In-Depth

Xactly Unveils Analytics Service that Helps Customers Cut Costs

In a world of economic uncertainty, Xactly officials say the company's value proposition has never seemed more attractive to potential customers.

• By Stephen Swoyer
• 04/30/2008

When times are tough, you tend to hear a lot more about cost-cutting -- how companies are scrimping and saving and generally stretching each and every dollar to cut their operating costs or squeeze more profits out of their existing resources.

In the minds of many, software-as-a-service (SaaS) is an effective means, in certain contexts, to help companies cut costs -- primarily by doing away with expensive licensing fees, hardware costs, implementation expenses, IT management expenditures, and maintenance or support costs. As the success of on-demand solutions from Salesforce.com, Oracle Corp., Microsoft Corp., and other vendors can attest, it's an attractive proposition -- again, in certain definite contexts.

One such context is sales performance management (SPM), which is an offshoot from (or hybrid of) customer relationship management (CRM).

One vendor that's staked out an enviable position for itself in the sales compensation management segment -- signing deals with The Big Three (salesforce.com, Oracle, and Microsoft) of the on-demand CRM world -- is Xactly Corp. Xactly officials say that in these times of economic uncertainty, the company's value proposition has never seemed more attractive.

This week, Xactly unveiled Xactly Analytics, a new analytic service -- complete with a cleansed and profiled post-sales data mart -- optimized for SPM.

An analytic component is a logical complement to the company's Incent's sales compensation management capability, argues Xactly co-founder Chris Cabrera, who notes that Incent already generates a raft of information -- e.g., what was sold, by whom, at what price, through which channels, and at what level of compensation -- which organizations can sift through to uncover valuable insights.

Xactly Analytics formalizes this information, Cabrera argues, consolidating it into an online repository and giving users access to prebuilt analytics -- e.g., metrics, scorecards, ad-hoc query and analysis capabilities, and executive dashboards -- that are designed to deliver greater insight into sales and sales compensation, product profitability, and customer trends.

"Xactly Anlaytics helps [customers] understand things like performance across [sales] territories, sales quotas, and credit assignments," Cabrera argues. "It gives them greater insight into [sales] forecasting and planning and overall compensation, including [sales] rewards and incentives. All of this [information] is a byproduct of that [post-sales data] they've already generated [with Xactly Incent], so it's just using [formalized] analytics [in conjunction with] this stuff."

Xactly Analytics consolidates data from ERP (orders, customers, and geographies), HR (organizational hierarchies, reporting structures, employee and names), pricing (margins, product bundles, promotions), and product (SKUs, product hierarchies, and master data) systems. Its canned analytics include compensation benchmarks and optimization services, sales effectiveness benchmarks, sales productivity benchmarks, sales profitability benchmarks, peer-to-peer company comparisons, and custom score cards.

All told, Xactly Analytics ships with 13 reports and 46 SPM-specific metrics. Xactly Analytics includes a Report Creation wizard, along with a built-in Expression Editor, that supports more than 50 statistical functions, according to Cabrera.

In addition, the Xactly Analytics repository is based on a star schema data model that's specifically optimized for sales performance management. This amounts to another important differentiator, officials argue.

"We've always had some operational reporting capabilities, and right now we have some basic dashboards that we make available to our customers," says Karen Steele, vice-president of marketing with Xactly, and a veteran of Informatica Corp.

"The big news here is [that] … about 80 percent of the effort is getting the data schema and the data model right, [and] what we've done over the last six months is … just that. The goal is to really give companies out of the gate complete ad hoc capabilities."

Xactly plans to unveil the first rev of Xactly Analytics, along with version 4.0 of Xactly Incent, version 4.0 of Xactly Modeling, and version 4.0 of Xactly Connect, in June. Because of its SaaS underpinnings, Steele says, Xactly can quickly add new reports, metrics, or scorecards to Xactly Analytics. Once a report or metric is added to the base Analytics service, it's available to all customers, she notes. "It's something that we can easily enhance over time, and [customers] can, of course, build their own [custom reports or metrics], too," Steele maintains.

Inexpensive Sales Compensation Management

Xactly president and CEO Chris Cabrera says he knows just how expensive a proposition an on-premises sales compensation management system can be. He and co-founder Satish Palvai (Xactly's vice-president of engineering) both helped build and market one, he says, in a former life.

"We came from an on-premises enterprise application, where we were just solving the big pain [associated with figuring out] sales commissions. We had a great experience and a great ride, and we built that company from zero on up to $100 million [in revenues], but we realized very quickly that the vast majority of companies just couldn't afford it," Cabrera indicates, citing licensing expenses, hardware expenses, implementation costs (and time-to-implementation), services or integration costs, and ongoing support and maintenance fees.

Add it all up, Cabrera argues, and you're talking about a prohibitively expensive proposition -- particularly for small to mid-size customers.

What Xactly does, he maintains, is behavior modification of a sort: it gives sales people, directors of sales and marketing, and other principals more insight into the compensation process, which -- in turn -- helps them better structure and target incentives, in addition to empirically boosting the effectiveness -- and the competitiveness -- of a sales force.

Cabrera uses the example of a major auto parts retailer, an Xactly customer, that is deploying his company's Incent sales compensation management solution to rank-and-file sales people such as sales clerks who typically earn between $10 and $15 an hour.

The company hopes to boost incentives for rank-and-file clerks -- and to give them insight (via Xactly) into just how much sales incentives can be in order to increase in-store sales.

"What we do is, first, behavior modification of the sales team. We help companies pay differently, more accurately, [and we] provide Web-based visibility to the sales team. In so doing, we get the sales team to sell more stuff, change the product mix that they're selling, and improve their ability to target and compete," Cabrera observes.

There's a theoretical bent to what this company is doing, of course: it doesn't know if this approach will achieve much of anything, Cabrera concedes. The salient point, he stresses, is that a SaaS solution like Xactly Incent gives them a quick and easy way of finding out. The retailer doesn't have to spend an enormous amount of up-front money (in licensing, hardware, and services costs), nor must they endure a lengthy time-to-implementation. Call it sales compensation management prototyping, Xactly-style.

"The beauty of SaaS [for this purpose] is that it is affordable, obviously, but it's all about risk mitigation. When I used to sell this stuff before, it was such a leap of faith, you were asking a customer to hold your hand and basically take your word that this stuff would more than pay for itself," Cabrera comments.

"With [Incent], we can tiptoe into the shallow end with our customers and test the water, and if they don't like it, they can step right back out. There isn't this big investment up front, and that is something which is unique to SaaS that you can't accomplish in the on-premises world."

With the economy on shaky ground, Cabrera argues, this value proposition becomes even more compelling. "This is a time when nobody wants to spend money, but if [a director of sales goes] go in and says, 'Mister CFO, for $5,000 a month we can probably get our 200-person sales team to sell more and sell more effectively' -- that's going to hit a nerve."