Xactly News, 100 Express Customers, Incent 7.1 and Conversation with Xactly’s CEO

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There has been a lot of industry news in the past few months that I haven’t had time to cover and I’ll start trying to catch up by talking about what has been going on with Xactly.

Xactly just announced that it has expanded its North American operations with new headquarters in San Jose, as well as a regional office in Denver. They added a whooping 80 new customers since the beginning of 2011 (that’s a lot!) and a lot of that growth comes from their Xactly Express solution which recently signed up its 100th customer. Over the last year, Xactly also increased their staff by 54% to support its quick growth.

However, what I’m the most excited about are the enhancements to Xactly Incent Version 7 which launched a few months ago. The new version has several new very important features.

Quota and Rate Table Effective Dating: This enables companies to manage incentive program changes at the time and point of need. This may seem as a not-so-important feature, but from an administration perspective it’s VERY important. It also makes the annual plan updates much more simple to achieve and saves a lot of time on the configuration side. The net effect of this feature is faster end-to-end deployment time, more administration flexibility, and easier/quicker year-end plan updates.

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Report Customization:
Reports outside of the analytics module used to be fairly “What you see is what you get”; in other words, not allowing many configuration options. In this new version, there is much more flexibility and reports can be customized to meet specific needs.

Ranking Reports:
New reports are available to provide visibility into individual and team performance.

Xactly Incent 7.1:
Usually Xactly delivers mostly small improvements between minor versions, but version 7.1 added some big features.

Version 7.1 includes the addition of mobile functionalityenabling teams and reps to access reports and performance information through their mobile phone/devices. I personally think that this is a great new feature, particularly for road warriors who don’t have time to access their dashboards. The new release also comes with several improvements to Xactly Territories, eDocs & Approvals. However, Illustrator was a surprise new addition to Incent’s impressive list of recent features:

Illustrator:
Xactly added an Illustrator module to Incent which provides great modeling functionality. Reps can plan measures to forecast associated hypothetical commission. Reports are great, but I always felt that interactive what-if modeling was the best way to drive behavior.

Overall, I am really impressed by the new features released by Xactly in the past few months. Effective dating is something I had been waiting for from them for a long time, and it is what I would qualify as Xactly’s greatest configuration enhancement since the formula copy and paste feature.

Performance
With such an accelerated growth, I was also curious to see if performance would become an issue. I recently had the chance to work with the latest version, and it is still a very responsive SaaS application that can process a fairly large number of transactions quickly.

Conversation with Xactly CEO, Chris Cabrera
I talked with Chris about the future of Xactly, and not surprisingly, he thinks it’s very bright! We talked about many of the features described earlier and also about what the recent growth meant for the company. Chris believes that the trend towards small companies adopting affordable SPM systems such as Xactly Express is only going to accelerate. I initially thought that the Express would only be a “project”, but Chris is optimistic that it could eventually surpass the revenues generated by Xactly Incent. The additional revenues also enabled Xactly to add new members to its executive team, most recently a new VP of marketing and a VP of enterprise sales. Since it is not feasible to contact every small company to sell Xactly Express, a strong marketing strategy is key to its success. Finally, Chris mentioned that in a few years, Xactly would be poised to “go public”, providing additional capital to further accelerate it’s growth and leadership position in its market.

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Time to Burn the Ships!

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Why do large system implementations often fail or get delayed? Depending to whom you ask, you’re likely to get a different answer: the requirements were not understood properly, the data was too complex, processes were not documented, key stakeholders were not involved enough, there’s too much red tape, my team/manager is incompetent, we picked the wrong solution, etc. I’ve observed that the bigger a project or program is, the more likely people are to feel that they can’t affect the outcome. Large project teams seem to have a low internal locus of control.

In 1519, Captain Hernán Cortés and his army set out on one of the greatest conquests in the history of the world. Cortés was going to accomplish his goals no matter the consequences, despite being up against incredible odds. When he arrived near Veracruz with 500 soldiers, a dozen horses and a few cannons, the first thing he did was burn his ships so there could be no retreat. He told his men “You can either fight or you can die”. Returning to Spain was not an option anymore. By burning his ships, he not only cut off his only means of retreat, but also made his soldiers fight harder. They were all fully committed to the cause.

I cannot condone what Cortés later did to the Aztecs, but burning the ships probably played a major role in the outcome.  Most project managers will say that failure is an option and have a “do-or-die” attitude, yet when things start going wrong, the managers usually start looking for excuses. Likewise, when blamed for delays, the project team will often start looking for their own excuses or try to jump back on the ship.

I challenge you to think about your objectives and about at least 5 factors that could make it difficult to reach them. Now, get rid of these excuses.

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Negotiating a SaaS Contract

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I talked about SaaS Contract Negotiations before, but I found another great article from ERP Software Advice on this topic here. The author describes 9 points that can be negotiated within a SaaS agreement. Here is a short summary:

1. Pricing and Discounts: Obviously, published pricing can usually be negotiated, and the bigger the deal, the bigger the discount.
2. Additional Costs: Aside from the standard monthly fee, other costs can quickly add up, such as fees for additional users, customizations, integrations, third-party services, training and set-up fees.
3. Term: A longer term can mean a better deal.
4. Service Level Agreements: Make sure that SLAs – the vendor’s commitment to keeping the system up and running – are clearly defined in the contract.
5. Renewals: This process is an opportunity to renegotiate or exit a bad contract. Make sure there you are still in control when it’s renewal time.
6. Scalability Pricing: Find out what pricing options are available to increase the number of users and if there is the possibility to decrease it.
7. Support: The contract should describe the level of support that will be received: is it delivered via the web, email, phone? Is it 24 / 7?
8. Backups and Recovery: The contract should specify how often backups are performed, how long it will be kept, and if it is kept in a separate center in case of disaster.
9. Data Export: Can data be retrieved from the system?

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7 Principles to Improved Sales Performance

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In designing an incentive compensation scheme there is no one perfect design, there are however some common best practice design principles that characterize effective schemes.

Effectively implementing these seven principles will provide immediate value to the sales organization therefore we would recommend that you consider how your organization compares.

1. Clear link to strategy
Plans need to link clearly to company goals, hold participants accountable for the results they control, and pay for results focusing on margin or profit rather than volume.

2. Accurate, Transparent and Consistent
Performance should be accurately measured and a transparent and there should be a consistent link between performance and plan payout. Where possible, this process is automated to ensure effectiveness.

3. Uninterrupted flow of key strategic messages
There is an effective flow of key messages (for example growth, increasing profitability per customer, quality customer retention) from the sales strategy to sales targets to salesperson role to incentive plan measures to payout.

4. Significant on-target opportunity
Plans have an on-target payout which is significant and consistent with company/product status in the market. For example, a new product/service in a new market requires a more highly leveraged plan.

5. Promotes positive behaviors
The plan should influence sales behavior in a way that drives positive selling and which prevents negative selling behaviors.

6. Simple
A plan should be simple, using as few performance measures as possible. If the salesperson can’t explain how it works in under a minute, it’s too complex.

7. Differentiation
Plan payout should differentiate clearly between excellent and average sales performance.

This post was written by Jon Clark at Sean Culligan at OpenSymmetry’s UK office.

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Merced ICM… Two Years Later

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I’m back from my blogging “vacation” and I apologize to all my readers for this long delay. I’ve been extremely busy juggling projects and I started an MBA a few months ago which has been using most of my free time. I will do my best to do a better job at fitting blogging in my schedule.

For this first new post, I’d like to talk about Merced Systems. I covered Merced’s incentive solution (then called Merced Incentive Management or MIM) about two years ago, soon after it acquired Practique Associates. At that time, the big question was, is Merced going to be successful at integrating the incentive compensation tool to the rest of its products, and will it be able to compete against well established vendors such as Callidus and Varicent in the competitive US market.  Gaining credibility from clients, selling enterprise solutions and going live with them is a long cycle, and finally, after two years, some conclusion can be drawn.

The Company…
First, I’d like to talk about the company itself. Even with the recession, Merced Systems has managed to grow and post profits for 7 consecutive years. I’m pointing this out because in a world where most other SPM companies are relying on investments to develop solutions and gain market share, Merced has actually been making money – and reinvesting it into R&D to improve their product.  It now counts over 225 employees concentrated in its Silicon Valley and London offices, responsible for more than 125 customers deployed in over 20 countries. Merced’s big challenge at the moment is to hire enough smart people to sustain its rapid growth.

The Challenges…
One of the first challenges Merced needed to overcome to be successful in the US market was to develop the ability to implement and support its ICM solution in the United States as well. Now with over two years of ICM experience under its belt, this is no longer a concern.

The other hurdle that Merced needed to overcome was to attract large clients in the United States to show that it could be successful here as well. One of its first projects in the US was Nationwide. The goal was to help agents gain more visibility into their performance, to increase payment accuracy and to reduce calculation time. Merced ICM successfully managed to accomplish these goals, and the phase one of the project was completed in early 2010. Many customers in the United States are finally live or are currently being implemented; these customers include Bank of America, Otsuka and Dell. When I spoke with Mark Selcow, Merced System’s president, he pointed out that not only was Merced successful at gaining traction in the US market, but that it was also keeping its momentum in the European market. Merced recently announced the successful deployment of the ICM Suite at Kia Motors.

The Solution…
Now about the solution itself; as a reminder, in a nutshell, Merced ICM calculates compensation and incentives, and provides meaningful reports and dashboards. Since Merced acquired Practique, Selcow noted that Merced System’s engineers have been working very hard at integrating the incentive solution to the other tools of the Merced Suite comprising Merced Planning (for territory planning, quota planning and goal setting), Merced Intelligence (for sales and compensation analytics) and to the Merced Performance Suite (used for performance scorecards, ranking, and coaching). Selcow believes that scorecarding for seller self-correction and coaching to drive best sales behaviors are emerging trends in Sales Performance Management, and will become an important part of ICM/SPM solutions.

In my opinion, one of the biggest improvements recently brought to the incentive compensation suite is the Workflow Manager module. Workflow Manager allows users to setup various workflow that can range from dispute resolution and payment approval, to requiring approval to submit a manual adjustment, MBOs, or to make any changes to a plan component.

Two years ago I also showed screenshots of some standard reports and dashboards available with this solution. I had a hard time choosing a good adjective to describe them, but the first word that came to mind was “outdated”. Again, thanks to Merced’s competent engineering team, Merced ICM received a face lift with the Merced Analytics suite. Leveraging MicroStrategy Business Intelligence, Merced ICM delivers stunning reports and dashboards.

Significant improvements were also brought to the functionality and features of the application. Some of Merced’s innovations are based on their aggressive roadmap to become the number one sales solution provider (with Merced ICM being a significant part of that objective). However, Selcow also noted that Merced is a very agile company and that many innovations are a result of customer requests.

In Conclusion…
Another aspect that makes Merced different from its competitors is the ability for a client to choose to deploy it on-premise or on-demand and to have the ability to easily switch from one to the other if needs evolve.  With Callidus trying to be a completely recurring revenue business, or Varicent which is mostly on-premise, having the ability to choose between both delivery models can be a huge advantage.

But according to Mark Selcow, even with great technical solutions, what REALLY makes Merced Systems and Merced ICM different from the competition is its relentless focus on its customer’s success during and after an implementation. “We don’t see ourselves as a solution provider” he told me, “we become a true partner”.

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SaaS – Future or Buzz?

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I had a good conversation with Chris Cabrera, the CEO of Xactly Corporation, last week. We spent an hour talking about Software as a Service (SaaS) and why people should care. He is definitely one of the people most passionate about this topic that I know!

For those who don’t remember, I wrote an article called “Buy the Car, Rent the Car or Take the Bus” which explains the difference between on-premise, single-tenancy and multi-tenancy.

“Many people are confused about what SaaS is, and about the benefits of a pure SaaS solution” said Cabrera. “Many companies use the term incorrectly to be buzzword compliant. That’s too bad because some people start to believe it is only a marketing gimmick.” I asked him why people should actually care about if a solution is SaaS or not. Playing the devil’s advocate, it would seem like most potential customers would not care if a solution is really a SaaS solution versus hosted, or multi-tenancy versus single-tenancy.

Chris mentioned 6 reasons why potential customers should care:

  1. It is in the client’s interest for the vendor – their technology partner – to be around long term. On-premise solutions are not cost effective because they have so many technology stacks and versions of the software that need to be maintained and supported. With SaaS solutions, some of the savings are passed back to the client, and a significant portion of the revenues are reinvested into the infrastructure as well as in the development of new features.
  2. SaaS vendors can focus on improving a single software version, used by every customer. Every engineer is dedicated to improving a single source of code. This allows the vendor to release new features and improvements much more quickly than is typically feasible with an on-premise solution.
  3. Upgrading a SaaS solution usually happens ‘behind the scenes’. New SaaS software releases are tested extremely rigorously before being released. A quality problem would impact thousands of customers and hundreds of thousands of payees. On-premise solutions often transfer the quality ownership to the clients who must perform their own regression testing after an often labor intensive upgrade process.
  4. Non-SaaS solutions are not always scalable. For example, with 10, 100 or even 1000 customers, an on-premise solution might work. But the real test will be when a solution is used by thousands of customers – will a non-SaaS solution really be able to scale up? “Probably not” said Cabrera.
  5. SaaS vendors constantly measure and monitor their environment. They make a significant investment into that infrastructure to ensure an optimal performance for all of their customers.
  6. SaaS solutions are usually sold on a basis of $ per payee per month. Solutions such as Xactly Incent all of a sudden become cost effective for even small companies which can avoid a high upfront infrastructure and license cost.

Chris Cabrera is convinced of one thing: SaaS is the future. “On-premise solutions might still be appropriate for a very small share of the market, but SaaS is appropriate at least 98% of the time.” Looking at the market trends, I would say he’s right. Most vendors realized the benefits of SaaS and are rushing in that direction.

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