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What a week. Xactly bought Centive, Salesforce.com introduced the Service Cloud, and the gridlock in Washington looks the same as ever but with new players. If you parse the Xactly-Centive deal, you might be tempted to say, "So what?" After all, the deal was a stock swap, and the strike prices of the respective companies' stocks were not disclosed. I have watched both companies, as well as Callidus and Makana, try to breathe life into the sales performance management market for several years, and I have some observations.
Hi Denis,
I like your analysis of the SPM market size. I also often wonder how analysts come up with their market growth predictions which often appear quite high.
I also have a few more comments about your post...
You say that "Big dogs can enter the market whenever they want, too, so no one vendor should feel it is in a safe haven." But I don't think that anyone feels like they are in a safe haven. Just within the current players there is fierce competition; sure, Xactly just took their biggest competitor out of the race, but there are many others. With respect to "big dogs", Oracle and SAP already have a finger in the pie. If other big
players want to enter the market, it is likely to create very interesting exit opportunities for many of the existing SPM companies.
I agree with you that most industries are about "making profits or go home", but it hasn't been the case for most SPM companies which are all focused on growth rather than profitability. I think that Callidus achieved profitability for the first time in Q3 of 2008... and they are in business since 1996!
With all those private deals, it's hard to know how and to what extent investors profit. I have no doubt that Centive investors and executives are happy about the latest acquisition, but as you mentioned Centive went through many incarnations. $96 million is a lot of VC money, but I believe that a significant portion of this paid back many investors when Centive's on-premise solution (CompCentral) was acquired in September 2006.
If you are interested, you can read more about my opinion on the Xactly-Centive acquisition on my blog LeapComp.com, dedicated to sales performance and incentive compensation management.
http://leapcomp.com/2009/01/breaking-news-%E2%80%93-xactly-acquires-centive.html
I like your analysis of the SPM market size. I also often wonder how analysts come up with their market growth predictions which often appear quite high.
I also have a few more comments about your post...
You say that "Big dogs can enter the market whenever they want, too, so no one vendor should feel it is in a safe haven." But I don't think that anyone feels like they are in a safe haven. Just within the current players there is fierce competition; sure, Xactly just took their biggest competitor out of the race, but there are many others. With respect to "big dogs", Oracle and SAP already have a finger in the pie. If other big
players want to enter the market, it is likely to create very interesting exit opportunities for many of the existing SPM companies.
I agree with you that most industries are about "making profits or go home", but it hasn't been the case for most SPM companies which are all focused on growth rather than profitability. I think that Callidus achieved profitability for the first time in Q3 of 2008... and they are in business since 1996!
With all those private deals, it's hard to know how and to what extent investors profit. I have no doubt that Centive investors and executives are happy about the latest acquisition, but as you mentioned Centive went through many incarnations. $96 million is a lot of VC money, but I believe that a significant portion of this paid back many investors when Centive's on-premise solution (CompCentral) was acquired in September 2006.
If you are interested, you can read more about my opinion on the Xactly-Centive acquisition on my blog LeapComp.com, dedicated to sales performance and incentive compensation management.
http://leapcomp.com/2009/01/breaking-news-%E2%80%93-xactly-acquires-centive.html
