Cloud Computing - A Silver Lining

Is it true that every cloud has a silver lining? What about cloud computing? I was reminded of the silver-lining adage recently when I noticed that several online news outlets had picked up this story from silicon.com – the thrust of which is that many companies still are not even aware of SaaS.

Sometimes we may lapse into thinking that we’re a bigger deal than we really are; and this forces us SaaS vendors to work that much harder to earn validation in the marketplace.

This article quotes statistics taken from a study conducted by BT (British Telecom), “One of the problems that we've unearthed in a survey that we did recently was about 81 per cent of customers we spoke to didn't really know about software as a service…”

This quote was from Chris Lindsay from BT, who goes on to say, "It's quite eye-opening really in terms of the lack of awareness but [also] the benefits are very clearly spelt out by the customers who have adopted the services…"

So the bad news is that 81% of companies (in the UK anyway) aren’t familiar with SaaS as a delivery model, but the good news is that, if they were familiar with it, they’d like it.

Unfortunately, several other online media outlets picked up this story and trumpeted it from the rooftops, using the somewhat sensational (and misleading) headlines such as, “Business Not Taking to SaaS”, “Businesses Still Clueless Over SaaS”, and “Businesses Still in the Dark About SaaS”.

What this tells me is that we – as an industry – still have a lot of work to do in order to get the word out on the SaaS delivery model in general. I think, too often, perhaps we forget that Silicon Valley doesn’t extend worldwide yet – in different parts of the world, the market penetration and mindshare that SaaS has claimed varies wildly depending on the geography you’re talking about.

Remember that the study in question was conducted in the UK, and there was some great news out of that region earlier this week, when TechWorld (billed as “The UK’s infrastructure and networking knowledge centre”) published this article that found a majority of companies planned “to adopt SaaS within five years.”

Neil Barton, director at Hostway, said: “Companies are certain that SaaS will make their application usage more c006Fst-effective because of the reduction in software management costs, and the ability to eliminate buying too many or too few software licenses.”

I agree with Jeff Kaplan of THINKstrategies who said, "I think (SaaS) adoption is far more advanced than is being readily reported.”

What SMBs are most concerned about is the functionality, Kaplan said. What they're finding is it's not just simpler and less expensive, it also adds a whole layer of application opportunity they couldn't get from legacy apps.

"A lot are having a revelation."

So perhaps that’s the silver lining to this particular cloud?

If not that, then perhaps the news yesterday that Symantec had agreed to buy MessageLab’s SaaS business unit for $695 million. Clearly, Symantec’s CEO John W. Thompson expects to make a major push into the SaaS market immediately. Reaction from industry media members was positive, as TheStreet.com and Forbes both published articles lauding the acquisition – one titled “Symantec Adds to Web-Software Arsenal”, and the other cleverly titled “Symantec Has Its Head in the Cloud”.

I think we’ve only seen the beginning of large companies looking to strategically make inroads into the SaaS/cloud-computing market. It makes too much sense to ignore, especially in these trying times.





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Da Vinci, Plate Tectonics and CapEx Budgets

Here in San Jose, where Xactly is headquartered, the Tech Museum of Innovation – located right down the street from us – recently unveiled the world premiere of an exhibit titled ‘Leonardo: 500 Years into the Future’, billed as “the largest, most comprehensive exhibit of the innovative art, science and engineering works of Leonardo da Vinci” and “a once-in-a-lifetime opportunity to see how this genius of the Renaissance has influenced and inspired much of the technology we use today.”

Now, I already knew some things about da Vinci and his life, but I learned that in addition to being one of the greatest painters and sculptors of all-time, his ideas about improving the world around him were simply astounding. In a time when no real technology existed, da Vinci “conceptualized a helicopter, a tank, concentrated solar power, a calculator, the double hull and outlined a rudimentary theory of plate tectonics. Relatively few of his designs were constructed or were even feasible during his lifetime, but some of his smaller inventions, such as an automated bobbin winder and a machine for testing the tensile strength of wire, entered the world of manufacturing unheralded. As a scientist, he greatly advanced the state of knowledge in the fields of anatomy, civil engineering, optics, and hydrodynamics.” [source]

He did all this five hundred years ago! I think it’s clear that the assertion made about da Vinci that he was perhaps ‘the most diversely talented person who ever lived’ is unequivocally correct.

Why am I telling you all of this (apart from the fact that it’s fascinating, and I seek to enlighten and instruct)?

Well, I was going to open this blog post by saying that we’re living in uncertain economic times.

But I stopped and realized that that’s an understatement on the same sort of level as saying “Leonardo da Vinci was slightly ahead of his time, don’t you think? If he was alive today, I’ll bet he'd be smart enough to have his own cable-access show, or maybe get a job selling Christmas trees at Home Depot. Possibly.”

It doesn’t quite capture it – and the economic crisis we’re facing can’t be understated. So it got me thinking about the need for companies to cut spending and save money on upfront costs; budgets are being slashed all over the place. But in most cases, companies don’t have the option to stop buying solutions altogether, they just must make smarter decisions about how they spend their money.

Opting for a SaaS solution in order to save their capital-expense budgets makes a lot of sense for these companies. As the always-eloquent and erudite Phil Wainewright points out in his blog, this financial crisis should be an opportunity for SaaS companies to continue to grow.

Phil says in his latest post, “If credit remains tight, then one of the first things businesses are going to cut is capital expenditure — either because they can’t stomach the risk, or because they can’t raise the finance. The upside for SaaS vendors is that those cash-strapped businesses will find the pay-as-you-go SaaS model highly appealing — especially if it helps deliver operational cost savings at the same time. So while the credit crunch seems certain to harm the front-loaded cost model of conventional software sales, SaaS should continue to grow by picking up some of those canceled projects.”

Sing it, Phil. We are in lock-step with you on this kind of thinking.

Additionally, when one considers that among the hardest-hit entities at the moment are the banks and financial institutions, I enjoyed this article (published by AmericanBanker.com) that touts the advantages of SaaS and BPO as an effective way to cut costs in the current economic climate.

To quote the article, opting for outsourcing some processes and choosing Software-as-a-Service solutions “not only reduces the bank's operating expenses and protects them from cost spikes… it can also help institutions reduce their risk through service level agreements. This allows executives to focus their attention and resources on critical areas like customer experience and new product strategy to stay competitive and grow their businesses.”

Banks, as we all know, are not early adopters when it comes to technology. They are forced to remain fairly conservative and are not prone to making broad sweeping changes in the way they run their business. I like the idea that we can help them navigate through this choppy water, and help them look ahead into the future.

Maybe not 500 years ahead like Leonardo… but we’re working on it.




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CIOs are a Smart Bunch

In talking to CIOs these days, I’m hearing a lot of commonalities when it comes to discussing their focus and priorities.

One of these common threads is the need to opt for on-demand solutions over traditional on-premise software options because of man-power constraints. It seems there simply are not enough skilled folks to administer to these bulky on-premise software tools any longer.

Doing a little casting about on the internet, it seems as though I’ve hit upon something that’s begun to pick up steam: CIO.com published this great article about that very same topic. To quote the author, Thomas Wailgum:

“…however, there is a bigger problem that on-premise software vendors face: The net effect of the skills shortage is pushing existing and potential customers to consider alternative software delivery models, AMR Research analyst Dana Stiffler contends.

‘I think what it really means long term is that people are really crying out for a different delivery model for enterprise software and business functionality,’ she says. ‘And it's my belief that combinations of SaaS and business process outsourcing (BPO) will eventually begin to emerge and make that gap be slightly less noticeable.’

I’ve been banging on the ease-of-use drum for awhile. Consistently, I’ve called attention to the lower cost of entry, lower TCO, instantaneous upgrades, plus the freedom and flexibility that come with a subscription-based service model, but now we must add: no need to hire specialized, expensive personnel to administer to the technology.

Those on-premise software vendors better think about founding some schools just to train qualified technicians for their applications!

Better yet, I don’t want to wake any of them up. Forget I said anything.



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A History Lesson - Wall Street-style

"Those who cannot remember the past are condemned to repeat it."
--George Santayana
(The Life of Reason - 1905)

It’s at times like these that I’m extremely glad I live and work in California, as I would not want to be anywhere near the smoldering wreckage of Wall Street at the moment.

Are we nearing a serious financial crisis? Both presidential candidates seem to think so, as they are each piling in to the latest financial news and using it to boost their campaigns.

It got me thinking about how long these types of securities scares have been taking place.

A long time, as it turns out. Many people seem to believe that the dot-com bubble of 1999-2000 was the first of its kind.

Not so, my friend. You would be off by about 300 years, in fact.

Way back in 1720, the first ‘stock market crash’ rocked the old world. At the time, England was strapped for cash after its involvement in Spain’s War of Succession, so King George I made a deal with a private firm – the South Sea Company – granting them a monopoly on shipping trade routes with Spain.

George saw this as a good vehicle to finance government debt, and the wealthy saw it as a good opportunity to invest some of their hard-earned shillings. It became ever more fashionable for society folks to buy stock in the South Sea Company, and it drove the share price sky high.

Stock certificate for the South Sea Company – circa 1719

Meanwhile, wealthy folks in England were so eager to buy into the company, to keep up with the Lord Joneses as it were, that they were blithely oblivious to one minor detail: the company failed to show any kind of profit, mostly due to the fact that King Philip of Spain was resolutely unwilling to negotiate any more than three English voyages per year in his waters.

Oops. That might have been something that would show up in a good 10-Q or 10-K, hm?

Regardless, the precarious financial house of cards finally came tumbling down, after shares peaked in September of 1720. Investors got wise to the situation, a mad rush to sell shares ensued, and many fortunes were left in tatters.


Even celebrities took a bath on the South Sea Company: "When Sir Isaac Newton was asked about the continuance of the rising of South Sea stock? ---- He answered 'that he could not calculate the madness of people'. (Spence, Anecdotes, 1820, p368); Newton's niece Catherine Conduitt reported that Newton had participated and "lost twenty thousand pounds (a giant fortune at the time). Of this, however, he never much liked to hear..."

This was the world’s first economic bubble.

It reminds of the heady days of 1999 and 2000, when Priceline.com – a little-known website where consumers could ‘name their own price’ for airline tickets and hotel rooms went public despite never having come close to turning a profit; and on the strength of their decision to hire William Shatner as their celebrity pitchman, Priceline’s share price soared, and the company’s valuation was higher than that of the three largest U.S. airlines… combined.

When investors remembered that public companies were supposed to MAKE money, Priceline’s share price retreated faster than a French infantry unit that comes face-to-face with a Cub Scout troop.

This week, I’ve been interested to see what the reaction would be in the wake of the triumvirate of bombshell announcements that came to light – the sale of Merrill Lynch to Bank of America, the declaration of bankruptcy by 158-year old Lehman Brothers Holdings, and the frantic scramble for cash by insurer AIG.

The Federal Reserve Bank chose to reassure the shaken financial markets by holding the U.S. interest rate steady – and in response, the stock markets bounced around in an attempt to make sense of it all.

What does it all mean? Is it, as some have suggested, a harbinger of another crash like the one Wall Street suffered in 1929?



I don’t see it that way, partly because this is a more sophisticated time, although there are times when we seem doomed to repeat the past. For example, the sub-prime credit crisis was predicted far and wide prior to it happening, and Warren Buffett – in the late 1990s – decried the internet bubble as untenable, since it made no kind of sense to have unprofitable companies (companies who had NEVER shown a profit) sporting multi-billion dollar valuations.

I thought about attempting to tie this whole post back to the SaaS market in general, perhaps drawing a thin analogy to the fiscal prudence of using an on-demand model, but I’ll save that for a different day.

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The Power of Analytics

In recent years, prices for raw metals and minerals have skyrocketed. Mining companies have fanned out to all corners of the globe, conferences have been convened to discuss the topic, and all the while prices continue to rise.

But did you know that right now, at this very moment, there are tens of billions of dollars worth of iron ore and other valuable metals and minerals just sitting on the floor of every ocean on earth? Scientists have known about manganese nodules for decades (as a matter of fact, geologist A.A. Archer estimated that the sea floors and abyssal plains of the ocean contain something like 500 BILLION TONS of untapped metal ore). Iron prices should be dirt cheap!

So what’s the problem? Why has this vast natural resource lain undisturbed for decades? The issue is that no one has been able to successfully come up with a way to mine it cost-effectively.

This got me thinking about the difficulties of different kinds of mining, specifically DATA mining.

For a long time, many companies have been talking about the ability to provide Analytics. And I will admit that there are some phenomenally cool, whiz-bang products out there in the business intelligence space. However, there has always been one inherent problem with this: Analytics are only as good as the data they’re analyzing.

Those whiz-bang B.I. solutions can only do their cool stuff once you have the underlying data.

Getting at that data traditionally has been harder than stripping iron ore out of a manganese nodule eighteen fathoms below. This is the dirty little secret around why more than HALF of all data warehouse projects fail.

You see, first a company needs to figure out where the data IS, and more importantly, how to get at it. This usually involves getting IT involved and purchasing an ETL tool to extract and cleanse the data.

Then comes the hard part: aggregating the data into one place which requires architecting the data schema and building a data mart or data warehouse. Then, a presentation or (BI) layer must be selected in order to view and analyze the data. Of course, you will need to do a lengthy requirements phase to talk about what you want to see, etc., reports will need to be built, multiple constituencies need to be involved. There are a lot of moving parts.

Lots of money has been spent just analyzing why these massive data warehousing projects fail – you can read just a small subset of some of the findings here and here.

What about analyzing your CRM data, you may ask? You could certainly do that, but what are you really analyzing? Pre-sales data entered by sales reps, complete with equal measures of sand-bagging on one side and pie-eyed optimism on the other.

No self-respecting CFO would run his or her business on such data. I’m talking about true POST-sales data – getting to this rich data is what will make Analytics truly sing.

What if a company could streamline this entire process and make it fantastically simple – giving you access to ALL your post-sales data without any intervention from IT, tedious consulting projects or ETL tools?

Well, don’t despair, Xactly to the rescue! But don’t just take my word for it…

If you speak to Henry Morris (SVP Worldwide Software & Services Research at leading research firm IDC) he’ll tell you: "I always thought business intelligence [BI] on demand would have difficulty taking off, since the application has to get its data from an outside source. But Xactly already has your data.“

As a byproduct of solving the variable compensation problem for companies, Xactly has pre-built a sophisticated data warehouse that contains every bit of this rich data. Not only that, but because of our fixed data schema (just one of the innumerable benefits of being a true on-demand company), every company can get access to this data.

We then layer a wonderful Analytics engine over the top of it, complete with all the tools you could ever need, and now you’ve got something companies have thrown millions of dollars at, usually ending in frustration and tears.

Let us tell you more about it – you’ll wonder where we’ve been all your life.

Now that we’ve got this problem licked, I’m off to tinker with some ideas on these manganese nodules. I may have a few tricks up my sleeve.

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

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.

View Webinar

What is Sales 2.0?

Karen Steele, Xactly's VP of Marketing, discusses how Sales 2.0 helps companies align people, process and technology to increase sales productivity.

Non-Cash Rewards Can Help Your Company Weather the Economic Storm

Today human resources has the opportunity and the pressing need to get creative with pay-for-performance compensation. The Alexander Group, a sales-growth consulting firm, has forecast a modest 4-percent increase in incentive compensation pay for sales personnel this year. Companies, meanwhile, are getting serious about managing through the uncertain economy; buyers are watching expenditures; and sellers are looking for every bit of sales motivation they can muster. This dictates thinking outside the traditional incentive compensation “cash box” to counter the effects of the modest 4-percent raise with other rewards.

Non-cash rewards have proven effective in motivating employees to excel in all types of economies. And they have proven effective not just for the sales team, but other functions such as customer support, marketing and other specific corporate audiences. Non-cash rewards go where cash cannot in rewarding specific behaviors and creating a positive work environment. They provide greater agility anytime there’s a special opportunity such as rewarding up sell or cross sell, moving excess inventory in the channel, resolving customer-support cases, attracting prospects to marketing events, etc. The instant gratification factor of non-cash rewards also is attractive to many employees, particularly younger employees with little patience for annual or semiannual bonuses.

Read More at WorldatWork...

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

Upcoming Webinar: Motivate and recognize your top performers with non-cash rewards programs and incentives

This upcoming webinar expands on one of our previous posts:
The Power of Linking Non-Cash Incentives to CRM


Introducing Xactly Rewards for Salesforce Force.com: Leverage your CRM Investment & Increase Adoption

Motivate and recognize your top performers with non-cash reward programs integrated directly with your Salesforce application. Empower your sales, marketing, support and call center teams to effectively run contests, special performance incentive funds (SPIFs) and other incentive programs with immediate redemption for millions of leading brand merchandise items, travel & leisure options, tickets for theatre, concerts and sporting events and more.

Join Xactly and Astadia as we discuss the impact this new and innovative application can make throughout your organization.

Date: Wednesday, June 25, 2008
Time: 11:00 AM – 12:00PM PST

Join us and learn how to get your first 90 days free!

Register to learn more: https://www1.gotomeeting.com/register/602120293

When it comes to incenting behaviors non-cash rewards are typically under-utilized, yet they can be extremely effective in driving behavior in ways that cash compensation can’t. Cash is king, but cash is impersonal and predictable. Non-cash rewards, on the other hand, are extremely engaging when the prize is something that the targeted recipient truly wants and considers worth striving for. In fact, a University of Chicago study found that using non-cash incentives improved employee performance by 38.6% vs. 14.6% for cash rewards.

With Xactly Rewards for Force.com, you can quickly automate these programs and tie them to activity in your Salesforce CRM application while providing immediate access to the widest possible selection of value-oriented tangible rewards.

Join Xactly and Astadia to learn how this revolutionary application can impact the performance of your sales, marketing, service, support and call centers.

Register to learn more: https://www1.gotomeeting.com/register/602120293

Learn more about Xactly Rewards for Force.com: http://www.xactlycorp.com/resource_center/Rewards_ds.pdf

Sales Performance Management Benchmark Report by Ventana Research

This morning we announced the availability of new benchmark research from Ventana Research, underwritten in part by Xactly, that highlights the growing need for companies to improve their sales performance management processes in order to boost top- and bottom-line business results. Titled “Improving the Performance of Sales Organizations to Maximize Strategic Value,” the research also offers recommendations for companies looking to evaluate and enhance sales performance management processes and systems.

Says Ventana Research, “Improving sales performance is a primary motivating force for most businesses that rely on a sales force to generate revenue. Assessing and improving sales performance management processes is not just important, but imperative.”

Click Here to Download the Report
(no registration needed)

Click Here to Read the Press Release
(no registration needed)

Business Finance - Aligning Sales with Finance

Sales and finance professionals don’t always find the common ground required to meet their mutual goals. Christopher Cabrera offers some insights on how to bridge the divide between sales and finance.

To view video Click Here

SaaS + Sales Performance Management = Recession Resilience

With recession alarm bells going off all over the world, smart managers are looking for ways to make their businesses more recession resilient. Reducing your cost base, making sure you have operational flexibility, and boosting employee productivity are three well-proven tactics. Software as a Service (SaaS) wasn’t an option during the last recession. But SaaS has established a track record over the past several years, decisively proving its value in supporting the first two tactics: cutting costs and increasingly flexibility. And what’s valuable in the best of times can prove priceless in the worst of times.

You know the litany. In contrast to on-premise enterprise software, SaaS means no upfront hardware and software costs, no worrying about costly ongoing software maintenance, and no vendor lock in. Instead of being tied to an expensive software infrastructure, you’re free to quickly implement changes. And if a SaaS vendor doesn’t perform, you’re free to immediately choose one that will and be up and running in a matter of weeks. Believe me, savvy SaaS vendors know this. Subscriber retention is one of our key success metrics, along with speedy initial implementation and the ability to quickly deliver innovative new functionality.

So, while SaaS delivers lower costs and enhanced flexibility, where does that leave employee and business productivity? Obviously, not all software applications—SaaS or on-premise—deliver equal productivity boosts, at least not of the kind that directly impact the bottom line. Yet some categories excel in their ability to do so, including Sales Performance Management (SPM) applications. In a recession, businesses need to invest in getting the most profit possible out of their front-line employees. SPM applications provide this value by helping align sales behaviors to corporate objectives, focusing reps on the most strategic sales, maximizing agility in the face of market change, and providing visibility into sales success drivers through comprehensive analytics. And along the way, they help greatly reduce administrative time and costs, and support compliance efforts.

The last recession was a boom time for early-generation SPM applications—and that was even before the advent of SaaS. Today, thanks to the SaaS model, the SPM arena is expanding in scope like never before, and SPM functionality such as on-demand sales compensation management is finally affordable to companies of any size.

SaaS plus SPM delivers a genuine double whammy in the face of recession: SaaS economic value combined with SPM strategic business value. It just makes good business sense, whether you are managing in a recession or in a vibrant high-growth economy.

SaaS 2.0? Predictions for the year ahead.

2007 was a momentous year for Software as a Service (SaaS), as it emerged as a disruptive force in an increasingly complacent industry. And while it would be easy to say that growing customer interest will propel SaaS to new heights in 2008, I believe there’s something going on right now that is about more than mere market momentum. From my viewpoint, SaaS is becoming increasingly savvy, and it isn’t too far-fetched to think we’ll soon being talking in terms of SaaS 2.0.

Here’s what I mean. In 2007, we were still witnessing the first generation of many SaaS solutions. Their limited functionality led to criticism that they weren’t as robust as their enterprise software counterparts. In 2008, we will see more SaaS companies building out or partnering to provide more robust solutions and platforms, along the lines of salesforce.com’s Force.com platform.

This is already happening in the market in which Xactly competes, as Incentive Compensation Management (ICM) offerings are morphing into full-blown Sales Performance Management (SPM) solutions, with rich analytics and functionality such as territory and quota management.

Just as exciting to me, SaaS will breathe new life into struggling enterprise software sectors in 2008, and will create entirely new sectors by lowering the cost of entry vis a vis traditional software models. This is huge. And the fast-expanding SPM segment is proof that it is starting to happen.

At the same time, SaaS will create entirely new ecosystems. In 2007, we witnessed the delivery of mash-ups combining data and SaaS functionality via single sign-on. In 2008, we will see SaaS companies supporting end-to-end processes and seamless user experiences through deep integration, software suites, or partnerships.

And through it all, SaaS vendors will only get smarter about customer needs. The advantage of managing all customer deployments under a single umbrella, as SaaS vendors do, is that we are better able to find common threads across customer problems, needs and desires. And customers don’t have to wait for the next release cycle—which, in the enterprise software world can mean waiting a year or more—for a SaaS vendor to implement major fixes and changes across the board. In fact, SaaS vendors are free to be innovative and practically impelled to deliver ever more value, because we are developing a single line of code for one platform shared by all users.

Finally, in 2008, Wall Street will increasingly wake up to SaaS as we witness an up-tick in SaaS IPOs, despite the down market predicted for the first half of the year. The recent successful IPO of Xactly partner and customer, SuccessFactors, is likely a harbinger of things to come. Along these lines, Wall Street bankers, investors and enterprise customers will come to see the distinction between tactical SaaS applications that conveniently automate non-mission critical business functions like recruiting versus truly strategic SaaS applications like SPM, which are at the center of driving business growth and profits.

Okay, I admit to a bias. But, as the SaaS industry matures, I firmly believe it will continue to burn a hole right through traditional software models throughout the rest of this decade and beyond. Whether we call it SaaS 2.0 or not, the SaaS we’ll come to know in 2008 will be light-years ahead of the SaaS we knew in 2007— in terms of functionality, robustness and appeal and, most importantly, in its ability to game-change a customer’s competitiveness and profit picture.

Connect the Dots between Pre- and Post-Sales Processes

I’ve written before in this space about the natural synergies that exist between CRM and sales compensation management applications. Pre- and post-sales visibility/automation are truly just different sides of the same sales performance management coin. In an article recently written for CustomerThink.com, I discuss these synergies in depth, and show how one company has been able to extend its CRM investment in a powerful way.

Specifically, the company has linked its sales compensation management solution directly to its Salesforce implementation so that reps now run “what if” scenarios based on Salesforce CRM “live” opportunity data coupled with accurate compensation plan data from their Xactly Incent implementation. Notably, they are able to do it all within Salesforce CRM.

The big benefit is that the people in the field can now easily see where to direct their sales efforts for maximum commission payouts. As these payouts are a reflection of where the company wants them to put their best efforts, the whole business gains. That’s powerful stuff. And it’s something that any company with a Salesforce, RightNow, or Oracle Siebel CRM On Demand implementation is in a position to take advantage of. For the details, please read the full story at: www.customerthink.com/article/connect_dots_crm_sales_compensation

On-Demand in Demand as SAP Goes SaaS

If ever there needed to be a “big bang” validation of the software-as-a-service (SaaS) concept, then SAP’s September 19 unveiling of its Business ByDesign on-demand software for midsize companies surely suffices. Not only is SAP the first major enterprise software player to get serious about SaaS, it is the absolute largest enterprise software player and its move is thus freighted with significance.

But there really doesn’t have to be a big-bang validation of SaaS. Many thousands of customers are endorsing the concept every day as they leverage SaaS offerings, and will continue to do so in increasing numbers, with or without the help of traditional enterprise software companies. It is not SAP nor any other huge software company that will drive SaaS. It is the customers who are in the driver’s seat, and SAP is wisely reacting to this fact. And now SAP will have to meet these customers’ expectations—expectations built up by trail-blazing, 100 percent SaaS companies like salesforce.com, NetSuite and Xactly.

There’s no doubt that SAP’s on-demand offerings have the potential to provide immense value to the targeted customers—SaaS delivery coupled with SAP functionality packs a powerful punch. But SAP is not about to abandon its on-premise model anytime soon, and its management will be wrestling for some time with such issues as how to keep from cannibalizing its bread-and-butter software licensing revenues and how to successfully support two entirely different delivery models. And along the way, they will learn what 100 percent SaaS companies have known from the start: If you don’t meet the expectations of SaaS customers, they can cut you off in an instant, no questions asked. That’s not something that enterprise software vendors, with their long-term licenses and claws sunk deeply into their customers’ costly IT infrastructures, have traditionally needed to deal with.

Still, SAP is doing the smart thing by getting started in SaaS now, when it can be lifted by the rising SaaS tide. In doing so, SAP will add to the tide by increasing the portfolio of software functionality available to customers on demand. SAP’s move doesn’t prove that SaaS is viable. That’s already established. What it really demonstrates is that the traditional enterprise software model is not all that viable for most companies. And for that we welcome SAP to the SaaS world.

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.