Steve Evans talks to the founder and CEO of hosted CRM vendor RightNow Technologies about why hosted is better, and how his company can compete with SaaS poster child Salesforce.com.
Q. How is your business going from a UK point of view?
A. We continue to see progress there. We serve large organisations that have lots of consumers. The work we’re doing with BA, BT and recently Tesco, shows that we are continuing to see progress.
In terms of the business overall – we saw about 25% growth during calendar year 2008 and about 25% of that came from the UK and Europe.
Q. Are you seeing any impact from the economic crisis?
A. We’re seeing it in three ways: First, capital budgets have really dried up in most cases. Fortunately as a SaaS provider, most companies are using operating dollars not capital dollars. This does not bode well for the SAPs and Orcales of the world, but for the new breed SaaS providers it’s positive.
Second, discretionary spends have gone; only essential money is being spent. Fortunately the business problems we solve for our clients are not discretionary, they are essential. We saw 57% growth in our business with retailers in the last year. It doesn’t make exact sense until you realise that the one thing companies have to do at this time is keep their existing customers. It’s harder to acquire new customers so you have to keep the ones you have.
Third, with the economic downturn companies are being a lot more careful about what purchases they do make, so we’re seeing that a few more signatures are required to get orders processed.
Q. Where do you see the benefits of cloud/SaaS?
A. We are absolutely a cloud computing company. To me cloud computing is this idea that the underlying plumbing for business applications can be moved off-premise. As it moves into the cloud companies have less to worry about. What happens as technologies mature is that complexity and costs are reduced and market sizes get larger. That is what cloud computing does for enterprise business applications.
Q. Is that hugely different from SaaS?
A. I’m not sure how worthwhile debating the difference between SaaS and Cloud is because one is just an evolution of the other. I like cloud computing because it’s a simple concept, it can cover a lot of things. From an industry perspective if technology becomes less obtuse and more easily understood by the people that are just trying to solve a business problem – that’s a step forward.
Q. I think it’s fair to say that when people think of hosted CRM they think of salesforce.com. Where do you see the competition?
A. We serve different customers. They are attempting to come into our space, but we routinely beat them because we solve different business problems.
RightNow, from a business value creation perspective, is the largest, by far, SaaS company focused on service delivery. We’re the only SaaS vendor with a multi-channel capability. We rarely lose to them if there is any robust requirements related to call centres.
Q. If they are attempting to enter your space, how do you plan on staying ahead of them?
A. We have a ten-year head start and thousands of clients. We’ve also taken a fundamentally different approach to the market. We’ve taken an approach to build a broad suite of applications designed to help our client deliver a service to their client. Salesfoce.com has built a platform and an eco-system. But if you’re attempting to do what we can do for a client with their platform you need products from six or eight different vendors and you need contracts with them.
We originally used some of the Web 2.0 capabilities to build our agent desktops. However, latencies associated with Web 2.0 – where every request has to go back over the Internet – adds precious time to each phone call. In a large call centre that can add up thousands or millions of pounds in costs every year.
Six years ago we switched to smart client technology. So on our agent desktop there is a downloaded piece of software but then only data goes over the connection, so you get the performance of a desktop application with all the benefits of being Internet-delivered. Salesforce.com can’t do that. Unless they re-write all their applications from scratch they’ll never achieve the efficiency we can deliver.
Q. A few years ago you switched from a perpetual licence to a subscription model. Why?
A. We’ve always offered both. In the early days we did that because we were the first cloud company that got the majority of its revenue from larger corporations. Historically, large businesses bought their systems through perpetual licences. So that’s what we offered, even though we still hosted the application. It was strictly a contract vehicle, it had nothing to do with delivery.
What we found was that fewer companies chose this perpetual licence. When we got rid of perpetual licences just over two years ago, it was only 12% of our business. Now we are 100% subscription-based.
Q. What impact has that had on customers?
A. It’s just better for them – they pay less up front and they have a throat to choke.