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RightNow Summit report: Innovating in the downturn

15th Oct 2008
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Continuing's exclusive coverage from RightNow's international Summit in Colorado Springs, Chris Middleton talks with the software as a service (SaaS) player's senior executives to discover whether the economic climate is an opportunity or a threat for SaaS.

By Chris Middleton

Software as a service (SaaS) CRM provider RightNow held its international summit last week in Colorado Springs, and was the only UK journal there. Aside from our conversation with CEO Greg Gianforte - as reported last week - how did some of the company's other senior executives view the downturn: as a threat, or as an opportunity for SaaS?

Basking in the Colorado sunshine outside the main conference hall, RightNow's chief marketing officer (CMO) Jason Mittelstaedt was in ebullient mood, despite the waves of bad news from Wall Street. “A couple of weeks ago I was pretty nervous that customers wouldn't show [because of the downturn],” he confided, “but then the contingents from Australia and New Zealand turned up, and I realised we'd be OK.

Photo of Jason Mittelstaedt"A lot of people are bullish on SaaS – it will do well in the downturn if there's a lot of thought and activity devoted to companies' purchasing decisions."

Jason Mittelstaedt, CMO, RightNow

“But it's hard to say how big a challenge the downturn will be for us. The Dow [Jones industrial average] is down another 500 points today and yesterday it was down 800. But we're very fortunate to be in a challenging economy with a strong balance sheet.”

Gianforte said at the event that the company has $100 million in cash and “zero debts”. As CMO, Mittelstaedt is the “strategic lead”, in his own words, for product management and defining the company's vertical approach to market. “One thing you do is invest in the customers you have,” he said. “A lot of people are bullish on SaaS – it will do well in the downturn if there's a lot of thought and activity devoted to companies' purchasing decisions. But nobody will do well if everything is frozen.

“Every one of our customers wants to cut costs. And the advantage of SaaS in that environment is, one, risk reduction. Two, speed to implementation - it's a three month project... who would sign off on a 15-month project now? Three, [the reduction of] technology complexity. The majority of SaaS platforms are at the cutting edge; they're not old, archaic, legacy apps. And last, our contract terms put the buyer in the power position: if we don't deliver, you cancel.”

On the same day last week that Gianforte warned of lengthening customer payment terms and said he did not know the extent of RightNow's exposure to customers' debts or bank collapses, client-server enterprise behemoth SAP issued a profits warning. Before the start of the credit crunch 18 months ago, many people believed that SAP had validated the SaaS market by announcing its entry into it; since then, little or nothing further has been said by SAP about it. Why?

“SAP's model for SaaS was unique,” say Mittelstaedt, “but it didn't embody the benefits. It wasn't multitenancy (sic). They should focus on the core. What they're great at is not software as a service.”

Drinking our own champagne

So where in the world will RightNow focus its intentions next as the SaaS message spreads on the back of a major global downturn? “We're focused on thoroughly executing where we already have a strong presence: the UK, the Netherlands, New Zealand, Canada, the US, Germany and Australia,” said Mittelstaedt.

"CIOs are often considered an expense or a cost centre, and CIOs are always asked to take cost out of the infrastructure platform."

Laef Olson, CIO, RightNow

Does this exclude the great 21st century 'green-field' sites, India and China, where mass urbanisation and economic growth over the next ten years makes Asia the market to be in? “I think in the mid to long term there are significant opportunities in the BRIC [Brazil, Russia, India, China] region,” he said. “But timing is everything, I believe. It's not a question of 'if', it's a question of 'when'. It would be a mistake to simply transfer what we know now [to those markets] from the US or the UK. The mobile phone is likely to be the computing platform, with customer chat and web self-service via mobiles.”

Back in the shade of the conference hall, chief information officer (CIO) Laef Olson was equally good humoured, if philosophical. What lessons as CIO could he offer customer CIOs in the downturn? “We drink our own champagne,” he joked (well, it is a better phrase than “eat our own dogfood”, let's be honest). In other words, RightNow uses RightNow.

“As a CIO your career is over if you don't manage business needs,” he continued. “CIOs are often considered an expense or a cost centre, and CIOs are always asked to take cost out of the infrastructure platform. As we go into larger enterprises, we don't need to define our existence by being able to rack and stack and cable. It's about how you can deliver value for the business.

”That said, if you lose your technical grounding, you may as well be the CFO or something. There's more than one way to innovate: you can take the methodical route of Google, Apple or Nike and build products that anticipate customers' needs, or you can jump onto someone else's innovation curve.”

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