The Rise and Fall--and Rise--of Clarify
The call center vendor has finally found a home with a solid foundation.
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In the late 1990s Clarify was virtually synonymous with call center solutions. When Nortel Networks paid $2 billion in stock for Clarify, the stage was set for end-to-end dominance in the customer contact sphere. Instead, barely a year and a half later Nortel sold Clarify for 10 cents on the dollar to Amdocs, which has made Clarify the core of its CRM offerings. Nortel's trouble with Clarify was multifaceted, but boiled down to an inability to execute. "[Nortel] had a sales force that had no ability to sell software," says Laurie Orlov, research director at Forrester Research. Orlov also impeached the company's product strategy and management handling--Nortel lost senior Clarify staff in marketing, alliances, sales, and professional services in a six-month span. As a result the leadership necessary to make the two firms work together may have been missing. "Clarify CEO Tony Zingale did a good job selling Clarify into Nortel, but wasn't really there for the execution [of integrating the firms]," says Joanie Rufo, research director at AMR Research. Instead of taking on Siebel and PeopleSoft with new ammunition, under Nortel's stewardship Clarify went underground. Industry analysts complained privately about a lack of visibility, press inquiries went unanswered, and the Clarify brand was snowed under in confusing ad campaigns that promised to put top-quality call center agents on a CD-ROM. Despite entering the market with a major splash, Nortel characterizes itself as being out of the CRM business, period. "We sold our stuff," says spokesperson David Chamberlin. Nortel declined to discuss its Clarify tenure at length, with Chamberlin simply adding, "It wasn't a core business." Amdocs brought top-management stability to the unit by putting Dror Pockard in the Clarify head office that had been vacated by Zingale and two successors at Nortel. Pockard led the company's CRM task force before assuming the role, and says his focus has been on R&D run by a development team he says was largely retained from Nortel/Clarify. Amdocs declined to provide any specific measures of the strength of Clarify. However, executives reportedly projected $100 million in ClarifyCRM revenue for 2002, which would represent a more than 50 percent decline from Clarify's annual turnover before the Nortel purchase. Since it began shedding business units like Clarify, Nortel has reengineered its business into three divisions: optical, wireless, and enterprise/metropolitan networks. "Pieces of their business have stabilized, even the worst pieces, and they've ditched a lot," says Wells Fargo Securities analyst Chet White. Rufo suggests that Nortel confused the chain of cause and effect in CRM decision-making. "There was an assumption that the CTI/switch piece [Nortel's core strength] would drive the call management decisions within buyers, and more often it's the other way around: People investing in a new call center pick the call management application first," she says. Had the economy generally and the networking equipment market specifically not turned as it had, things could have been different. "Some of it you can attribute to normal acquisition mayhem...there are some things you can make acceptances and allowances for," Rufo says. "In an economy that starts to go south, if you're in a business that's not part of the core, you're the first logical thing to eliminate." As for Nortel's prospects, White's conclusion is that the firm needs to position itself to survive until broader telecom and network spending recovers. He pegs current quarterly communications capital expenditures in North America at $9.5 billion, down from a high of nearly $22 billion at the end of 2000. "What they have to do is right-size their burn," he says, and considers Nortel's sale of Clarify and the wind-down of several other businesses to be a step in the right direction to reach its stated goal of profitability in Q3 2003. So far, Clarify CRM wins have played directly to Amdocs' strength in the communications market. The company has signed international telecom operators like Netia (Poland), Cegetel (France), and Vodafone (U.K.) to significant implementations. Despite, or perhaps because of, the pinpoint focus on its new core market, some analysts have been reluctant to let Clarify back on their radar screens, saying that they are unconvinced that the outfit will become an innovator once more. "This sounds like a support-and-maintenance strategy for keeping the Clarify user base," Orlov says. In September Amdocs unveiled ClarifyCRM Release 11, which touts thin-client, browser-based applications and enhanced business process management. Release 11 also includes an XML-based integration gateway. Amdocs demands to be a part of every integration project with customers, Pockard says. "Clients are looking for someone to take responsibility," he says. At the very least, Release 11 demonstrates Amdocs' commitment to the CRM market, industry watchers say.
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