RightNow

  • June 27, 2012
  • Oracle launched its customer experience push this week with an announcement by co-president Mark Hurd.  The new direction begins to pull together the results of Oracle’s latest buying spree in which it purchased ATG for e-commerce, RightNow Technologies for customer service and other technologies for analytics in cyberspace.

    While Oracle will always draw skeptics the way a dog finds fleas, I think at least some of the new direction makes good sense but not necessarily for the reasons stated.

    The big push into customer experience leaves much unsaid, especially the idea that customers are increasingly turning off vendors and their messages and seeking out indirect approaches to getting the information and products or services that they need.

    The push into social media and especially analytics for gauging customer sentiment is a case in point.  People have a natural reticence about revealing too much to a vendor correctly assuming that anything they say in a sales conversation might be later used against them.  Fair enough.  But people are still remarkably unguarded about what they reveal to their peers and hence the boom in all things social.

    However, if you look at the quotes recently put out by Oracle executives they’re really still selling old style CRM with the new label of customer experience.  They’re still talking about costs saved and calls avoided because those are the things that make vendors buy and it’s the vendors who are Oracle’s customers — end users not so much.

    The strategy is smart because we are in an era of severe cost cutting and not simply for the usual economic reasons.  First off, and I have been saying this since 2007, companies like Oracle have to deal with the fact that energy and transportation costs are escalating making it harder for vendors to visit customers at a profit as well as more difficult for consumers to visit the mall.  This is the age of indirect selling for both these reasons.

    But add on the idea that the economy has not grown in real GDP terms since 2008 and you see another dynamic.  A whole generation of people is trying to launch into life and finding it very difficult to form households.  Without household formation things like carpets, refrigerators, sofas and maybe even cars are not being bought in the numbers they would be under other circumstances.

    In this age of austerity and stagnation, increasing profits to produce the illusion of growth comes from reducing overhead and avoiding margin gobbling expenses like conventional selling.  So you get things like this strategy of customer experience.  It makes sense to me and positions Oracle and a few other companies in a leadership position so good for them on that.

    I also noticed though this curious line in a fine article by Chris Kanarkus of IDG News discussing the Oracle announcement; “Larger companies such as IBM, Adobe and Salesforce.com are also building out CEM portfolios.  None of them can compete with Oracle’s breadth of technologies, [Anthony] Lye maintained.”  Of course, Anthony Lye is senior vice president of CRM at Oracle and the architect of the CEM or CXM strategy.  He was the guy buying up the CEM companies last year.

    I found it interesting that Salesforce was lumped into the “larger companies” rubric with IBM and Adobe.  Oracle and Salesforce sometimes act like two Tomcats in a cage but keep in mind that Salesforce has yet to crack the Fortune 500 though it is making strides.  At any rate, this looks to me like an attempt by Oracle to set up some competitors for easy knockdown rather than something more substantial on the product front.  I don’t really understand the Adobe reference and while IBM has lately made strides in CRM and analytics the efforts seem directed elsewhere.

    As for Salesforce, their efforts are in the enterprise with collaboration and highly socialized applications that are increasingly penetrating new niches.  The Salesforce strategy resembles Apple’s and both riff off the idea of a “Blue Ocean Strategy” that was subject of a book by the same name.

    If I had to sum it up, and I do, I’d say we’re at a point in time when the market is splitting up and rather than the monolithic approach to social that we’re seen since the middle of the last decade, companies are developing specialization.  So we see Salesforce focusing on enterprise IT in the true cloud, and Oracle focusing on the vendor-customer transaction while others are carving out their own niches.  Yes, Oracle has a cloud strategy too as well as a hardware division.

    So it’s the age of austerity, of reduced personal outreach and increasing relationships with and through machines and we now have the technologies to support the zeitgeist   Eventually, growth will be back on the menu.  Even Lent only lasts a short time.

    Published: 12 years ago


    I found out about Oracle’s purchase of RightNow, a multi-channel contact center company, when Chris Kanarkus of IDG News rang my cell.  Ironically, I was sitting in the departure area waiting for a flight that will take me to the RightNow Summit, the annual user meeting which is being held in Colorado Springs at the Broadmore resort.

    Kanarkus was looking for comment, which I am always happy to provide, and lots of thoughts ran through my head that I chose to pass by.  The deal was worth one and a half billion dollars at the $43 per share offering price, a nice bump to the share price.

    It had been my observation that the stock prices of many companies rose just before or during their user meetings as good news was usually announced there and the financial press in attendance post their scoops.  A couple of years ago I watched RightNow’s stock gain two or three points as CEO Greg Gianforte gave his keynote but this year the news appears to be built in to the share price already.

    One and a half billion bucks is a lot to spend and that’s even truer for a company that last year generated $200xxx million in revenue.  A multiple between seven and eight is usually reserved for less proven and smaller companies with some kind of social angle.  But RightNow has been around a while and it’s track record, while sterling made me, at first, somewhat skeptical.

    True, RightNow has a great focus on the customer experience and on helping its customers craft great experiences for their customers.  Also, it’s a SaaS company with a SaaS strategy that mirror’s Oracle’s which is to say they are multi-tenant but not fanatics about it.  However, RightNow is not a Fusion application and Oracle has its share of customer service/call center, call them what you will, apps so they weren’t exactly desperate to get another one.  I recall that Oracle paid one billion dollars for ATG, a company focused on e-commerce, so perhaps the company only knows how to write checks with nine places to the left of the decimal.

    Seriously though, Oracle, ATG and RightNow might be a thing in the future.  Multi-channel communication combined with e-commerce outreach could be very important.  Add to this Oracle’s success in what it has called clienteling (sp?) in which store sales associates carry mobile devices that can orchestrate customer centric shopping, and you might see a pattern.  If the customer can’t come to the store, perhaps the store will come to the customer.

    But this takes nothing away from RightNow’s core strengths today.  The company has become something of a missionary bringing the message of customer centricity to its customers.  In teaching the religion, RightNow has helped them navigate the social divide and some of that teaching might be very useful to Oracle which has a boat load of older technology products that it is in the process of “Fusing” and those applications need to adopt more socialized approaches.  Presumably, Oracle will protect the brand as it has with other acquisitions and Oracle RightNow does not appear to be that hard to say.

    Competitively, this is interesting.  Salesforce.com another big CRM vendor recently bought Assistly which provides service functionality in an unassisted mode, or to say it differently, it is more of a customer self-service solution for the small business space.

    Nonetheless, these are merely starting positions; it’s hard to know the ultimate destination some of these packages will have.  Part of that issue resides in a couple of social facts of life.  First, socially mediated processes are completely scalable working across the internet equally well for all sizes of company. Second, socially mediated business processes have very low costs and for that reason are attractive to anyone with a pulse especially in this economy.

    There are other companies in the market that might make interesting buys for one of the bigger CRM companies and you can start with the CRM Idol finalists — Assistly’s stablemates, CrowdFactory, GetSatisfaction and Stone Cobra.  Each does something different and each is worthy of a vote or even a billion.

    Finally, we should ask why in the middle of a terrible economy there is so much company buying going on.  The answer is that the corporate economy replete with M&A activity and some very good IPO’s this year has little to do with the real economy.  We’ve reached a point where some very good but siloed solutions have matured and a time when the big companies have ample cash that they aren’t spending on things like hiring people.  Buying a promising company is like R&D spending all bundled up and you get the result more or less right away.

    So there it is.  Oracle buys RightNow for a king’s ransom.  I wonder if they’ll be serving champagne at the Broadmore tonight.

    Published: 12 years ago


    Oracle announced it has entered into an agreement to purchase InQuira today.  InQuira is a privately held company that supplies knowledge management technology to support web self-service and agent assisted self-service.

    On the face of it, this seems to emulate solutions provided by RightNow and Salesforce.com and several other vendors in the customer service space.  So while this is a good thing for Oracle and its customers, it is not revolutionary.  It means that at least in this area of customer service Oracle has filled an opening.

    The announcement did not disclose the purchase price or any other terms.


    Published: 13 years ago


    Recessions are always a good time to rebuild your competitive infrastructure and the slow growth/recession of the last couple of years has been no exception.  On the stock market, the technology sector seems to be doing quite well.  After bottoming in the middle of the summer the software companies especially seem to be rebounding.  Microsoft, Oracle, Salesforce, RightNow and NetSuite are all gainers.

    But the drivers for software acquisition remain what they have always been—improving processes, saving money or making money.  Companies whose products can do one or more of these will do well.  And customers will gobble up their wares as they seek out more competitive stances in their chosen markets.  The theme to watch for is replacement as many foundational applications that were implemented for Y2K reach the end of their shelf lives.  Here are some issues to consider.

    • Ten year-old ERP and CRM systems will be more than ripe for replacement.  New business processes and better economics will do the heavy lifting to prove the case for new applications.  Many of the conventional vendors like Oracle and SAP will be there as will newer entrants who’ve proven themselves over the last decade.  Watch for names like NetSuite, RightNow, Salesforce and others to command attention.
    • Cloud computing.  After several years of debate about what cloud computing is or is not, customers are in a great position with lots of choices for solutions.  It doesn’t matter whether you prefer single tenant or multi-tenant solutions, the economics of running software in the cloud are so compelling that you can find a vendor that speaks your cloud dialect.  Virtually every front and back office vendor has a cloud offering or two.
    • Analytics is another solution set that has been in the background for many years.  But new demands in the form of trying to make sense of the mountain of data brought in daily by our social applications makes analytics a necessary add-on.  Analytics solutions are abundant and even SAS Institute, a pioneer in enterprise analytics, has jumped into the market with cloud based solutions for social data.  It is somewhat surprising that Gartner expects only 35% penetration in customer service centers by 2013.  That looks like a great opportunity for differentiation to me.
    • It will also be a year for collaboration and I think collaboration may be the first true business social application type.  Judging from the rapid adoption the Salesforce’s Chatter is receiving I anticipate the broader market will see collaboration as a business process no one can afford to ignore.
    • Integration will be important in the year ahead too.  There are no so many applications and application types on the market that we can safely give up any pretense that a single vendor could deliver all of a company’s CRM needs. APIs and cloud computing make integration more important and feasible.  More vendors will discover that the winning strategy is to do whatever is possible to pre-integrate their wares with strategically important foundation CRM vendors.  It wouldn’t surprise me to see some vendors begin to organize around specific business processes or types such as channel selling.
    • This also implies that many companies will be looking to extend their solution sets with strategic additions.  Any company can optimize its CRM deployment and probably gain competitive benefit by looking at its business processes and comparing their level of automation with the product sets now on the market.  Need a way to keep your sales people in the game?  Try a compensation management system.  It will give them a way to quickly understand their progress in the only way they keep score.  At the same time it will reduce the back office overhead caused by end of quarter commission calculations.
    • If you have an interest in bringing out a new product but worry that a limited marketing budget could limit your success, you might first consider a variety of customer analytics that can help you determine which customers have a need, what that need is and how to approach them.
    • Or perhaps you are looking to improve service and save money but worry about displacing the good but expensive handholding your service group provides with faceless automation.  Try a social service solution that engages your user community to help answer basic customer inquiries through Twitter and Facebook.  Not only will you be able to maintain a person-to-person approach but response times might decline and there’s no telling what positive fallout might happen when customers help each other.  If you’re monitoring the chatter you might discover that a core group of customers has great understanding of your product and does a super job of helping out.  The help can also turn into articles for your knowledge base.
    • The last area for social penetration might be using solutions to analyze your negatives—to identify instances where customers express their displeasure with you on the Web.  It’s much better to deal with an irate customer than to let their anger fester, but first you have to find them.  Social media and analytics can help and it’s a worthy investment.  Our research shows that even the best companies have their detractors but often a vendor knows little or nothing about a problem.

    My analysis

    To summarize, the year ahead in CRM will be important for replacing old systems and for integrating new niche applications that sharpen your game.  The costs of these additions will be relatively low due to cloud computing and the nature of some smaller niche applications.  The recession ended in July of 2009 and while it might not feel like a recovery right now, there is ample evidence of improvement.  You can use next year strategically to improve your stance as a recovery picks up steam.  There are good products on the market and vendors are still hungry.  If you miss this opportunity, I think you’ll be saddled with your old and relatively expensive systems for longer than you might like.

     

    Published: 13 years ago


    RightNow Technologies certainly has come a long way in the last ten years and the company used its industry influencers day in Colorado Springs this week to remind us.  I saw the day as a marker of a turning point in the company’s development, a time when it said to the world, the first phase of life is over, now let us tell you what’s in store next.

    My big takeaways:

    1. The company is generating cash and will continue to improve margins, which will propel it to its next phase.
    2. RightNow has staffed up with lots of industry veterans who will help to drive future success.
    3. RightNow believes its suite of customer service solutions is substantially complete and it will soon begin concentrating on accelerating sales and marketing.

    Since this was a day for both industry and financial analysts there was a good amount of discussion about the company’s finances.  The men and women in black asked penetrating questions about margins, strategies and how the financial sausage was made.  From the answers I deduced that things are good.

    Even before CFO Jeff Davison spoke the company had made several announcements including revising its advice to the street about Q3 2010 financials.  The unaudited—and don’t hold me to it—numbers look like this: about $48 million in revenue up from advice of $45 million and up 24 percent over the same quarter last year.  Not too shabby and apparently I was not the only one thinking this because the stock went north by about three and a half for the day, most of it in the morning.

    So the company has good cash flow.  But more importantly, more of the cash is margin.  According to CEO Greg Gianforte, the company embarked on a four-year plan two years ago to boost its margins.  Half way through the exercise it looks like they will hit their target of eighteen to twenty-two percent operating margins.  This single example gives me the impression that RNOW is a well-run organization.

    Also pre-announced, Wayne Huyard was appointed President and Chief Operating Officer.  Huyard has a twenty-five year track record, mostly at MCI, in leading sales and operations and he looks like a good fit for the team.  The company has also acquired numerous industry veterans over the past few years injecting significant business experience into all the key areas.  We were treated to a panel discussion with the VPs of the centers of excellence later in the morning and each of them knows their stuff.

    Beyond Gianforte, Davison and marketing ninja Jason Mittelstaedt other heavies included Brian Kern, VP Web Experience, John Kembel acquired from Best Buy, VP Social Solutions who came over in the HiveLive acquisition, Ted Bray, VP Contact Center, Shon Wedde, Director of Platform Solutions, Chris Hamilton, VP Customer Feedback, and more that my notes don’t cover.

    But back to the boss.  Before any of the leaders of RightNow’s centers of excellence spoke, Gianforte gave a succinct and well-reasoned overview of the market and his company’s opportunities.  He sees a ten-fold growth opportunity for the company in seven verticals making up a universe of about three thousand companies.  The sweet spot for this expansion are companies in business-to-consumer, government-to-consumer and higher education-to-student markets.

    This universe includes many companies that might be missed by a more traditional call center approach focused on telecommunications and banking (though each is important).  Some of RightNow’s most interesting customers such as EA Games are well outside of that box and offer an intriguing peek into the future, not just of RightNow but of our society as we further socialize and become even more addicted to our mobile devices.

    Interestingly, in discussing his land and expand strategy Gianforte revealed that the average customer places six to eight orders in the first three years of a relationship—quite an accomplishment for any software company and aided no doubt by the cloud model.

    Finally, there are the four drivers Gianforte said are stoking demand—customer empowerment, cloud computing, proliferating online interactions and the contact center replacement cycle.  He says all drivers point to adoption of light, lithe and above all smart systems, which the company has worked to deliver.

    If there was a fly in the ointment it might have been when the CEO said “The solution is basically done.” Gianforte no doubt meant that the suite of tools needed to support his vision of customer service is complete and he modified the statement to include the idea that there may be additions and acquisitions in the future.  But net/net he has the suite he wants to go to war with.  This is a significant revelation because in confluence with achieving his operating margin goals, it means the company will soon spend more on sales and marketing.  When that happens, look for the company’s growth to accelerate.

    So, all in all, RightNow’s influencer meeting was successful in communicating these points and outlining a bright future for the company.  RightNow is at a turning point and you can see it.  The customers are happy, they continue to buy and the financial analysts apparently liked much of what they heard.  As the company completes its objectives for margin and turns its attention to faster growth we could be witnessing the beginning of a spurt that delivers the second billion-dollar cloud company.

    Published: 13 years ago