SaaS Vendors Focusing on Niche Categories

There is little dispute that Software as a Service model rapidly becoming a dominant delivery model. By 2009, more than 50 percent of new implementations of sales force automation applications will be SaaS deployments, according to a new Gartner (NYSE: IT) research note.

Not surprisingly, the popularity of this deployment model in SFA is opening new opportunities in related categories. As SaaS continues to gain momentum, best of breed vendors will begin to deliver new products targeting its growth, Gartner predicts.

Growing Interest in ICM

One niche category attracting interest is sales incentive compensation management. ICM software gives sales reps better transparency concerning how they are compensated for certain transactions -- a process that can be surprisingly opaque in large companies with many third-party partners.

It is an important way to support the selling function, Gartner says, yet "there is a dearth of compelling enabling technologies -- and those currently on the market address narrow specialties."

In the SaaS ICM space, primary vendors will be augmenting their core functionality of managing compensation plans with new capabilities that establish targets and market coverage, Gartner predicts.

Also, business intelligence (BI) and corporate performance management (CPM) vendors are likely to introduce analytic applications that increase visibility into sales activities, according to the research firm.

In the long run, the larger market of sales performance management will gain momentum, says Gartner's note, coalescing around ICM best-of-breed vendors. "This is the domain that has developed into a sustainable, discrete market."

Leveraging Sales Performance Data

One school of thought -- put forth by vendors in this space, of course -- is that sales performance management applications could be harnessed to do more than just help cut a check to a sales rep.

Eventually, companies will be able to leverage their sales performance data in order to discern related sales and market trends important to their operations, says Karen Steele, vice president of marketing at Xactly, an SaaS sales compensation software developer.

"Data is the center of sales performance management," she tells CRM Buyer. "The only way to calculate commissions is by integrating data from throughout the corporation." This includes data from HR, product SKUs (stock keeping units), customer information, pricing and margins.

The end result, she says, is a data store that gives visibility through the entire sales process. "You can see what has been sold to which customers, which products are selling most efficiently in which locations, channel analysis and so on -- all based on the data you bring into your system to pay your people."

Xactly has sized opportunities in this market at US$1 billion, Steele says.