Talking to an Unrelenting Cloud Enthusiast - Part 2

Part 1 of this blog series introduced Xactly Corporation, a provider of fully multi-tenant, software as a service (SaaS)-based solutions for sales performance management (SPM). The article also provided the bullish vendor’s genesis since being founded in 2005 and its current state of affairs. This article will feature my recent conversation with Xactly’s founder and CEO Christopher Cabrera.

Cabrera is a noted industry expert in issues relating to SPM, sales compensation, and enterprise and on-demand/SaaS delivery models. He was recently named the 2011 “Alumni Entrepreneur of the Year” by the Lloyd Greif Center for Entrepreneurial Studies at the USC Marshall School of Business. Cabrera is the co-author of the “Xactly Sales Compensation for Dummies” book (Wiley Publishing, 2006), as well as a regular contributor writer to Selling Power Magazine,, World at Work’s Sales Compensation Focus, and more.

As mentioned in Part 1, prior to founding Xactly Corporation, Cabrera was the senior vice president of operations for Callidus Software, an on-premises enterprise incentive and compensation management (ICM) company at the time (Callidus has meanwhile embraced the cloud software delivery). At Callidus, he was responsible for the execution of worldwide sales and marketing strategies, customer advocacy, and strategic alliances with companies such as IBM, Accenture, and Deloitte. Under his leadership, the company acquired more than 100 customers, contributing to the growth of annual revenues from zero to greater than $75 million and a successful initial public offering (IPO) in 2003 raising more than $70 million.

Cabrera earned a BSc degree in business administration with an emphasis in entrepreneurship from the University of Southern California (USC) and a master’s degree in business administration from Santa Clara University. Cabrera is the Chairman of the Board for USC Marshall Partners, Northern California. He is also on the Advisory Board for Santa Clara University's Center for Innovation and Entrepreneurship (CIE).

Chris Cabrera Speaks Out

My provocative questions and Cabrera’s frank answers are as follows:
PJ: What is your competitive landscape, and why do you win over/lose to these competitors?

CC: The majority of the world’s companies still use spreadsheets to manage compensation. Our primary competitor, therefore, is replacing cumbersome, manual, error-prone processes that companies have sadly learned to accept. As companies wake up to the fact that they no longer have to suffer with spreadsheets and their reps can sell more if they automate and provide visibility, we become the obvious choice.

Our biggest advantage is our delivery system – but, really, the cloud is about more than delivery. As I noted before, we are the only pure play multi-tenant SaaS company in the space and we are able to offer our customers access to the latest technology and completely scalable power. Because we are multi-tenant, we are able to provide calculation power when our clients need it so that reports are done in minutes, not hours. Our customers can access us from anywhere, including on mobile devices.

In addition, no business using Xactly is ever left on an out-of-date version of the solution. All new features are automatically delivered over the cloud. Because there is no software to upload or hardware to buy, there is no investment of IT time. Solving comp problems remains a comp issue. Last but not least, without expensive hardware to purchase and maintain, flexible incentive comp becomes accessible and affordable for businesses of all sizes.

PJ: Are there any particular capabilities (that solve what pain points) that you do and no one else does?

CC: Our ease-of-use and speed are big differentiators. When companies use Microsoft Excel to solve compensation problems, they find themselves unable to easily make changes without spending hours essentially coding the connections between spreadsheets. Often times, when they then adopt a solution, they find that the complexity remains. Customized tables link to customized tables. There is no simple way to update a compensation plan without hiring professional services.

Recently, we have had a number of companies who have automated with the old style on-premise or hosted solutions come to us because calculation times were being measured in days and weeks! These companies are switching to Xactly so that they can calculate their entire companies comp in a few hours.

With Xactly, we’ve stripped all of that complexity out. We’ve made it easy to work with compensation plans so that analysts can do what they do best, and not focus on coding. Because of this and our multi-tenant foundation, we are able to provide companies with the fastest solution around. It’s comparatively easy and fast to set up and easy and fast to use. Our customers appreciate the difference.

PJ: Do you think the SPM market is sustainable on its own or it will inevitably become a part of another ecosystem, e.g., a financial management system (FMS), a human capital management (HCM) system, some other (given its possible synergy with configure, price, quote (CPQ), contract management, pricing, etc.)?

CC: At the core of the SPM market lies compensation automation. This is the underpinning that allows for all of the rich analytics and performance improvements. When you realize that almost every company on the planet sells something and has humans who get incented to make those sales, the market is enormous. It is every bit as big as sales force automation (SFA)/customer relationship management (CRM).

Therefore, SPM solutions as a stand-alone product and service are very sustainable.  That said, there are huge synergies between SPM and the aforementioned areas such as HCM, CRM, CPQ and others. This is why we work so closely to integrate and go-to-market with these other players. What is most important, and a by-product of the SaaS phenomenon, is that customers can pick best-of-breed solutions in each area. For example, one enterprise resource planning (ERP) system might fit, with a different CPQ, all integrated into an SPM tool.

PJ: What recent trends in buying behavior (any hurdles and detractors, and drivers and rationale) for SPM software adoption have you seen in the market?

CC: Xactly continues to see significant interest in our solutions from across the marketplace. One unique perspective that Xactly brings is that our solutions cover 90 percent of the companies on the planet. Our Xactly Express product has allowed us to offer the same value and performance that has previously only been available to the large enterprises to companies with small sales teams. At the same time, our Xactly Incent product can calculate all of the incentives of the largest firms in minutes.

The key trends we see are that companies are waking up to the incredible value of the data that is created from our system. Within the comp data mart are data on what was sold, by whom, and at what prices. The data includes pricing metrics, discounting practices, and much, much more. The demand for more data analytics at the fingertips of management is exploding. They want quick ways of knowing what is going on, and what can be done to improve – and we are able to provide this level of insight.

PJ: What is your mobility, big data, and social media strategy (technology and platforms/devices supported)?

CC: Unlike our competitors, we have always believed that SaaS will fuel the SPM market and be the dominant model moving forward. Looking forward, this architecture offers technology advantages that allow us to leverage leading edge solutions such as Apache Hadoop and NoSQL Big Data to provide unparalleled performance and deliver the only way to mine sales data in an efficient, timely and effective manner. As a result we can process analytics up to 100 times faster than the tradition on-premise and hosted providers. This is the difference between usable analytics and slide-ware.

In terms of mobile, it is a must. Sales people are increasingly mobile and we enable them to access critical sales compensation information from their preferred mobile devices – anytime, anywhere. We are the only SPM company with a native Apple iPad application.

On the social side, we integrate with Salesforce Chatter.  From our company business perspective we use Radian6 and of course are very active on Twitter, Facebook, LinkedIn, and Google+. While we have not seen a huge direct business impact, they are valuable platforms to better understand and communicate with our customers. Also on the customer side we have been testing a new customer loyalty/gamification platform that rewards our customers with redeemable points for things like speaking at our user conference, providing a case study or even following us on Twitter. We call the program FOX – Friends of Xactly. Early feedback has been really positive and has been a great way to give back to our customers in a fun and engaging way.

PJ: What were the highlights of your 2011 user conference and what could one see/hear at Comp Cloud 2012?

CC: CompCloud 2011 was our inaugural user conference and we welcomed a sold out crowd of more than 250 customers and partners.  At the recently held CompCloud 2012 we had even more sessions and opportunities for customers and partners to learn and share best practices strategies for leveraging compensation to improve bottom line results.

PJ: What issues/challenges are keeping you up at night?

CC: The main challenge for Xactly is increasing awareness that companies can buck the status quo – spreadsheets. They have so many shortcomings for this usage, yet they are well engrained in many organizations that simply don’t know there is an alternative or are laboring under the idea that “good enough”… is “good enough.” These people simply don’t understand that better results are readily available with modern SaaS solutions. And that these better results are not just improving the lives of sales comp people everywhere, they are changing the velocity and quality of sales everywhere!

PJ: What is your end game, going public, being acquired (for a great price), something else?

CC: We are looking to go public sometime in 2013, but that’s definitely not the end game, it is the beginning game. We will invest the proceeds from that financing event to continue building this business and will continue to execute on our vision.

PJ: Is there anything you are at liberty to volunteer on the company's future moves, i.e., new functional scope, verticals, etc.? Or simply, is there anything you would like to add?

CC: As companies look to optimize the potential of all their employees, we are seeing an increased interest from customers to leverage the power of compensation outside of the sales function. In essence – almost every department in and organization could benefit from variable compensation programs to drive increased performance and we see this as a tremendous opportunity for Xactly moving forward.

Dear readers, what are your comments, thoughts, suggestions or individual experiences with Xactly’s cloud SPM products? What do you think of the company’s strategy and related moves, and do you think that the SPM software market is sustainable in the long run? Generally speaking, how do you handle your sales compensation processes (manually, in an automated way, somewhere in-between)?
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