An update on Xactly & where it must go

Flash back to Xactly in 2013 when I ran into Xactly CEO Chris Cabrera at  a Dreamforce event (Salesforce’s user conference). He had just published a book , Game the Plan, and was willing to tell me about Xactly’s fortunes then.

At that time Xactly was two years away from going public. The company was doing well as a sales compensation management firm and its sweet spot was selling to chief revenue officers or chief operating officers who needed a better way to calculate, pay and incent sales professionals. Spreadsheets were not the tool to use anymore as businesses and salespeople demanded more transparent (not opaque), more accurate and more flexible commission tracking and administration tools.

Flash forward to Xactly today and six years on I had another chance to catch up with Cabrera. 

Xactly has changed a lot in the intervening years. It did go public in 2015 (at the 10 year old mark) and was then acquired/taken private by Vista Equity Partners in 2017.

But the key story now is around growth. Specifically:

• The product line has grown beyond its initial sales compensation management.  Xactly now has benchmarking data/tools, territory management, commission expense forecasting, support for Revenue Recognition re: commission costs, MBO support, integration technology and more.  Xactly believes it offers a full sales performance management solution today. CPQ (configure, price, quote) capabilities are provided via its alliance with Salesforce..
• The company’s global footprint has expanded materially and continues to grow. Xactly customers often have multi-national reach and that has propelled much of Xactly’s global penetration. Xactly’s acquisitions have also furthered their global reach.  Xactly reported “bookings growth of more than 100 percent in the EMEA region” and “office expansion with new offices in Denver and an increase in total headcount of more than 50% across US, UK, Canada, Romania, Australia and India.” Total customer count now exceeds 1,600.
• The company now has large enterprise solutions to complement its pre-existing SMB product line. Xactly has had a small/mid-sized solution since the beginning. I used to see them at many user conferences of other firms targeting that market (e.g., Intacct (now part of Sage)). Larger enterprises are driving more and more of Xactly’s global growth – especially when these firms have extensive field sales forces.
• The company has made several acquisitions recently.  The company closed three such deals in H1 2019: AlignStar, Obero and OpsPanda. AlignStar brings territory management, planning, maps and major account support to the Xactly portfolio. Obero brings deep commission accounting and sales planning to the product line.  OpsPanda “continues to accelerate its delivery of an AI-driven solution for integrated annual and continuous sales planning and predictive performance.”  Prior to these, the only other acquisition made by Xactly was Centive back in 2009.

Cabrera also discussed:

• How AI is figuring into more and more of the product suite. The company was already working on AI-powered technology prior to the OpsPanda deal. He believes AI can help sales organizations continuously improve processes and can do a better job of predicting future sales results than a human being.  Salesforce’s Einstein technology will help power some of this new AI capability.
• The SAP/Callidus deal has actually turned into a good thing for Xactly. Since that deal, Salesforce and Xactly have gotten much closer.
• Xactly is also expanding its horizons regarding big data. More data will make new algorithms and machine learning apps smarter. Predicting sales attrition will be one algorithm-based application.  

Future Implications

Applications around sales and marketing activities are great candidates for many new technologies (e.g., bots, AI, ML, algorithms, etc.).  Sales and marketing tools, unlike accounting applications, need to deliver reasonably certain outcomes. Like the game of horseshoes and or the use of hand grenades, sales and marketing technologies need to be “close enough” to deliver value. Only the revenue accounting aspects of sales deals needs to be absolutely correct.

I state this as predictors of future buying activity are one of the most important data points that any sales performance or CRM toolset can provide. Xactly is correct in pursuing innovative technologies like machine learning and big-data related tools. Better insights will deliver better and hopefully more accurate results.

My take

This space is like an arms race. Whenever any firm that sells products or service can get an insight into customer behavior, sales performance, etc. that its competitors can’t, then that firm gains a potentially lucrative, strategic and competitive advantage. Firms like Xactly are the arms merchants in this. Their customers and prospects will want more innovations from these merchants if these technologies provide material financial upside for them.

Xactly’s next growth wave will be dependent on delivering substantial insights more so than automating basic sales tracking. To win effectively, Xactly will likely need to create new algorithms, insights, etc. at an ever-accelerating pace. This appears to be a challenge for many enterprise software firms as their innovation rate often slows as the company grows in size. Therefore, Xactly must accelerate innovation delivery while simultaneously growing as a company.

The future of Xactly will lie with new tech, speed and cunningly creative new customer capabilities and insights. Let’s see what they come up with.