAS 70 Certification Matters at Both the Data Center and the Application

Automating key business processes may not be the first thing companies are thinking of when evaluating their compliance initiatives, but certainly the two go hand-in-hand. According to a recent study by AMR Research, 42 percent of respondents reported that streamlining business processes is a primary benefit of good governance, risk management and compliance practices.

Sarbanes-Oxley (SOX) legislation has forced companies to implement greater internal controls. Given the importance of this issue, shouldn’t technology vendors be required to deliver solutions that meet the highest professional standards for ensuring internal controls?

Xactly thinks so. We have had Type II SAS 70 certification at our data center for some time and have extended this leadership position when we announced this week that Xactly Incent successfully completed a Type I SAS 70 audit. By way of this achievement, Xactly Incent is the first independently validated SAS 70 on-demand sales compensation management application hosted in a SAS 70 Type II certified facility underscoring Xactly’s commitment to providing customers maximum assurances with regard to compliance with Sarbanes-Oxley (SOX) regulations and concerns over outsourced controls. SAS 70 refers to the American Institute of Certified Public Accountants Statement on Auditing Standard (SAS) No. 70 that defines the standards used by an auditor to assess the internal controls of a service organization.

But what’s important is not that Xactly is the only on-demand sales compensation management company that can claim its application and hosting facility are both SAS 70 certified. The critical point is that now companies can get automation and security without paying exorbitant enterprise software prices. The long-standing enterprise software company criticism that on-demand solutions are not secure is no longer viable.

Simply put, SOX is too important to be taken lightly. Companies can hold vendors accountable by engaging only those whose applications and hosting facilities have been certified SAS 70 compliant.

Once again, Xactly has raised the bar by putting in place the most rigorous controls.

Post-Sales Data at the Center of the Ultimate Sales Performance Management Experience

Delivering a world-class customer experience is a goal for any forward-looking organization. In Xactly’s case, the focus is on providing customers with the ultimate sales performance management experience, a result we can deliver by providing companies the means to aggregate, cleanse, centralize and analyze post-sales data on-demand.

Last week Xactly announced its product roadmap for the next 18 months. The big picture is that over the coming months, Xactly will deliver the most comprehensive array of on-demand sales performance management solutions from a single vendor. Available now is Xactly Incent 3.2, a Web-based incentive compensation application that enables medium-size enterprises in any industry to improve sales effectiveness and maximize profits. A new, complementary module for Xactly Incent, Xactly Modeling™, empowers finance and sales to determine the impact of commissions expense forecast, organization plan and compensation plan changes in advance of implementing them. And to provide greater options for seamless connectivity, we have made available an open set of APIs called Xactly Connect™. These recent additions round out the Xactly product family including Xactly Data Management™ and Xactly Analytics™ announced last year. And coming soon is Xactly Rewards™, a non-cash incentive capability to augment your cash incentive programs as well as Xactly Territory ™, Xactly Quota ™, Xactly Forecast/Planning ™ and Xactly Price Management™.

But the meat of the news from Xactly last week addresses the critical need companies have to automate sales and finance business processes in and around sales performance management, and to create an on-demand repository for this data that is centralized, secure and hosted.

Fortunately for customers, Xactly gets this. Xactly’s vision is to help companies leverage this business data to automate mission critical business processes that comprise sales performance management to help companies improve operational performance and maximize profits. By aggregating data from a variety of disparate systems and feeding it to the Xactly Incent sales compensation management application, customers gain a one-stop shop for all sales performance-related data. Coupled with the Xactly Analytics module, customers can slice-and-dice data to determine what products were sold, to whom, through which channels, and at what price. The result is the most accurate reflection of what’s going on in the field a company can have. Let’s take a look at an example: Imagine that you are a hardware vendor and you have just sold a million dollar deal to IBM. IBM is located on the East coast, so it is booked on the East, but it was the West coast team that closed the deal. The process of calculating compensation takes into account all of these dynamics and scrubs the data so you have the clearest possible picture of what was sold in which geography, transaction by transaction. This means that after the compensation process, you truly have the richest and most accurate data in your company.

At the center of any company’s sales performance management strategy is the business data which includes what products have been sold to whom, through which channels, in which geographies and at what price points. Xactly Corporation is uniquely suited to automate several key business processes for finance and sales that leverage this business data including quota and territory management, price management and forecast/planning in addition to the capabilities it offers today

In the above diagram, the inner circle illustrates Xactly's core focus for delivering on-demand sales performance management, while the outer ring represents Xactly's ecosystem of partner strategies whose solutions are synergistic to Xactly Incent. Through such strategies, Xactly is able to provide greater value to customers and partners.

The complete line of Xactly sales performance management solutions have all the rich features you’d expect, and then some. We know customers require greater automation of business processes that enable sales and finance to increase productivity and profits. Our holistic approach is focused on helping companies significantly improve performance by optimizing the effectiveness of selling channels, impacting a business’s bottom-line, and managing risk and compliance.

We also get that customers aren’t interested in patching together point solutions from multiple vendors. Can you imagine buying your car’s engine from one dealer, the frame from another, wheels from a third, and so on? Of course not. Going forward, customers can buy with confidence today knowing that Xactly will deliver the industry’s most comprehensive and integrated on-demand sales performance management suite.

Xactly remains the only sales compensation and sales performance management vendor to offer a 100 percent multi-tenant on-demand architecture, which ensures customers will experience a low total cost of ownership, seamless product upgrades and first-class security.

Customers are truly excited about these innovations. They want their business operations to hum, and Xactly, with its focus on providing a hosted, secure and centralized repository for post-sales data, is uniquely capable of making the ultimate sales performance management dream a reality and the experience world-class.

Get Connected, Or Else

In the news this week was a report of yet another business being investigated for back-dating stock options for executives. This company is not the first and surely won’t be the last to have the authenticity of its business data tested in a public forum. Each time it happens I am reminded of the importance of data accuracy and consistency, not to mention personal accountability.

In my experience, I’ve seen firsthand what happens when the various functional areas of a company are not on the same page. More than one product launch has been torpedoed because sales was selling a product that marketing had marketed but which was not quite completed according to the engineering team.

On a larger scale, businesses are sunk every day because members of the executive team are aware only of information from their particular business silos. Rather than being connected, data is treated as if it exists in a vacuum, removed from and not at all dependent upon data from other departments in the organization. Frequently, this issue leads to problems that effect a company’s balance sheet. Too often, the results are more serious, including jail time for certain individuals.

To avoid this, businesses need to take a close look at the process by which they share data across the organization. Take, for example, the critical issue of sales performance management. For many companies, there is no greater need than to ensure sales is meeting its goals and objectives. But what happens when sales data is disconnected from finance, and vice versa?

Consider the consequences of this vignette: At an executive management meeting, the vice president of sales shares data regarding the number of deals the company closed in a given quarter. Everyone is excited because the sales team met its number. That is until the CFO lets it be known that the cost of providing commissions to the sales representatives, combined with the cost of the programs implemented by marketing to drive sales activity, is greater than the total revenue created by the sale of the products. If sales, marketing and finance had been on the same page with respect to each group’s numbers, this situation could easily have been avoided.

The goal of sales performance management applications, like Xactly Incent, is to centralize key sales-related data in a common repository. When all data is in a common location, data analysis and reporting is easier and more effective. Until recently, there was no easy way to connect “islands of information” for sales performance management purposes. But that has changed with the availability of Xactly Connect, the world’s first on-demand incentive compensation management integration platform that connects any system to Xactly web services APIs, resulting in transparent integration to the user.

The point of the story is, when one business hand knows what the other is doing, the chances of success are much greater. Every employee, across departments, as well as business partners, can participate in a seamless business process that puts information in the hands of people when they need it most. The challenge is getting on the same page; the answer is to get connected.

Modeling Requirements: What to Look for and Why

Compensation modeling is an important component of the sales compensation profession, affecting everyone in the industry, from individual sales persons to CFOs. There are many schools of thought as to how to approach this problem. Historically, automated solutions have only provided a point solution for one aspect of the modeling challenge. Until today. Xactly Modeling provides a fully integrated and fully functional modeling environment to leverage all critical requirements for the finance and sales professionals.

What We Have Learned

Leveraging our extensive domain expertise, Xactly has identified several key capabilities to effectively automate sales compensation management modeling. These should be considered as requirements in any evaluation of an sales compensation management vendor. Any vendor not able to adequately support the requirements below will not be able to meet all of the day-to-day scenarios needed to safely test, validate, and promote your business strategies into daily practice.

• Plan Modeling
  
  • Micro level (per payee)
    
  • Macro level (for organization or channel)
• Forecast Expense Modeling
• Organizational Modeling
• Bi-directional Support
• Separate Sandboxes for Production and ModelingSaaS Multi-tenant Provider

What to Look for and Why

Requirement 1: Plan Modeling
This requirement stipulates that users be able to create or modify any plan element for modeling purposes. This includes the ability to create a full plan from scratch or model individual elements such as rates, quotas, SPIFs, and more. Actual production plans and ‘proposed’ plans should be supported. Plan changes impact compensation in a non-linear fashion. This is where all vendors have traditionally focused although not all vendors support both micro and macro modeling.

Ask These Questions:

• Does the vendor support easy manipulation of plan elements to model the needed compensation design?
• Do they support micro modeling? Per payee?
• Do they support macro modeling? Full organization reviewable in total?

Xactly can.

Requirement 2: Forecast Expense Modeling
This requirement stipulates that both production data and forecast data are available to use as data sources to produce commission expense forecasts. Forecast data enables the user to produce modeled expense forecasts for future periods, which is supported by some vendors.

Ask These Questions:

• Can my actual data be easily made available for modeling while not impacting my production processing?
• Can modeling be run independent of and concurrent to production in case I need to perform a live calculation?
• Is modeled data separate from production data? (See Requirement 6 for impact.)

Xactly supports forecast expense modeling in all of these ways.

Requirement 3: Organizational Modeling
This requirement stipulates that a modeling solution must support any organizational structure, current or forecasted, for use in modeling scenarios. Organizational modeling is the most common requirement missed by sales compensation management vendors. You need organizational modeling to view historical data or forecasted data against actual or proposed deployment strategies. As new partner channels, products, or support overlays are needed, organizational modeling provides an accurate picture as to what you can expect. Organizational changes impact compensation in a non-linear fashion.

If a vendor does not support full organizational modeling, they cannot support all of your daily needs for designing a successful strategy.

Organizational modeling allows you to:

• Use actual payees
• Test results against your actual organization
• Simultaneously test results against a new organization with:
  
  • Modified positions
    
  • Additional headcount
    
  • Reduced headcount
    
  • New team assignmentsAltered overlay or support assignments

Ask This Question:
Does the vendor support full organizational modeling for each point above?

Xactly supports organization modeling—fully.

Requirement 4: Separate Sandbox Environments
This requirement stipulates that the production environment must not be co-mingled with the modeling environment. The Xactly leadership learned over our tenure in the sales compensation management space that customers with only one production environment are reluctant to “play” with creative rule designs due to a fear of impacting actual results. This prevents the customers from being fully self-sufficient. Our sandbox approach means that you can experiment with the application as much as you want and not worry about deleting, changing or damaging anything. If by some chance you do, you have a secure source from which to restore your model back to any state. Our sandbox approach is the best way you can be fully confident in using an application; you can use it any way you want, every day, and not worry about making a mistake. You can’t do this if your modeling is co-mingled with your production environment.

A separate sandbox approach promotes:

• User adoption
• Ongoing user training
• No performance impact on production
• No co-mingling of actual data with modeled data
• Secure promotion of modified plans
• Archiving of approved plans, promotions or organizationsUnique access for alternate users that are restricted from accessing the live environment

Ask This Question:
Can your sales compensation management vendor support each of the above-mentioned scenarios?

Xactly can.

Requirement 5: Bi-Directional Data Support
This requirement stipulates that the production data can be easily sourced to a secure modeling environment. This is not a simple copy-and-paste (See Requirement 4). Bi-directional data movement allows users to quickly deploy modeling scenarios and promote approved changes back into production in a secure manner.

Ask This Question:
Does the vendor’s data model support these criteria for modeling?

• Bi-directional data movement
  
  • Aggregated objects
    
  • Individual objects (single rule, etc.)
• Role security on data movement
• Intuitive user interface for any business user
• Protection from performance impact

Xactly can support all of these criteria.

Requirement 6: SaaS Multi-tenant Provider
This requirement is at the core of the Xactly design philosophy. The requirement states that in order to fully leverage the highest ROI and lowest TCO, a full multi-tenant SaaS provider is preferred.

Ask This Question:
Does your vendor support both multi-tenant database and multi-tenant application SaaS as a delivery model?

Xactly can.

Why Multi-Tenant On-Demand Software is Good for the Customer

I was driving to work the other day when a radio ad caused me to do a double-take. The product pitchman was pushing an HD radio service. Having just updated the televisions in my house, I know that “HD” is a term typically used to describe picture – not audio – quality. Sure enough, a quick Internet search clued me into the fact that HD radio stands for “hybrid digital” radio, which has nothing at all to do with high-definition television.

On the one hand, I give credit to the HD radio product vendor for its innovative marketing technique. Certainly there is logic to leveraging a hot industry acronym as a means to drawing-in customers. On the other hand, I wonder what impact the tactic has on customers, who are persuaded to buy based on a misleading and misbranded pitch.

The experience reminds me of the on-demand software model. Legacy software vendors everywhere are telling anyone who will listen about their new “on-demand” strategy. Clearly, the term means different things to different people. Unfortunately, only one definition of on-demand software – one that includes a multi-tenant architecture – returns the value that customers expect when they choose to go on-demand.

Legacy software vendors prey on customer confusion regarding on-demand software. Like the HD radio vendor, traditional software companies have a lot to gain by tying themselves to a hot industry catch-phrase such as on-demand. Rather than continue to debate this issue, I think it’s more valuable to address the questions I hear most frequently from customers: “Why do I care whether your application is on-demand?” and “Why is a multi-tenant architecture good for me?”

Believe it or not, the answers are surprisingly straightforward. Customers should care whether or not a software application is on-demand because what is good for me, the vendor, is ultimately good for you. If we can support a single line of code and maintain only a single version of the software, we can focus our engineering talent on bringing new functionality and improvements to you. If we employ a true multi-tenant architecture, we can deploy seamless upgrades on a large scale whether we have 100 customers or 10,000 customers.

By contrast, legacy software vendors whose “on-demand” applications are lacking a multi-tenant architecture simply can not offer the same value to a customer. Just imagine what happens when the vendor has to upgrade 10,000 customers, all with unique application schemas. How many engineers does the vendor have to employ to manage that process? What do you, the customer, have to give up since these staff resources can not work on new features and enhancements? It only gets worse when the vendor has to make a data schema change in a future release.

Clearly there is an important distinction between on-demand software that is multi-tenant and that which is not, just as there is a difference between HD radio and HD television. That’s why my guidance to customers is, ask a vendor before you buy whether or not they have a multi-tenant application architecture.

Creating SaaS Partner Ecosystems

Xactly Corporation and RightNow Technologies have more in common than a great name, but who are we to disagree to the smart folks at CRMchump.com. Much more than a marriage of convenience, Xactly and RightNow share a singular vision of the software landscape as it relates to the needs of mid-sized businesses. That is, customers win when like-minded software companies work together.

It is for this reason that Xactly is expending considerable resources to expand the scope of its partner program. Xactly is the most tightly integrated sales compensation management solution with salesforce.com and has set its sights on creating a Software-as-a-Service (SaaS) partner ecosystem that enhances the value of customer investments in these solutions. For further information on Xactly partners and its Partner Program, visit the Partners section of the Xactly web site.

Xactly understands that customers are laser-focused on deploying on-demand solutions from adjacent and naturally synergistic application areas. That's why you see Xactly partnering with CRM vendors Oracle and RightNow in addition to salesforce.com. CRM and sales compensation management are two critical components of sales performance management and customers are insisting these solutions integrate seamlessly. Likewise, Xactly has partnered with on-demand talent management vendor SuccessFactors to unite the Xactly compensation management solution for sales staff with the SuccessFactors compensation system for the general employee population. Meanwhile, users of financial software appreciate Xactly's ability to interface with on-demand software leader Intacct, while other customers plan on leveraging Xactly's partnership with Expensewatch.com for expense management and Right90 for sales planning.

Establishing a SaaS partner ecosystem centered around sales performance management – Xactly's mission for its partner program - is not a cliché. Sales is the lifeblood of any company, and ensuring sales effectiveness is paramount to staying competitive. Unfortunately, business processes to automate sales performance management historically have been non-existent, broken, or islands of disconnected point solutions. Through its network of SaaS partner friends, Xactly intends to change all that.

Sales is the lifeblood of any company.

Why then have the business processes to automate sales – with the ultimate goal of increasing revenues and profits and improving sales productivity – historically been either non-existent, broken, or islands of disconnected point solutions? Shockingly, the answer lies in the fact that many companies historically have labored under the yoke of spreadsheets to manage the complexities of incentive sales compensation and sales performance. This archaic approach, fraught with errors and risk, is no longer acceptable or viable from either a sales or finance perspective. Additionally, spreadsheet-operated companies are finding themselves at a significant competitive disadvantage and risk of non-compliance with Sarbanes-Oxley and other regulatory standards.

During my previous selling career at an enterprise sales compensation management company, I was repeatedly forced to walk away from sales opportunities because mid-market companies simply could not afford the cost of an enterprise sales compensation management solution: large up-front software license fees, maintenance, hardware, and unpredictable implementation schedules.

That’s why I started Xactly Corporation, the leader in on-demand sales compensation management. Xactly is representative of a new breed of software companies who have chosen to pursue a 100% pure play, on-demand solution.

The biggest advantage of on-demand software might not be measured in terms of cost, but in terms of productivity. Enterprise systems are not only expensive, but they can take months – or even years – to install. That's simply not acceptable to today’s dynamic businesses that demand immediate results when they buy new software.

In contrast, on-demand software can usually be installed in a matter of days or weeks. That translates into less wasted time and energy - and the ability to focus on what really matters: customer satisfaction.

To be clear, I’m not signaling the death knell of enterprise software anytime soon. There will always be a place for enterprise software, but its primary customers will be large corporations that can afford to invest millions of dollars to deploy their systems. For mid-market companies that want the advantages of an enterprise system without needlessly sacrificing cash or productivity, the future is clearly on-demand.

But enough commentary from me. Please join me in voicing your opinion in On-Demand Compensation Management Blog.