The Unrealized Potential of Incentives in the Call Center

Inbound or outbound, sales or service side, agent or supervisor: cash is king when it comes to call center compensation. Carefully calibrated cash-compensation plans - combining fixed and variable pay - certainly ought to be the bedrock on which to build a productive call center team. We all have to eat and pay the bills. But can cash by itself really overcome the challenges of inspiring top-flight sales and customer service behaviors, and retaining call center personnel?

Enter non-cash rewards incentive programs. Savvy call center managers know the power of contests and incentive programs, particularly in uncertain economic times like these, when base compensation is holding relatively steady. Many call centers have used contests with cash or non-cash rewards, recognition programs, or other incentives. And, again, cash rewards have their place in this scheme. But non-cash rewards - currently underutilized and undervalued - are what have the most potential to drive and motivate behavior.

Cash rewards can be seen as an extension of cash pay. In motivating group behavior, cash rewards can provide an excellent incentive. Cash is impersonal - we all like it equally. Non-cash rewards, on the other hand, can be highly personal and thus extremely motivating for individuals. That is, provided the individual truly wants the non-cash prize that is offered. This is just one point where non-cash rewards programs haven't lived up to their potential. Too often, non-cash rewards programs have been boring, being limited to fixed-prize giveaways like gift cards (27 percent of which are left unredeemed, according to Consumer Reports!) or to one-size-fits-all prizes that don't get everyone equally excited.

Another issue with rewards programs, cash or non-cash, is that they are rarely well integrated with companies' overall compensation programs and are consequently more often tactical than strategic. That is, they are valuable as "kickers," and for getting people to "stretch" to meet a short-term goal, but not ideal for molding sustainable long-term behaviors. How they are managed and tracked hasn't helped either as management by spreadsheet (today's standard method) results in dumbed-down contests that do little to motivate employees over the long haul.

But it doesn't have to be this way. When liberated from the confines of management-by-spreadsheet and one-size-fits-all prizes, non-cash rewards incentive programs can go where cash compensation can't. They can be personalized and highly targeted to specific individuals at any level across any call center audience (outbound selling, customer service, collections, etc.). They can be made not just more compelling but also "stickier" than cash, meaning that employees will be less likely to forget why they received them. They can play on the desire for instant gratification, in that they can be tied to points that can be immediately redeemed via the Web for merchandise, travel, entertainment, etc. And they can be integrated with strategic compensation programs and CRM applications to become a major driver in improving and sustaining call center productivity and combating turnover.

What it takes is a programmatic approach, resting on best practices and enabled by a level of automation similar to that provided by today's ubiquitous CRM applications. Part Two of this series will examine these best practices, while Part Three will explore automation strategies and potential return on investment (ROI).

The Business Case for On-Demand Sales Performance Management Analytics with Xactly and THINKStrategies

Tuesday, July 29, 2008 10:00 AM - 11:00 AM PDT

Register to learn more:
https://www1.gotomeeting.com/register/415893690

CRM applications have revolutionized the selling process, organizing pre-sales data that reps and management need to manage the sales pipeline. But what about "post-sales" data? There is a ton of information produced at the time of sale that is effectively orphaned-information on what a customer actually bought, the final price, the commission paid, the territory where it was sold, etc. This is data that, if collected and cleansed, can be used to increase sales performance and maximize profits going forward.

In this Webinar, Xactly's Karen Steele and THINKStrategies' Jeff Kaplan will discuss how post-sales analytics can provide new and strategic insight into an organization's selling patterns, commission spend, product performance, sales rep and team performance, and sales plan effectiveness. They will examine how post-sales data-traditionally scattered across a variety of disparate systems including ERP, HR, and Payroll-can be now be integrated and analyzed with an eye towards enhancing business strategies, changing sales rep behaviors, and super-charging sales organizations.

Participants will take away:

• Best practices for integrating and analyzing post-sales data to optimize sales performance.
• An understanding of how post-sales data can be leveraged daily by reps within their CRM applications to maximize profits - for the company and for themselves.
• A view of the broad scope of business processes that benefit from post-sales analytics - from sales compensation management to territory and quota management to pricing management and sales forecasting/planning.

Speakers:

Karen Steele, Vice President of Marketing, Xactly Corporation
Karen Steele is responsible for managing all aspects of Xactly's worldwide marketing.

Jeff Kaplan, Managing Director, THINKstrategies
Jeff Kaplan is the founder and managing director of THINKstrategies (www.thinkstrategies.com), a strategic consulting firm that helps IT enterprise decision-makers with their sourcing strategies; solution providers with their marketing strategies; and venture firms with their investment strategies.

Register to learn more:
https://www1.gotomeeting.com/register/415893690

This upcoming webinar expands on one of our previous posts:
The Power of Linking Non-Cash Incentives to CRM


Introducing Xactly Rewards for Salesforce Force.com: Leverage your CRM Investment & Increase Adoption

Motivate and recognize your top performers with non-cash reward programs integrated directly with your Salesforce application. Empower your sales, marketing, support and call center teams to effectively run contests, special performance incentive funds (SPIFs) and other incentive programs with immediate redemption for millions of leading brand merchandise items, travel & leisure options, tickets for theatre, concerts and sporting events and more.

Join Xactly and Astadia as we discuss the impact this new and innovative application can make throughout your organization.

Date: Wednesday, June 25, 2008
Time: 11:00 AM - 12:00PM PST

Join us and learn how to get your first 90 days free!

Register to learn more: https://www1.gotomeeting.com/register/602120293

When it comes to incenting behaviors non-cash rewards are typically under-utilized, yet they can be extremely effective in driving behavior in ways that cash compensation can't. Cash is king, but cash is impersonal and predictable. Non-cash rewards, on the other hand, are extremely engaging when the prize is something that the targeted recipient truly wants and considers worth striving for. In fact, a University of Chicago study found that using non-cash incentives improved employee performance by 38.6% vs. 14.6% for cash rewards.

With Xactly Rewards for Force.com, you can quickly automate these programs and tie them to activity in your Salesforce CRM application while providing immediate access to the widest possible selection of value-oriented tangible rewards.

Join Xactly and Astadia to learn how this revolutionary application can impact the performance of your sales, marketing, service, support and call centers.

Register to learn more: https://www1.gotomeeting.com/register/602120293

Learn more about Xactly Rewards for Force.com: http://www.xactlycorp.com/resource_center/Rewards_ds.pdf

This morning we announced the availability of new benchmark research from Ventana Research, underwritten in part by Xactly, that highlights the growing need for companies to improve their sales performance management processes in order to boost top- and bottom-line business results. Titled "Improving the Performance of Sales Organizations to Maximize Strategic Value," the research also offers recommendations for companies looking to evaluate and enhance sales performance management processes and systems.

Says Ventana Research, "Improving sales performance is a primary motivating force for most businesses that rely on a sales force to generate revenue. Assessing and improving sales performance management processes is not just important, but imperative."

Click Here to Download the Report
(no registration needed)

Click Here to Read the Press Release
(no registration needed)

This webinar provides deeper dive into a previous blog entry: SaaS + Sales Performance Management = Recession Resilience

With recession alarm bells going off all over the world, smart managers are looking for ways to make their businesses more recession resilient. Reducing your cost base, making sure you have operational flexibility, and boosting employee productivity are three well-proven tactics. In a recession, businesses need to invest in getting the most profit as possible out of their front-line employees.

In this educational Webinar, Xactly founder and CEO Christopher Cabrera will discuss how Sales Performance Management (SPM) solutions can boost performance and results and why companies should care in the best of times and during an economic slowdown.

Liz Herbert, Senior Analyst at Forrester will discuss how Software as a Service (SaaS), while not an option during the last recession, has established a track record over the past several years.

Key questions will be addressed:
- What are the key economic value drivers of the SaaS delivery model?
- How does Sales Performance Management impact employee and business productivity in a down economy?
- SaaS delivers lower costs and enhanced flexibility, but where does that leave employee and business productivity?
- How do SPM solutions provide value by helping to align sales behaviors to corporate objectives?
- Why is subscriber retention one of the key success metrics to determining success?

Registration Required: https://www1.gotomeeting.com/register/451142996

Everyone says different things about SaaS, with disagreements going down to the basic definition of what qualifies software as a service. Christopher Cabrera recently spoke with Krissi Danielsson at ebizQ about common SaaS misconceptions. Listen to the podcast below, or read the transcript.

Download file

Sales and finance professionals don't always find the common ground required to meet their mutual goals. Christopher Cabrera offers some insights on how to bridge the divide between sales and finance.

Christopher Cabrera recently completed a series of short videos with Gerhard Gschwandtner, Founder and Publisher of Selling Power. In this series they cover topics ranging from issues created by managing sales compensation with spreadsheets, key elements of sales compensation plans, and sales performance management.

Part I: Sales Performance Management and Compensation

(Runtime 5:07)

Part II: Successful Compensation Plans

(Runtime: 5:05)

Part III: Sales Performance Management

(Runtime 5:28)

When it comes to incenting behaviors, non-cash rewards are typically under-utilized, yet they can be extremely effective in driving behavior in ways that cash compensation can't. Cash is king, but cash is impersonal and predictable. Non-cash rewards, on the other hand, are extremely engaging when the prize is something that the targeted recipient truly wants and considers worth striving for. A vacation at the beach. An adventure package. Designer fashions. A day at the spa. That new set of golf clubs. The key is to let each individual decide what prizes motivate them the most - call it self-personalization - and then show them a way to attain them through their go-the-extra-mile actions. All-too-predictable fixed-prize contests don't come close in their ability to engage desire and personalize motivation. And those gift cards? Twenty-seven percent of them are tossed away, estimates Consumer Reports.

So how do you leverage non-cash rewards effectively? There are several steps. The first is to automate their management. One reason today's non-cash incentives are treated as one-offs and limited to fixed-prize giveaways is because they are tracked manually, typically in spreadsheets. Hence they have to be simplified. When you apply the same type of automation to tracking these contests as you do with tracking your sales leads and progress via your CRM application, you can start developing sophisticated, yet easily manageable, non-cash incentive programs precisely tailored for each specific audience or individual within the sales organization or across the entire company.

The next step is drive performance by delivering the widest possible selection of value-oriented tangible rewards. Give each person something personally meaningful to shoot for. Give them the ability them rack up points, with the points immediately redeemable for the prizes of their choice. This means leveraging the Internet for prize selection and points redemption, as well as for the power of instant gratification.

The final step is integrating your non-cash rewards program management with your CRM application. From a process standpoint, this provides the ability to tie actions to points automatically - for example, a lead becomes qualified, then points are automatically assigned and immediately viewable within the CRM application. From a visibility and instant-gratification standpoint, recipients and their management gain the ability to check earned and redeemed point balances at any time while logged into the CRM application, and instantly redeem their points online. And from an ongoing motivational standpoint, they can see how they earned their points, and how they can earn more.

We recently had a little fun in creating a video that promotes our Xactly Rewards product, which addresses the complexity of creating and managing an effective non-cash rewards program. Enjoy!

With recession alarm bells going off all over the world, smart managers are looking for ways to make their businesses more recession resilient. Reducing your cost base, making sure you have operational flexibility, and boosting employee productivity are three well-proven tactics. Software as a Service (SaaS) wasn't an option during the last recession. But SaaS has established a track record over the past several years, decisively proving its value in supporting the first two tactics: cutting costs and increasingly flexibility. And what's valuable in the best of times can prove priceless in the worst of times.

You know the litany. In contrast to on-premise enterprise software, SaaS means no upfront hardware and software costs, no worrying about costly ongoing software maintenance, and no vendor lock in. Instead of being tied to an expensive software infrastructure, you're free to quickly implement changes. And if a SaaS vendor doesn't perform, you're free to immediately choose one that will and be up and running in a matter of weeks. Believe me, savvy SaaS vendors know this. Subscriber retention is one of our key success metrics, along with speedy initial implementation and the ability to quickly deliver innovative new functionality.

So, while SaaS delivers lower costs and enhanced flexibility, where does that leave employee and business productivity? Obviously, not all software applications-SaaS or on-premise-deliver equal productivity boosts, at least not of the kind that directly impact the bottom line. Yet some categories excel in their ability to do so, including Sales Performance Management (SPM) applications. In a recession, businesses need to invest in getting the most profit possible out of their front-line employees. SPM applications provide this value by helping align sales behaviors to corporate objectives, focusing reps on the most strategic sales, maximizing agility in the face of market change, and providing visibility into sales success drivers through comprehensive analytics. And along the way, they help greatly reduce administrative time and costs, and support compliance efforts.

The last recession was a boom time for early-generation SPM applications-and that was even before the advent of SaaS. Today, thanks to the SaaS model, the SPM arena is expanding in scope like never before, and SPM functionality such as on-demand sales compensation management is finally affordable to companies of any size.

SaaS plus SPM delivers a genuine double whammy in the face of recession: SaaS economic value combined with SPM strategic business value. It just makes good business sense, whether you are managing in a recession or in a vibrant high-growth economy.

2007 was a momentous year for Software as a Service (SaaS), as it emerged as a disruptive force in an increasingly complacent industry. And while it would be easy to say that growing customer interest will propel SaaS to new heights in 2008, I believe there's something going on right now that is about more than mere market momentum. From my viewpoint, SaaS is becoming increasingly savvy, and it isn't too far-fetched to think we'll soon being talking in terms of SaaS 2.0.

Here's what I mean. In 2007, we were still witnessing the first generation of many SaaS solutions. Their limited functionality led to criticism that they weren't as robust as their enterprise software counterparts. In 2008, we will see more SaaS companies building out or partnering to provide more robust solutions and platforms, along the lines of salesforce.com's Force.com platform.

This is already happening in the market in which Xactly competes, as Incentive Compensation Management (ICM) offerings are morphing into full-blown Sales Performance Management (SPM) solutions, with rich analytics and functionality such as territory and quota management.

Just as exciting to me, SaaS will breathe new life into struggling enterprise software sectors in 2008, and will create entirely new sectors by lowering the cost of entry vis a vis traditional software models. This is huge. And the fast-expanding SPM segment is proof that it is starting to happen.

At the same time, SaaS will create entirely new ecosystems. In 2007, we witnessed the delivery of mash-ups combining data and SaaS functionality via single sign-on. In 2008, we will see SaaS companies supporting end-to-end processes and seamless user experiences through deep integration, software suites, or partnerships.

And through it all, SaaS vendors will only get smarter about customer needs. The advantage of managing all customer deployments under a single umbrella, as SaaS vendors do, is that we are better able to find common threads across customer problems, needs and desires. And customers don't have to wait for the next release cycle-which, in the enterprise software world can mean waiting a year or more-for a SaaS vendor to implement major fixes and changes across the board. In fact, SaaS vendors are free to be innovative and practically impelled to deliver ever more value, because we are developing a single line of code for one platform shared by all users.

Finally, in 2008, Wall Street will increasingly wake up to SaaS as we witness an up-tick in SaaS IPOs, despite the down market predicted for the first half of the year. The recent successful IPO of Xactly partner and customer, SuccessFactors, is likely a harbinger of things to come. Along these lines, Wall Street bankers, investors and enterprise customers will come to see the distinction between tactical SaaS applications that conveniently automate non-mission critical business functions like recruiting versus truly strategic SaaS applications like SPM, which are at the center of driving business growth and profits.

Okay, I admit to a bias. But, as the SaaS industry matures, I firmly believe it will continue to burn a hole right through traditional software models throughout the rest of this decade and beyond. Whether we call it SaaS 2.0 or not, the SaaS we'll come to know in 2008 will be light-years ahead of the SaaS we knew in 2007- in terms of functionality, robustness and appeal and, most importantly, in its ability to game-change a customer's competitiveness and profit picture.

It's no secret there's a sea change occurring in enterprise software, as "on-premise" increasingly gives way to "on-demand." What's not so evident yet is the shift in power from the vendor to the customer that is occurring as a result of the on-demand revolution. In a recent article posted on ebizQ, I discuss how the growing popularity of on-demand SaaS applications will lead to a more customer-centric and responsive software industry. This is because in the on-demand world, the customer is firmly in the driver's seat and can pull the plug on the vendor at any time. As opposed to on-premise software implementations, on-demand implementations have no expensive infrastructures and no sunk costs that lock customers in and limit their flexibility to make a change.

Nevertheless, customers need to step warily. As more and more large enterprise software companies test out the SaaS waters with initial on-demand offerings, there's no guarantee they will support their on-demand customers properly. After decades of locking customers into expensive on-premise software and subjecting them to lengthy implementation cycles and costly upgrades, who's to say these companies can suddenly and successfully shift gears and become paragons of customer care?

Then there are those vendors who are trying to cash in on the on-demand cachet by offering "hosted on-demand" applications that are really just the same old on-premise applications running remotely, and which have few of the advantages of a genuine on-demand application built on a multi-tenant SaaS model. There are some rude shocks just around the corner for the customers of these guys, who by blurring the truth are setting themselves up to disappoint their clientele.

So as you slide into the driver's seat and take the wheel in the brave new on-demand world, how do you make sure you're not going to be fooled and are indeed going to get all the value that you expect? In the ebizQ article, I posit a brief checklist to help customers navigate the maze of on-demand claims and promises. Like any good driver, you'll want to run down such a list before turning the key. Check out the full article here, and let me know what you think: www.ebizq.net/topics/bpm/features/8567.html

I've written before in this space about the natural synergies that exist between CRM and sales compensation management applications. Pre- and post-sales visibility/automation are truly just different sides of the same sales performance management coin. In an article recently written for CustomerThink.com, I discuss these synergies in depth, and show how one company has been able to extend its CRM investment in a powerful way.

Specifically, the company has linked its sales compensation management solution directly to its Salesforce implementation so that reps now run "what if" scenarios based on Salesforce CRM "live" opportunity data coupled with accurate compensation plan data from their Xactly Incent implementation. Notably, they are able to do it all within Salesforce CRM.

The big benefit is that the people in the field can now easily see where to direct their sales efforts for maximum commission payouts. As these payouts are a reflection of where the company wants them to put their best efforts, the whole business gains. That's powerful stuff. And it's something that any company with a Salesforce, RightNow, or Oracle Siebel CRM On Demand implementation is in a position to take advantage of. For the details, please read the full story at: www.customerthink.com/article/connect_dots_crm_sales_compensation

Could the NetSuite IPO be the beacon for a sea of change between Software as a Service companies and Wall Street? Are the days of trepidation for the SaaS business model, security and viability waning?

As I watch the revenue and sheer number of customers for on-demand companies like Salary.com, DemandTec and NetSuite amass-I say yes. All three companies are demonstrating to the market the benefits of this efficient and cost-effective model and calling Wall Street to attention.

Sure, a lot of companies are founded on a pure SaaS model, but relatively few have reached the public markets successfully. Why is this? It's because many people are still struggling to understand the SaaS model and failing to truly grasp the fundamental differences between SaaS-based and on-premise software offerings. Investors can't look at SaaS companies through the same lenses they have used for years with traditional enterprise software companies. When I talk to investors, I tell them to focus on two main differences: customer renewal and the revenue dynamic.

First, recognize that SaaS companies are built from the ground up around customer satisfaction and customer renewal. To survive, they must earn the customer's complete satisfaction every year, and often, every month. This focus is very different from traditional software companies whose first priority is to get to the next million dollar license deal in order to keep Wall Street happy, and whose second priority is to have these customers pay expensive ongoing maintenance and upgrade fees.

The second major difference: because there is no million dollar license fee, the revenue trails traditional software companies. This is actually great for investors because revenue SaaS companies earn is not an artifact from a relatively few very large deals, it comes from hundreds and hundreds of happy customers. This revenue dynamic is also the reason SaaS companies are so attractive and so much more predictable to Wall Street.

Because of the business model differences, it takes a little longer for SaaS vendors to ramp to the revenues that will justify an IPO, but-have no doubt-they are getting there fast. Salary.com, DemandTec and Netsuite are proving that it can be done and are helping to move the SaaS IPO market forward.

From a customer perspective, why SaaS and why now? SaaS offers customers an undisputable value and time to market advantage over traditional enterprise models, including no hardware, no maintenance fees, minimal implementation fees and, most importantly, no software upgrades. This means new features are available to customers instantaneously, as soon as they are live, saving customers from expensive upgrade costs while ensuring they'll never trail behind on older releases of software.

SaaS is also breathing new life into technologies that were too expensive for the masses in a traditional enterprise model. The fast growing Sales Performance Management market is living proof. Founded on a pure on-demand or SaaS model, Xactly Corporation has quickly amassed more than 70 customers including Salesforce.com, CNet and Polycom-all of whom are now utilizing an on-demand Sales Performance Management platform to create a strategic competitive advantage within their businesses.

For companies like Xactly and investors in the market, the SaaS IPO tipping point may very well be here, and I think it's about time.

If ever there needed to be a "big bang" validation of the software-as-a-service (SaaS) concept, then SAP's September 19 unveiling of its Business ByDesign on-demand software for midsize companies surely suffices. Not only is SAP the first major enterprise software player to get serious about SaaS, it is the absolute largest enterprise software player and its move is thus freighted with significance.

But there really doesn't have to be a big-bang validation of SaaS. Many thousands of customers are endorsing the concept every day as they leverage SaaS offerings, and will continue to do so in increasing numbers, with or without the help of traditional enterprise software companies. It is not SAP nor any other huge software company that will drive SaaS. It is the customers who are in the driver's seat, and SAP is wisely reacting to this fact. And now SAP will have to meet these customers' expectations-expectations built up by trail-blazing, 100 percent SaaS companies like salesforce.com, NetSuite and Xactly.

There's no doubt that SAP's on-demand offerings have the potential to provide immense value to the targeted customers-SaaS delivery coupled with SAP functionality packs a powerful punch. But SAP is not about to abandon its on-premise model anytime soon, and its management will be wrestling for some time with such issues as how to keep from cannibalizing its bread-and-butter software licensing revenues and how to successfully support two entirely different delivery models. And along the way, they will learn what 100 percent SaaS companies have known from the start: If you don't meet the expectations of SaaS customers, they can cut you off in an instant, no questions asked. That's not something that enterprise software vendors, with their long-term licenses and claws sunk deeply into their customers' costly IT infrastructures, have traditionally needed to deal with.

Still, SAP is doing the smart thing by getting started in SaaS now, when it can be lifted by the rising SaaS tide. In doing so, SAP will add to the tide by increasing the portfolio of software functionality available to customers on demand. SAP's move doesn't prove that SaaS is viable. That's already established. What it really demonstrates is that the traditional enterprise software model is not all that viable for most companies. And for that we welcome SAP to the SaaS world.

If ever there needed to be a "big bang" validation of the software-as-a-service (SaaS) concept, then SAP's September 19 unveiling of its Business ByDesign on-demand software for midsize companies surely suffices. Not only is SAP the first major enterprise software player to get serious about SaaS, it is the absolute largest enterprise software player and its move is thus freighted with significance.

But there really doesn't have to be a big-bang validation of SaaS. Many thousands of customers are endorsing the concept every day as they leverage SaaS offerings, and will continue to do so in increasing numbers, with or without the help of traditional enterprise software companies. It is not SAP nor any other huge software company that will drive SaaS. It is the customers who are in the driver's seat, and SAP is wisely reacting to this fact. And now SAP will have to meet these customers' expectations-expectations built up by trail-blazing, 100 percent SaaS companies like salesforce.com, NetSuite and Xactly.

There's no doubt that SAP's on-demand offerings have the potential to provide immense value to the targeted customers-SaaS delivery coupled with SAP functionality packs a powerful punch. But SAP is not about to abandon its on-premise model anytime soon, and its management will be wrestling for some time with such issues as how to keep from cannibalizing its bread-and-butter software licensing revenues and how to successfully support two entirely different delivery models. And along the way, they will learn what 100 percent SaaS companies have known from the start: If you don't meet the expectations of SaaS customers, they can cut you off in an instant, no questions asked. That's not something that enterprise software vendors, with their long-term licenses and claws sunk deeply into their customers' costly IT infrastructures, have traditionally needed to deal with.

Still, SAP is doing the smart thing by getting started in SaaS now, when it can be lifted by the rising SaaS tide. In doing so, SAP will add to the tide by increasing the portfolio of software functionality available to customers on demand. SAP's move doesn't prove that SaaS is viable. That's already established. What it really demonstrates is that the traditional enterprise software model is not all that viable for most companies. And for that we welcome SAP to the SaaS world.

Reeling from tight IT budgets and the consequent popularity of new software-as-a-service (SaaS) offerings, many enterprise software vendors are casting around for ways to dress up their own offerings and perhaps cash in on the cachet of SaaS and on-demand delivery. What several have come up with is the "hosted on-demand" label, which in reality is nothing more than draping the tired old enterprise software wolf in ill-fitting sheep's clothing. As I've said before, enterprise software by any name, hosted or otherwise, is not a substitute for true on-demand. Software vendors taking this re-labeling route are doing a colossal disservice to customers, whether those customers buy into the name game or not.

So, what does "hosted on-demand" have to offer? Disappointments, mostly. What these vendors are doing is simply providing the same old premise-based software in a hosted environment, coupled with a seemingly substantial-but not nearly substantial enough-price break. And under the fleece is the same old ravening wolf. Hosted or not, these are still expensive solutions to implement, and shaving 30 percent or even 40 percent off the typically enormous up-front implementation cost doesn't change that fact-and there's still the monthly fees for accessing the hosted software to contend with. These are also typically complicated and inflexible solutions and just because they are now off-premise doesn't necessarily change that fact.

What may well change, however, is a customer's support priority. With two models to support-on-premise and hosted-there's an almost invariable dilution of resources. Which customers do you think a traditional enterprise software company is most likely to make its top priority? And for that matter, what about new functionality, version control, reliability and scalability? On-premise and "hosted on-demand" implementations are identical in that each customer is a discrete box, or technology platform-it's just that in a hosted implementation, that box has been moved off-site. But with a true on-demand solution, all customers share the exact-same platform. Just as they all share the same low cost-base, they all benefit equally from more rapid introduction of new functionality as well as from identically robust version control, data security, disaster recovery and scalability. In numbers, there is strength.

So buyer beware. Don't be misled by labels. If you want on-demand, go with pure on-demand solutions, 100 percent purpose built to deliver the full benefits of SaaS. Avoid the nasty shock of being fleeced, and let the wolves go howl.

Reeling from tight IT budgets and the consequent popularity of new software-as-a-service (SaaS) offerings, many enterprise software vendors are casting around for ways to dress up their own offerings and perhaps cash in on the cachet of SaaS and on-demand delivery. What several have come up with is the "hosted on-demand" label, which in reality is nothing more than draping the tired old enterprise software wolf in ill-fitting sheep's clothing. As I've said before, enterprise software by any name, hosted or otherwise, is not a substitute for true on-demand. Software vendors taking this re-labeling route are doing a colossal disservice to customers, whether those customers buy into the name game or not.

So, what does "hosted on-demand" have to offer? Disappointments, mostly. What these vendors are doing is simply providing the same old premise-based software in a hosted environment, coupled with a seemingly substantial-but not nearly substantial enough-price break. And under the fleece is the same old ravening wolf. Hosted or not, these are still expensive solutions to implement, and shaving 30 percent or even 40 percent off the typically enormous up-front implementation cost doesn't change that fact-and there's still the monthly fees for accessing the hosted software to contend with. These are also typically complicated and inflexible solutions and just because they are now off-premise doesn't necessarily change that fact.

What may well change, however, is a customer's support priority. With two models to support-on-premise and hosted-there's an almost invariable dilution of resources. Which customers do you think a traditional enterprise software company is most likely to make its top priority? And for that matter, what about new functionality, version control, reliability and scalability? On-premise and "hosted on-demand" implementations are identical in that each customer is a discrete box, or technology platform-it's just that in a hosted implementation, that box has been moved off-site. But with a true on-demand solution, all customers share the exact-same platform. Just as they all share the same low cost-base, they all benefit equally from more rapid introduction of new functionality as well as from identically robust version control, data security, disaster recovery and scalability. In numbers, there is strength.

So buyer beware. Don't be misled by labels. If you want on-demand, go with pure on-demand solutions, 100 percent purpose built to deliver the full benefits of SaaS. Avoid the nasty shock of being fleeced, and let the wolves go howl.

Delivering a world-class customer experience is a goal for any forward-looking organization. In Xactly's case, the focus is on providing customers with the ultimate sales performance management experience, a result we can deliver by providing companies the means to aggregate, cleanse, centralize and analyze post-sales data on-demand.

Last week Xactly announced its product roadmap for the next 18 months. The big picture is that over the coming months, Xactly will deliver the most comprehensive array of on-demand sales performance management solutions from a single vendor. Available now is Xactly Incent 3.2, a Web-based incentive compensation application that enables medium-size enterprises in any industry to improve sales effectiveness and maximize profits. A new, complementary module for Xactly Incent, Xactly Modeling™, empowers finance and sales to determine the impact of commissions expense forecast, organization plan and compensation plan changes in advance of implementing them. And to provide greater options for seamless connectivity, we have made available an open set of APIs called Xactly Connect™. These recent additions round out the Xactly product family including Xactly Data Management™ and Xactly Analytics™ announced last year. And coming soon is Xactly Rewards™, a non-cash incentive capability to augment your cash incentive programs as well as Xactly Territory ™, Xactly Quota ™, Xactly Forecast/Planning ™ and Xactly Price Management™.

But the meat of the news from Xactly last week addresses the critical need companies have to automate sales and finance business processes in and around sales performance management, and to create an on-demand repository for this data that is centralized, secure and hosted.

Fortunately for customers, Xactly gets this. Xactly's vision is to help companies leverage this business data to automate mission critical business processes that comprise sales performance management to help companies improve operational performance and maximize profits. By aggregating data from a variety of disparate systems and feeding it to the Xactly Incent sales compensation management application, customers gain a one-stop shop for all sales performance-related data. Coupled with the Xactly Analytics module, customers can slice-and-dice data to determine what products were sold, to whom, through which channels, and at what price. The result is the most accurate reflection of what's going on in the field a company can have. Let's take a look at an example: Imagine that you are a hardware vendor and you have just sold a million dollar deal to IBM. IBM is located on the East coast, so it is booked on the East, but it was the West coast team that closed the deal. The process of calculating compensation takes into account all of these dynamics and scrubs the data so you have the clearest possible picture of what was sold in which geography, transaction by transaction. This means that after the compensation process, you truly have the richest and most accurate data in your company.

At the center of any company's sales performance management strategy is the business data which includes what products have been sold to whom, through which channels, in which geographies and at what price points. Xactly Corporation is uniquely suited to automate several key business processes for finance and sales that leverage this business data including quota and territory management, price management and forecast/planning in addition to the capabilities it offers today

In the above diagram, the inner circle illustrates Xactly's core focus for delivering on-demand sales performance management, while the outer ring represents Xactly's ecosystem of partner strategies whose solutions are synergistic to Xactly Incent. Through such strategies, Xactly is able to provide greater value to customers and partners.

The complete line of Xactly sales performance management solutions have all the rich features you'd expect, and then some. We know customers require greater automation of business processes that enable sales and finance to increase productivity and profits. Our holistic approach is focused on helping companies significantly improve performance by optimizing the effectiveness of selling channels, impacting a business's bottom-line, and managing risk and compliance.

We also get that customers aren't interested in patching together point solutions from multiple vendors. Can you imagine buying your car's engine from one dealer, the frame from another, wheels from a third, and so on? Of course not. Going forward, customers can buy with confidence today knowing that Xactly will deliver the industry's most comprehensive and integrated on-demand sales performance management suite.

Xactly remains the only sales compensation and sales performance management vendor to offer a 100 percent multi-tenant on-demand architecture, which ensures customers will experience a low total cost of ownership, seamless product upgrades and first-class security.

Customers are truly excited about these innovations. They want their business operations to hum, and Xactly, with its focus on providing a hosted, secure and centralized repository for post-sales data, is uniquely capable of making the ultimate sales performance management dream a reality and the experience world-class.

In the news this week was a report of yet another business being investigated for back-dating stock options for executives. This company is not the first and surely won't be the last to have the authenticity of its business data tested in a public forum. Each time it happens I am reminded of the importance of data accuracy and consistency, not to mention personal accountability.

In my experience, I've seen firsthand what happens when the various functional areas of a company are not on the same page. More than one product launch has been torpedoed because sales was selling a product that marketing had marketed but which was not quite completed according to the engineering team.

On a larger scale, businesses are sunk every day because members of the executive team are aware only of information from their particular business silos. Rather than being connected, data is treated as if it exists in a vacuum, removed from and not at all dependent upon data from other departments in the organization. Frequently, this issue leads to problems that effect a company's balance sheet. Too often, the results are more serious, including jail time for certain individuals.

To avoid this, businesses need to take a close look at the process by which they share data across the organization. Take, for example, the critical issue of sales performance management. For many companies, there is no greater need than to ensure sales is meeting its goals and objectives. But what happens when sales data is disconnected from finance, and vice versa?

Consider the consequences of this vignette: At an executive management meeting, the vice president of sales shares data regarding the number of deals the company closed in a given quarter. Everyone is excited because the sales team met its number. That is until the CFO lets it be known that the cost of providing commissions to the sales representatives, combined with the cost of the programs implemented by marketing to drive sales activity, is greater than the total revenue created by the sale of the products. If sales, marketing and finance had been on the same page with respect to each group's numbers, this situation could easily have been avoided.

The goal of sales performance management applications, like Xactly Incent, is to centralize key sales-related data in a common repository. When all data is in a common location, data analysis and reporting is easier and more effective. Until recently, there was no easy way to connect "islands of information" for sales performance management purposes. But that has changed with the availability of Xactly Connect, the world's first on-demand incentive compensation management integration platform that connects any system to Xactly web services APIs, resulting in transparent integration to the user.

The point of the story is, when one business hand knows what the other is doing, the chances of success are much greater. Every employee, across departments, as well as business partners, can participate in a seamless business process that puts information in the hands of people when they need it most. The challenge is getting on the same page; the answer is to get connected.

Compensation modeling is an important component of the sales compensation profession, affecting everyone in the industry, from individual sales persons to CFOs. There are many schools of thought as to how to approach this problem. Historically, automated solutions have only provided a point solution for one aspect of the modeling challenge. Until today. Xactly Modeling provides a fully integrated and fully functional modeling environment to leverage all critical requirements for the finance and sales professionals.

What We Have Learned

Leveraging our extensive domain expertise, Xactly has identified several key capabilities to effectively automate sales compensation management modeling. These should be considered as requirements in any evaluation of an sales compensation management vendor. Any vendor not able to adequately support the requirements below will not be able to meet all of the day-to-day scenarios needed to safely test, validate, and promote your business strategies into daily practice.

• Plan Modeling
  
  • Micro level (per payee)
    
  • Macro level (for organization or channel)
• Forecast Expense Modeling
• Organizational Modeling
• Bi-directional Support
• Separate Sandboxes for Production and ModelingSaaS Multi-tenant Provider

What to Look for and Why

Requirement 1: Plan Modeling
This requirement stipulates that users be able to create or modify any plan element for modeling purposes. This includes the ability to create a full plan from scratch or model individual elements such as rates, quotas, SPIFs, and more. Actual production plans and ‘proposed' plans should be supported. Plan changes impact compensation in a non-linear fashion. This is where all vendors have traditionally focused although not all vendors support both micro and macro modeling.

Ask These Questions:

• Does the vendor support easy manipulation of plan elements to model the needed compensation design?
• Do they support micro modeling? Per payee?
• Do they support macro modeling? Full organization reviewable in total?

Xactly can.

Requirement 2: Forecast Expense Modeling
This requirement stipulates that both production data and forecast data are available to use as data sources to produce commission expense forecasts. Forecast data enables the user to produce modeled expense forecasts for future periods, which is supported by some vendors.

Ask These Questions:

• Can my actual data be easily made available for modeling while not impacting my production processing?
• Can modeling be run independent of and concurrent to production in case I need to perform a live calculation?
• Is modeled data separate from production data? (See Requirement 6 for impact.)

Xactly supports forecast expense modeling in all of these ways.

Requirement 3: Organizational Modeling
This requirement stipulates that a modeling solution must support any organizational structure, current or forecasted, for use in modeling scenarios. Organizational modeling is the most common requirement missed by sales compensation management vendors. You need organizational modeling to view historical data or forecasted data against actual or proposed deployment strategies. As new partner channels, products, or support overlays are needed, organizational modeling provides an accurate picture as to what you can expect. Organizational changes impact compensation in a non-linear fashion.

If a vendor does not support full organizational modeling, they cannot support all of your daily needs for designing a successful strategy.

Organizational modeling allows you to:

• Use actual payees
• Test results against your actual organization
• Simultaneously test results against a new organization with:
  
  • Modified positions
    
  • Additional headcount
    
  • Reduced headcount
    
  • New team assignmentsAltered overlay or support assignments

Ask This Question:
Does the vendor support full organizational modeling for each point above?

Xactly supports organization modeling-fully.

Requirement 4: Separate Sandbox Environments
This requirement stipulates that the production environment must not be co-mingled with the modeling environment. The Xactly leadership learned over our tenure in the sales compensation management space that customers with only one production environment are reluctant to "play" with creative rule designs due to a fear of impacting actual results. This prevents the customers from being fully self-sufficient. Our sandbox approach means that you can experiment with the application as much as you want and not worry about deleting, changing or damaging anything. If by some chance you do, you have a secure source from which to restore your model back to any state. Our sandbox approach is the best way you can be fully confident in using an application; you can use it any way you want, every day, and not worry about making a mistake. You can't do this if your modeling is co-mingled with your production environment.

A separate sandbox approach promotes:

• User adoption
• Ongoing user training
• No performance impact on production
• No co-mingling of actual data with modeled data
• Secure promotion of modified plans
• Archiving of approved plans, promotions or organizationsUnique access for alternate users that are restricted from accessing the live environment

Ask This Question:
Can your sales compensation management vendor support each of the above-mentioned scenarios?

Xactly can.

Requirement 5: Bi-Directional Data Support
This requirement stipulates that the production data can be easily sourced to a secure modeling environment. This is not a simple copy-and-paste (See Requirement 4). Bi-directional data movement allows users to quickly deploy modeling scenarios and promote approved changes back into production in a secure manner.

Ask This Question:
Does the vendor's data model support these criteria for modeling?

• Bi-directional data movement
  
  • Aggregated objects
    
  • Individual objects (single rule, etc.)
• Role security on data movement
• Intuitive user interface for any business user
• Protection from performance impact

Xactly can support all of these criteria.

Requirement 6: SaaS Multi-tenant Provider
This requirement is at the core of the Xactly design philosophy. The requirement states that in order to fully leverage the highest ROI and lowest TCO, a full multi-tenant SaaS provider is preferred.

Ask This Question:
Does your vendor support both multi-tenant database and multi-tenant application SaaS as a delivery model?

Xactly can.

I was driving to work the other day when a radio ad caused me to do a double-take. The product pitchman was pushing an HD radio service. Having just updated the televisions in my house, I know that "HD" is a term typically used to describe picture - not audio - quality. Sure enough, a quick Internet search clued me into the fact that HD radio stands for "hybrid digital" radio, which has nothing at all to do with high-definition television.

On the one hand, I give credit to the HD radio product vendor for its innovative marketing technique. Certainly there is logic to leveraging a hot industry acronym as a means to drawing-in customers. On the other hand, I wonder what impact the tactic has on customers, who are persuaded to buy based on a misleading and misbranded pitch.

The experience reminds me of the on-demand software model. Legacy software vendors everywhere are telling anyone who will listen about their new "on-demand" strategy. Clearly, the term means different things to different people. Unfortunately, only one definition of on-demand software - one that includes a multi-tenant architecture - returns the value that customers expect when they choose to go on-demand.

Legacy software vendors prey on customer confusion regarding on-demand software. Like the HD radio vendor, traditional software companies have a lot to gain by tying themselves to a hot industry catch-phrase such as on-demand. Rather than continue to debate this issue, I think it's more valuable to address the questions I hear most frequently from customers: "Why do I care whether your application is on-demand?" and "Why is a multi-tenant architecture good for me?"

Believe it or not, the answers are surprisingly straightforward. Customers should care whether or not a software application is on-demand because what is good for me, the vendor, is ultimately good for you. If we can support a single line of code and maintain only a single version of the software, we can focus our engineering talent on bringing new functionality and improvements to you. If we employ a true multi-tenant architecture, we can deploy seamless upgrades on a large scale whether we have 100 customers or 10,000 customers.

By contrast, legacy software vendors whose "on-demand" applications are lacking a multi-tenant architecture simply can not offer the same value to a customer. Just imagine what happens when the vendor has to upgrade 10,000 customers, all with unique application schemas. How many engineers does the vendor have to employ to manage that process? What do you, the customer, have to give up since these staff resources can not work on new features and enhancements? It only gets worse when the vendor has to make a data schema change in a future release.

Clearly there is an important distinction between on-demand software that is multi-tenant and that which is not, just as there is a difference between HD radio and HD television. That's why my guidance to customers is, ask a vendor before you buy whether or not they have a multi-tenant application architecture.