Success in the SaaS lane

Just yesterday a vendor said here that cloud computing was not reaching its potential and wouldn't for years because of data integration limitations. Tell that to Xactly Corp. According to CFO Steve Klei, the San Jose-based SaaS vendor of online sales management, compensation and analytic software recently closed its fourth round of venture capital funding for $30 million, topping the $27 million it had raised in the three prior investments.

That, he says, is not just an endorsement of Xactly's service, but a slap on the back for SaaS itself.

Data integration has been essential to Xactly's success to date, says Karen Steele, vice president of marketing. For example, she claims the company's Analytics tool, now in beta, does just fine with integrating data from multiple ERP and CRM systems as well as product, pricing and other corporate data sources.

Steele observes that one of the key advantages of a SaaS approach to a data-rich application is the multi-tenant architecture. That is, a SaaS vendor can aggregate data anonymously and offer analytics based on all users of the software/service, not just one customer or company.

And come the second half of 2008, that's exactly what Xactly has up its sleeve. Steele says it will offer an Xactly Research module for users to evaluate their sales compensation, performance, incentive and other factors against broader, multi-company metrics in areas such as geography or vertical industry. Granted, the data will be a self-selective subset of markets. But as Xactly grows, the data will become more interesting and valuable, she says.

Klei adds that that $30 million will be used for exactly that purpose: growth.

Maybe SaaS's near-term future is not as cloudy as some suggest.