SaaS mashups shape up

As SaaS vendors and integrators begin to roll out enterprise mashups, the mashup's seminal role as the disruptive motor at the heart of the on-demand model is becoming clear.
Written by Phil Wainewright, Contributor

Much has been written about the promise of mashups to become serious business tools — as well as the obstacles and challenges they must overcome along the way. It's only now, more than six years since the notion of mashups first came to the fore (they acquired the name a little later), that SaaS vendors and integrators are beginning to realize the full potential of the mashup for enterprise applications. As this first wave of commercial enterprise mashups comes to maturity, it is making clear once and for all the mashup's seminal role as the disruptive motor at the heart of the on-demand model.

As a case in point, take Xactly's 5-way mashup, announced Monday (image courtesy of Xactly). Using Salesforce.com's Force.com platform as the foundation, the SaaS vendor has mashed up its own sales compensation application with Amazon.com's retail catalog, the Paypal payment system and an iGoogle gadget. The mashup creates an enterprise-class incentive rewards management and fulfilment application that at the same time is economical enough to be affordable for smaller businesses — subscriptions will be $10 per user per month, at the end of a 90-day free-of-charge launch window that ends December 1st.

Using the application, an organization can set up award targets to incentivize its sales, marketing or contact center teams, with points instantly convertible to retail purchases from Amazon's online catalog. The awards are paid for out of a Paypal account, which the organization maintains in credit to match its awards budget. Users can view their incentive targets and tallies from within Salesforce.com, or using the iGoogle gadget.

This five-way mashup is a substantive proof point for applying mashups to enterprise applications. It pools the disruptive economics of at least three separate giants of on-demand: Amazon, PayPal and Salesforce.com. Will any ZDNet reader dare argue with me that you could/should do this in-house and do it better and cheaper? It's simply not tenable. Nor is it any more practical to think of implementing a similar mashup to Amazon, Paypal and the rest from an on-premise application — leaving each individual customer to negotiate their own gateway access to Amazon, Paypal and the rest, along with the necessary security precautions. It's a recipe for multiple implementation disasters.

In this respect, the Xactly mashup makes the case for multitenancy more convincingly than any other example I've come across. It's crystal clear that making any one of these five components single-tenant instead of multi-tenant would instantly destroy the economic benefit and immediacy of the one-to-many multi-tenant model. A multi-tenant mashup is a one-to-many instance: it makes all of its service integrations available to any of its clients. In contrast, mashing up single instances one at a time is a laborious, repetitive and economically wasteful activity.

The example makes evident the huge economic leveling effect that comes into play from mashups of multi-tenant services. Xactly has been able to deploy a series of off-the-shelf components that benefit from the economies of scale of market leaders such as Amazon and PayPal, while the low-cost PaaS mashup development approach means that its developers could focus their efforts on the business logic — workflow rules and policies, all managed by the Force.com platform, are at the heart of the application. Using Salesforce.com's PaaS platform meant Xactly could develop the finished application in two months using just "a couple of developers," according to Xactly's VP of marketing Karen Steele. Its marketing costs will also be lower because the prime marketplace will be Salesforce.com's million-plus subscriber base (although the effective market is narrower as the capabilities used by Xactly Rewards require an enterprise subscription rather than the less costly and more widely used Professional or Team subscriptions).

As an aside, although Salesforce.com benefits from its role as the underlying platform for Xactly's mashup, it isn't immune from the economic leveling effects of the multi-tenant mashup. In April, cloud integrator Appirio released its cloud storage product for Salesforce.com, which allows subscribers to bypass the relatively expensive costs of storing documents and other assets on Salesforce.com's servers, taking advantage of Amazon's much lower utility storage pricing. Appirio seems to be taking a leading role in enabling such multi-tenant enterprise mashups — it released an interesting business contacts mashup in May and has contributed the iGoogle element of Xactly's 5-way mashup.

In summary, I think the Xactly mashup is a harbinger of the disruptive effect of multi-tenant enterprise mashups, and of much more interesting developments that are yet to emerge. There's still a ways to go, though, especially when it comes to matters such as integrated payment and user authorization. Xactly remains wedded to a subscription revenue model but this application is interesting in that it uses a combination of two monetization strategies — as well as the $10 per user per month subscription, Xactly earns what Steele described as "a very modest markup" on each Amazon transaction. It's designed to cover the transaction handling costs but, if the application became successful enough to generate large volumes of transactions, my guess is that it could potentially begin to offset the subscription fee. However it's worth bearing in mind that, in order to use the application, subscribers not only have to pay Xactly's $10 subscription — they must also have an enterprise-level Salesforce.com account. What's more, those subscriptions have to be purchased separately instead of as a single packaged offering, adding unwanted hindrances to the onboarding process.

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