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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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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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What is Monaco?
Bingo!
But Monaco is also the name of Callidus’ latest on-demand offering. The only problem is that they haven’t done a very good job at advertising it – which is one of the reasons why I’m receiving many questions on this topic.
The press release about Monaco came out a few months ago but faded quickly. It describes Callidus Monaco as:
A robust, SaaS offering that delivers the most modern-looking and rich user interface experience available in the sales performance management marketplace today. The Callidus Monaco Suite is the only unified SPM software solution that provides complete alignment of the entire business with corporate objectives to optimize performance, streamline profitability and deliver a rapid ROI.
…Yet another “only unified SPM software solution”. That press release also mentions that the solution is a multi-tenant SPM offering which streamlines:
• Objective Management
• Quota Management
• Reporting and Analytics
• Compensation Calculation
• Embedded Workflow
• Plan Distribution
After reading this, I was wondering if Callidus Monaco was only a rebranding of the Callidus On-Demand SPM, a new solution that would be replacing it eventually, another offering that would be available in parallel, the same solution but ‘multi-tenant’…?
What I found out is that Monaco is a combination of many existing on-demand offerings, focused on SMBs. For example, the Objective Management and Quota Management features are offered through TrueMBO and TrueQuota which I reviewed here. TrueMBO and TrueQuota can be purchased as standalone applications, but they are also unified with the core ‘Monaco’ product which is similar to TrueComp with a Web 2.0 facelift and more basic templates available out of the box.
Callidus Monaco will be offered in parallel to Callidus SPM On-Demand. Callidus On-Demand will be limited to customers in specific industries such as Insurance. All other customers wanting to use an On-Demand solution from Callidus will be offered Monaco.
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I found an interesting comment on LinkedIn from Chris Collins regarding the difference between On-Premise, On-Demand (Single-Tenant) and On-Demand (Multi-Tenant). This is not the first time I hear or use the car rental versus car buying analogy, but I think it is well explained and I enjoyed the ‘bus’ example:
Here is one analogy that I use to demonstrate the concept of SaaS to non-technical audiences that always seems to get them understanding the basic idea. I tell them to imagine 2 cars and a bus.
BUY THE CAR: The first car they buy and pay for outright. They are responsible for all maintenance, insurance, gas. This is analagous to buying the hardware and traditionally licensing the software yourself in house. You as the buyer are very interested in the technology you are getting.
RENT THE CAR: The second car they rent by the month. You don’t own the car but you have some say over where the car goes and you are still somewhat interested in the technology. When you go the rental car parking lot, you have a choice of cars and your decision of which car to choose is somewhat based on technology. Also, one person rents one car. This is somewhat analagous to a traditional ASP model. The point is someone else might own it, but you are still interested in the technology underlying it.
TAKE THE BUS: The bus is multi-tenant. When the transmission (platform) is changed on the bus, every tenant is affected because they are riding on the same platform. BUT when you take the bus, unlike when you buy or rent a car, you are not as interested in the underlying technology but in what the bus can do for you. You are now looking primarily at the service aspect, what need can it fulfill for you? If you need to go to the mall and a bus arrives whose ticker says “Mall” on its route, then you take it for that reason, not because of the the transmission on the bus. You only pay for the cost to get to the mall, not by month or not the full cost of the bus.
However you can take the analogy a little further. If you are transporting precious cargo on the bus, you will of course want to make sure the bus is safe from hijackers while stopped and in transport just the same way customers still want to be sure their precious data is protected. If there is a particular transmission type that that is known to have holes in it and cargo sometimes falls out, the customer will want to know about that upfront.Then you risk losing the customer’s focus on the service and put it back on the technology. That is a very important concept.
Do you think this applies to a Sales Performance Management solution licensing model decision?
(7 votes, average: 4.29 out of 5)
(5 votes, average: 3.4 out of 5)
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