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RightNow bullish on the here and now

These are heady times in the hosted CRM market. Salesforce.com is headed for a public offering, enterprise software leader Siebel Systems Inc. leaped into the arena with IBM's backing, and Salesnet Inc. recently announced a new round of funding. While the others are focused primarily on sales and marketing, RightNow Technologies Inc., of Bozeman, Mont., has carved out a niche in the hosted customer service space. It says revenue is growing and touts a 2,000-seat deal with customer care outsourcer Convergys Corp. Some are predicting that RightNow will also soon go public. SearchCRM.com spoke with CEO and founder Greg Gianforte about where RightNow is headed.

Why Bozeman? Are you committed to Montana for the long haul?
Bozeman is a huge competitive advantage for us. When we run [job] ads in Seattle, San Francisco and Denver, typically we get a huge response. [Bozeman is] a place where people love to live and work. As a result, we have a staff that loves to take care of customers. Our customers appreciate that.

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Who is your main competitor, and who are you losing the most deals to?
A large percentage of our deals are really uncontested, which is a sign that this is a young market. In 15% or 20% or so [of deals] we are going up against the legacy call center vendors, and we see some of the traditional CRM vendors like Siebel and PeopleSoft. The decision that companies need to make is 'how much longer do I have to keep running these legacy systems before consolidating onto a single architecture?' Hosted SFA has, for the most part, been a small and medium-sized business phenomenon. What is the makeup of Right Now's customers? Is it changing?
We also started as a middle-market vendor, serving middle-market clients. We made a decision a couple of years ago that buying decisions of divisions of Global 2000 companies are much like the midmarket. Today, half of our business comes out of the Global 2000 and half from the upper end of the midmarket.

We've always offered our solutions both hosted and on premise. Four years ago, half were on premise, half hosted. Today, more than 90% of our new customers choose to host. We're seeing a very strong shift toward this hosted model. [Customers] realize they can get rid of most of the IT costs and all the headaches.

We're rooting for Salesforce.com. We're locked arm in arm in helping companies eliminate the challenges of CRM.
Greg Gianforte, RightNow CEO,
Salesfore.com has filed for an IPO, and RightNow has been mentioned as possibly going public as well. How do you see Salesforce.com's public offering affecting the market and your company?
Salesforce is really the banner carrier for this new method. Salesforce is focused on the business challenges of a sales force. We are focused on customer service. We're rooting for Salesforce.com. We're locked arm in arm in helping companies eliminate the challenges of CRM. Salesforce is the largest on-demand CRM company in the world. We are the second largest in terms of revenue. We feel their IPO is going to create a lot more visibility on this emerging space. RightNow seems to be positioning itself squarely in the contact center. Can you explain that strategy and what it means in terms of the direction you see the hosted CRM market headed?
In Q4, fully one-third of our new customers were complete contact center deals. Historically, RightNow has focused on e-service. We recognized these e-service implementations existed alongside legacy operations from vendors like Clarify, Remedy or Siebel. These legacy apps tended to be client-server in nature, which made it difficult to consider these separate systems -- one for e-service, one for phone calls. The agent had no record of an e-mail. We've seen a convergence of service and CRM, particularly in a thin client on a hosted basis. That was the focus for us to expand our product line into the contact center. Can you talk a little bit about the recent growth and performance of RightNow?
We've been very fortunate. In our last quarterly results, Q4 [2003] was our 20th consecutive quarter for revenue growth. It was also our seventh consecutive quarter of cash flow positive business. It's been good for us and our customers. We've used the revenue to invest back in the business. We've doubled the size of our engineering staff, and with the hiring of [former Oracle and SAP executive] Peter Dunning [as vice president of worldwide field operations], we're in the midst of doubling our field organization, which will allow us to better serve our customers.

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