RightNow pins enterprise hopes on new CRM

The hosted applications company on Wednesday launched RightNow CRM 7.5, which it says boasts significant improvements across three of the major subsets of CRM applications--marketing, sales and service.

RightNow also released two new add-on CRM products, aimed at boosting automation of telephone sales operations and providing more powerful business-intelligence tools to customer service operations, respectively.

Industry watchers are predicting that there will be increasing demand for hosted business tools in the enterprise market, which could open the door for RightNow and a growing list of rivals to win more deals among larger customers.

"As we see these hosted solutions become more customizable and the integration capabilities (improve), we're hearing more success stories in larger enterprise, and that shows in general that hosted (software) is moving up-market," said Liz Herbert, analyst with Forrester Research.

"Traditionally, there's been a gap in customization and integration between hosted and on-premise software, but if you look at what the (on-demand) vendors are working to improve, that's allowing them to sell into the larger companies," Herbert said.

Hosted, or on-demand applications, consist of software programs maintained away from an organization's physical premises by a vendor who oversees management of the systems as well as any data used in the tools. Proponents argue that the "software as services" offer a number of advantages over traditional enterprise software, such as faster installation, lower overall costs and increased ease of use.

Built on its roots as a call center specialist, RightNow--which has posted 30 consecutive quarters of profitability--is hoping to increasingly challenge established enterprise players, such as Siebel Systems, Oracle and SAP, which are also moving into the hosted market.

RightNow currently lists major companies such as AIG, British Airways, Nike and Sprint among its customers. The company offers its software via both the traditional on-premise and the emerging on-demand delivery models, but some 90 percent of its customers are choosing the latter, said Greg Gianforte, the company's founder and chief executive.

RightNow rival Salesforce.com, perhaps the best-known provider of on-demand sapplications, has specialized primarily in small and medium-size businesses but shares the same aspirations of moving deeper into the enterprise space.

Like Salesforce CEO Marc Benioff, another outspoken advocate for the downfall of on-premise software, RightNow's Gianforte maintains that larger customers are increasingly looking at on-demand applications for the same reasons smaller companies have adopted the tools.

As further proof that hosted applications are increasingly valid in the enterprise area, Gianforte pointed to SAP's expected entry into the market later this year with its own set of on-demand tools. SAP executives had previously labeled hosted applications as unimportant to the massive businesses that make up the majority of its sizable customer base.

Siebel, RightNow's primary competitor in the call center automation segment, has been pushing its own hosted offering as one of its best chances for regaining its former leadership position in the CRM market.

Unlike Salesforce, which introduced a set of development tools known as Multiforce to allow the company's customers and partners to build their own vertical applications and integration points, Gianforte said that RightNow is focused on delivering products that address companies' CRM needs without requiring a lot of add-on work.

RightNow says it has created special packaging for companies in different vertical markets, most notably in the education and government sector, which currently accounts for roughly 20 percent of its sales.

"Not building vertical applications makes sense for (Salesforce.com's) market; they want to be a data repository for every type of information that a business needs to store, while we are much more focused," Gianforte said. "Larger enterprises are looking for depth of experience in a particular discipline, and we don't just supply product, we're bringing in best practices. For larger companies, you simply must go deep, not shallow and broad as with (Salesforce)."

Salesforce.com was not immediately available to comment.

RightNow may have an edge over Salesforce in the enterprise market, analysts said, based on its background in large call center installations. Scott Nelson, analyst with researcher Gartner, said RightNow may not yet be winning huge deals but it has a good chance to find its way into smaller parts of larger companies, where it could then expand its presence.

"We're going to see (RightNow) primarily in divisions of large enterprises, although they have the capabilities to play across a larger enterprise," Nelson said. "The on-demand model tends to put them in a midmarket box, but, compared to Salesforce.com, RightNow has more of a presence across the whole CRM spectrum, while (Salesforce) primarily sells only into the sales environment."

Nelson said there's plenty of room for both RightNow and Salesforce to grow into the enterprise market, as on-demand applications are only beginning to sell into the market more frequently. The analyst, and RightNow executives, maintained that the two companies serve different customers, pitting them more against the various offerings of larger enterprise players than forcing them to face off against each other.

Chuck Udzinski, consumer services manager at power tools specialist Black & Decker, said he chose RightNow's CRM applications to work with his company's SAP enterprise resource tools because the software was easier to use and install than products he'd seen from other vendors.

Udzinski said it's unlikely that Black & Decker will move back to an on-premise application now that its customer service employees have come up to speed on RightNow's hosted tools. The company is now in the process of expanding its RightNow project from its call center into its sales and marketing operations.

"Something drastic would have to happen for us to want to bring this back in-house, we're very satisfied with the hosted experience," he said. "With IT resources being what they are, one of the reasons we had to move to on-demand was that we couldn't get the budget to work on our legacy systems. Everyone is dealing with that on some level, and that's why more companies like ours will consider someone like RightNow down the road."