The CEO of Xactly explains how his business gets sales people paid - and how he has on-premise credentials to back up his view that a pureplay Cloud model is best.
With Cloud now an accepted part of the mainstream, business applications vendors with traditional on-premise models are racing to get their Software as a Service (SaaS) story sorted out.
As an industry, the applications market has been here before of course: 20 or so years ago the likes of Management Sciences America and McCormack & Dodge were the Oracles and SAPs of the pre-client server apps market, but failed to make the successful transition to the new computing model.
There’s no reason to believe it’s now going to be any easier for the Oracles and SAPs in the current tectonic shift, reckons Chris Cabrera, CEO of sales compensation specialist Xactly. “The difference between on-premises and SaaS is religious. People who are on-premise don’t get that. People for years have told me that it’s really just about invoicing and to this day people still do. They just don’t get it,” he argues when we meet up in London for an exclusive chat.
“There are very few companies who have made the move from on-premise to Cloud. RightNow and Concur are probably the only two who burnt their boats and said we’re not doing both on-premise and Cloud. There are still many companies who are trying to do both, but no-one has been able to convince me why they would.”
Xactly is a pureplay Cloud firm, but Cabrera has on-premise credentials to back up his view. “I previously built a traditional on-premise software company, very Siebel-esque that sold only to the largest companies that could afford this sort of thing,” he says.
The SaaS model brings with it so many benefits, he suggests. “What happened with on-premise is that we could say yes to everything and to everyone,” he recalls. “If you wanted it on DB2, we could say yes or on Oracle, we could say yes. We could customise the software – which was great in the early days when you have ten customers. What we found though was that once we started getting 100 customers, then the wheels ran off the wagon. You had customers who didn’t want to do upgrades at certain times so as time marched on you ended up supporting so many versions which was an abject nightmare.
“So I viewed moving to the Cloud as being very good for me as a vendor,” he adds. “In 2005 we built Xactly in the image of Salesforce.com – they were the only ones then and still seen as a fluke. We believed that we could take that multi-tenant technology and get it down market to firms that had tens or hundreds of sales reps. What’s good for me as an entrepreneur is that I can hire 50 engineers who only need to support one version of the product, so they can innovate and innovate.”
What Xactly does is get sales people paid – a fairly fundamental necessity for any organisation that’s plans to incentivise its staff. “We get rid of Excel and provide transparency to the people who are getting paid compensation and commission,” explains Cabrera. “We let them understand how they are being paid. If you incentivise right, then they sell more. We get organisations to pay differently."
Customers include Salesforce.com among around 500 others. "We managed to get Salesforce.com as one of our first five customers. They now pay every worldwide rep using our product," says Cabrera. "We have a very large customer base in the US, but 25% of customers are outside the US."
The data angle
There's also what seems to be a Big Data spin to what Xactly offers. "We bring together our experience as well as a lot of data for impartial benchmarking. Now you have a tool that can automate all the big quagmire to drive better behaviour," says Cabrera. “What information do I need in order to pay compensation? What was sold, how much was sold, the order entry information and so on."
Data is pulled from multiple sources, including on-premise systems. "It’s not unusual for us to go in to a customer and have to connect with six sources of data," Cabrera notes. "We can use the data in two ways. We can provide an analysis option and slice and dice that data. I can correlate all the data and say this is how the best companies pay. A universal standard of compensation doesn’t exist, but I can say that I have impirical data that no-one else has.”
All of this reverses back into CRM. “You’re a Salesforce.com user so you’re looking at opportunities. Then you become an Xactly customer and little button appears on your Salesforce.com instance that estimates your compensation on various opportunities as they arise,” explains Cabrera. “If you sell this, you’ll make this. If you sell that, you’ll earn that much. If you’re incentivising correctly then you’re getting people to push the more valuable products more powerfully.”
Given the seemingly universal appeal of this sort of offering to any commercial business, it must be a possibility that at some point the likes of Salesforce.com or the newly Cloud-centric Oracle or SAP will want some direct skin in the game? “We’ve been passionate about solving the compensation problem for the past five years,” says Cabrera. “We believe that this compensation space is rapidly approaching a tipping point. Compensation is very very hard, much more so than CRM. It’s an onion that as you peel back the layers you discover is not for the faint-hearted.”
Anyway, he adds, the likes of Oracle still have their own more urgent issues in moving to the Cloud while not upending their installed, on-premise base. This means evanglising a version of the Cloud that isn't necessarily in line with the multi-tenant worldview of the likes of Xactly. “Larry [Ellison] has lemons so he’s making lemonade,” he concludes. “He has to find a way to convince the world of that methodology. He can’t ‘do a Benioff’ and abandon it overnight.”