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The core purpose of Xactly is to empower companies of all sizes to incent right. For years great business leaders have recognized that sales compensation is one of the prime motivators for a company's success. The right plans can increase profits, control expenses and drive consistent quarter-over-quarter results.

Unfortunately, due to the high costs associated with automating sales compensation, only the world's largest sales organizations have been able to realize the benefits. For the vast majority of companies the cost to acquire traditional enterprise applications is impractical. These offerings are characterized by large up-front software license and maintenance fees, costly hardware, unpredictable implementations and complex upgrades.

As a result, most companies continue to limp along, stuck in the paradigm of complex, homegrown spreadsheet-based sales compensation programs. These companies tend to either simplify or unnecessarily complicate sales compensation resulting in lost motivation, lack of understanding and individual results that may not be in concert with corporate objectives.

Xactly Corporation was created to meet the needs of the broader market by providing the most affordable on-demand sales compensation solution allowing companies to improve their business performance through the use of more effective sales compensation programs. Xactly enables companies to easily and affordably design, implement, manage, audit and communicate sales compensation programs. By providing more effective plans and better visibility, these companies can dramatically improve sales performance.

Xactly is clearly an innovative company that is helping move the world of SPM from manual, error-prone, spreadsheet-driven processes to automated, accurate, SaaS-driven processes. Yet, in somewhat of a paradox, the company has faced its own similar spreadsheet related challenges. Xactly was built from the ground up five years ago. The company started without any existing tools or processes for handling invoices and customer billing. As a start-up, it didn’t make sense to automate everything by purchasing expensive software licenses, hardware and services. So, like many new businesses, Xactly used spreadsheets.

In 2005 that was hardly a surprising decision. An appropriate SaaS-based alternative to spreadsheets did not yet exist for the billing and payment requirements of Xactly. However, the company would soon realize success and the challenges of growth that accompany it. Fortunately a SaaS billing and payment solution from Zuora would be available by then.

Consumers with mobile phone plans who make changes over time understand how inherently complex subscription billing can be. They may start with a basic plan with an allowance for some number of minutes per month. Then they may add additional lines for a spouse or children. Eventually the parents may end up with a data plan for email while the kids get texting plans for staying in touch with friends. Now consider that these changes almost never happen exactly at the start of a billing cycle. Some of them may even happen at different times within the same billing cycle. Combine this with a variety of promotion and discount codes and it can be difficult to maintain billing accuracy. And what about calculating taxes, handling phone upgrades or implementing regional differences? The list goes on.

It turns out that subscription billing in general has many of these complexities and SaaS offerings invariably use subscription billing. Organizations using SaaS offerings may make plan changes in the middle of billing periods, add and remove users at different times, add or remove capabilities, change contract plans, update support levels and possibly utilize professional services. When multiple changes happen at different times within the same billing cycle, another layer of complexity is added. The SaaS provider must accurately track all changes, pro-rate refunds and new charges, and align subscriptions with billing cycles and contract dates.

According to Christopher Cabrera, CEO of Xactly, “Our team had done a great job with the tools they had, but we had outgrown what spreadsheets could deliver. The system had become a quagmire. We were growing rapidly and constantly figuring out which payments were coming due.” The last nail in the coffin for the old spreadsheet driven system came when invoices totaling $200K slipped by a couple months. “It was all under contract so we went back and invoiced. But I knew we had to really fix it. I knew there was a better way.”

The next step for Xactly was to find a commercial billing solution – a process with its own set of risks. Neovise has previously identified a number of common mistakes that vendors and service providers make when selecting a billing system. These include:

Based on its SaaS genetics, Xactly was pre-programmed to avoid selecting a legacy billing system or to miscalculate the complexity of subscription billing. Further, with a focus on its core business, the company did not even consider building a billing and payment system themselves. As an award winning SaaS vendor, Xactly certainly had the capability to build their own solution. But the direct cost would be quite high and the opportunity costs had the potential to be massive. “The ‘stick to the knitting’ mantra echoes through my head constantly,” says Cabrera.

The remaining pitfalls were avoided by using a more typical product or service selection process. Xactly involved finance team members and an external consultant in requirements identification and then sought a vendor that could meet them. According to Cabrera, “We already knew the value of SaaS-based solutions and were committed to finding a SaaS solution.” This meant pay-as-you-go pricing; no capital investment; minimal up-front investment; no hardware, software or maintenance expenses. Additional requirements included integration with systems such as Salesforce.com, Workday and PayPal, as well as automation, quality, flexibility and a reasonable cost.

After evaluating all of the key selection criteria, Zuora was chosen as the new billing solution for Xactly. Zuora provides a SaaS-based subscription billing and management platform for companies to build, run and operate their subscription and recurring revenue businesses. The Zuora product suite allows companies to focus on top line revenue growth, operational efficiency and automation. It also helps businesses manage the entire lifecycle of a customer subscription, including subscription orders originating from a website, a CRM application or from a channel partner. Zuora also helps them manage subscription changes due to upgrades, renewals, cross-sells and up-sells. Figure 1 below shows how Zuora fits in with the Xactly ecosystem.

While Xactly is a SaaS company, Zuora supports any business that has a subscription and/or recurring revenue model including SaaS, Web 2.0, cloud computing and traditional enterprises that offer recurring revenue products and services.

Once the solution from Zuora was chosen and the implementation details worked out, the deployment took just a few months. Now Xactly has a timely and accurate invoice process with every invoice issued by the company coming from Zuora.

When asked whether all his needs were met through Zuora, the answer from Cabrera was enlightening. “Not all of them. But that isn’t how I look at it. There will always be a bug or a new requirement. Right now we’re in the process of deploying Workday [a SaaS Human Capital Management solution] so we’ve asked Zuora to add some additional integration for that. What I tell my customers is ‘to measure us on how we react and adapt.’ Zuora listens to our needs, and – as a SaaS vendor – is able to quickly iterate and release new capabilities without us having to go through any sort of painful software upgrade process.”

Of course “the finance team loves the new system because they no longer have to do strange gyrations in spreadsheets to complete the billing cycle or handle reporting.” The team used to work for days on financial reports to provide the necessary information to the executives for planning and decision making. “As a CEO I need to get at the data quickly and do calculations to understand what is happening with the business. With Zuora I have it at my fingertips.”

Xactly did not follow a formal return on investment (ROI) evaluation process, but the company felt it achieved clear financial payback through accurate and timely billing, better visibility to sales data and metrics, increased finance staff efficiency, better alignment of expenses with revenue, and more. Cabrera sums it up, “It has been a very, very positive experience. I have no complaints or qualms about it. With Zuora, our billing system is a whole order of magnitude better than what we had before.”