Fourteen years ago Greg Gianforte launched RightNow out of a spare bedroom at his house in Bozeman, Montana. Not exactly the tech center of the world, one way that RightNow has taken the road less traveled.
At this year’s RightNow Summit, Gianforte said that in those early days, email was the hot thing. Some vendors (e.g. eGain) were launching customer service solutions to support that channel. But Gianforte placed his bets on a web-based “self-learning” knowledgebase. Think FAQ on steroids and you wouldn’t be far off.
Fast forward to 2011, and you’ll find RightNow as a public company ensconced as the leading B2C customer service solution in the SaaS turned Cloud Computing industry. Web self-service is still a core solution, but RightNow has expanded to offer solutions for the agent desktop and added social and mobile capabilities recently, too.
Customers now include global brands like AMEX and large government agencies like the Department of Defense. In 2010 RightNow booked $185.5 M in revenue, and has a annual run rate of $228M, based on Q3/2011 results.
Pretty impressive considering Gianforte and company did it without the chest-thumping bravado that we’ve all come to expect from software industry. Given that my passion is all about customer-centric business, it’s been refreshing to see that “nice guys” don’t always finish last in the software business.
Why is Oracle Buying RightNow?
Well, the party’s over. Oracle has announced plans to acquire RightNow for $1.5 billion, about a 20% premium over RightNow’s market value. Neither company will provide any details beyond official statements, so I’ll feel free to speculate on two key reasons why this deal happened.
- In Software, Size Does Matter.
I like scrappy upstarts as much as anyone, but at some point smaller software companies just can’t keep up with big dogs like IBM, Microsoft, Oracle and SAP. And now Salesforce.com. R&D, marketing, sales forces, legal fees… the bills really start piling up.
With increasing competition from Salesforce.com along with Oracle and SAP finally getting serious about cloud computing, Gianforte judged this was the right time to sell and get the best value for RightNow’s shareholders. I think he was right. The next stage of cloud computing will belong to the mega IT brands, not the start-ups.
- Oracle Needs an Injection of Cloud DNA
Sure, Ellison recently announced a Public Cloud offering, which was no doubt spurred by SAP’s cloud strategy and Salesforce.com’s success. But the CRM service seems designed to compete with Salesforce.com in B2B SFA, based on this announcement:
Oracle Fusion CRM Cloud Service helps sales professionals outsmart their competition by planning, prospecting, collaborating and closing smarter. The system’s embedded business intelligence delivers unprecedented insight into sales planning and sales performance management, so that sales representatives and sales leaders can sell smarter.
What Oracle really needs is RightNow’s expertise in running an online service focused on customer service/support (not sales or marketing). Oracle is not just buying code and a customer base (e.g. like Siebel, PeopleSoft), it’s buying an integrated service that has been honed over many years. Of course, $200M+ revenue/year is worth something, but I’ll bet Ellison wants to add another “0” immediately if not sooner. RightNow gives Oracle a shot at catching Salesforce.com in the cloud revenue derby.
Can Oil and Water Mix? Yes, if You Remove the “Gas”
The party line is that RightNow customers will continue to get RightNow’s innovative CX solutions backed by the strength of Oracle. Here’s a quote from an email RightNow sent out to customers and partners:
We anticipate that you will experience significant benefits from this combination. Oracle is moving aggressively to offer customers a full range of Cloud Solutions including sales force automation, marketing, human resources, talent management, social networking, databases and Java as a part of the Oracle Public Cloud. Our customer service cloud offering is an important and complementary addition to Oracle’s Public Cloud. Together, we intend to enable a superior customer experience at every contact and across every channel.
Maybe so, but as many industry watchers and analysts have already noted, the cultures of the two organizations are just a tad different. RightNow’s customer- and employee-centric culture is quite a contrast to Oracle’s more hard selling, product-oriented approach. Both have been successful, but the open question is how will RightNow’s workforce fit in?
That said, Oracle has been working on becoming more customer-oriented in recent years. Customers using software from Siebel, PeopleSoft and other acquired companies were not abandoned. When I talk to Oracle customers, they generally seem satisfied and don’t plan to switch (much to SAP’s chagrin). And Oracle has invested in a Voice of Customer program designed to build customer loyalty.
For its part, RightNow has also been changing to become—dare I say it—more Oracle-like. At the RightNow Summit, President/COO Wayne Huyard attributed the firm’s recent growth surge to an emphasis on sales effectiveness and a tighter focus on core products, markets and channels.
So, yes, there are distinct cultural differences. But perhaps the gulf is not as wide as some think. If the acquisition is managed well—and I’m sure Gianforte will be well motivated to do so—the two cultures may find they can work together.
By the way, did you know that oil and water really can mix? All you have to do is remove the gas! However, scientists don’t know if the software industry could survive without all the hot air.
Mobile and Social Announcements
Chief Solution Officer David Vap briefed the press/analyst meeting on two major announcements, which he positioned as “packages of capabilities.”
- RightNow CX for Mobile supports consumer-facing functions (e.g. web self-service) for mobile devices. Three use cases are supported: native apps, hybrid (native/browser) and browser.
What’s important here is that without re-coding for mobile, the RightNow functionality is available to the rapidly increasing universe of mobile users. Not another silo of mobile code to maintain, so fewer headaches for IT. One early user is the Boston Globe, says Vap, using RightNow in an iPad app.
RightNow’s CMO Jason Mittelstaedt believes that as brands add “apps” to interact with users on smartphones and tablets, the support channel should be integrated. I couldn’t agree more. This is a huge opportunity for B2C brands, and for RightNow if they can execute. Every mobile app should include a “help” function.
- RightNow CX for Twitter provides an automated response channel similar to email. In email, you can send a support request to a certain email address, and the RightNow system will respond with a list of possible solutions, based on the content of the email. With Twitter, use the hashtag “#help_xxx” where xxx = the brand name.
This is a good example of how RightNow is approaching social business applications—as an integrated part of a customer service experience, not a standalone solution. While RightNow can sell a community solution (HiveLive acquisition) separately, it doesn’t appear they are trying to compete directly with Lithium, Jive and other online community vendors. I spoke with one RightNow customer who is currently using Jive and is seriously considering moving to RightNow’s community solution because of the tighter integration.
Headwinds and Downdrafts in the Cloud
I’ve enjoyed following RightNow over the years because it was a cloud computing pioneer that also proved “customer-centric software company” wasn’t an oxymoron. The Oracle/RightNow combination has a number of challenges, but I think this is the right time for both parties, and they’ll work hard to make it succeed.
The main risk is that while the integration work goes on, Salesforce.com has time to keep growing without such distractions. And I will also be very interested to see if RightNow, under the Oracle umbrella, can keep its position as a leading player in the hot market for “customer experience” solutions.
Integrating RightNow into Oracle’s Public Cloud will not be easy, nor will combining the two services into some kind of mashup. Furthermore, just explaining to customers what to buy and how it will all work may stretch the capabilities of the average sales rep, especially Oracle reps used to selling license software. The cultural issues just compound these technical and marketing challenges.
But still, on paper at least, with astute management by Gianforte and his counterpart at Oracle, these challenges can be overcome. And they’d better be, if Oracle intends to be a serious threat to Salesforce.com or even SAP in Cloud 2.0.
Disclosure: RightNow invited me to attend their customer conference, provided a free pass and paid my travel/hotel expenses. This post is part of my independent industry coverage and is not an endorsement of RightNow or its products/services. RightNow has been a sponsor of the CustomerThink community within the past year.
