RightNow Challenges Cloud Competitors

Greg Gianforte, chief executive officer of RightNow Technologies, took to the floor at San Francisco's Fairmont Hotel yesterday to make an announcement regarding the "epidemic" faced by software customers today. "There's a lot of trauma associated with acquiring software," Gianforte said. "Customers are forced to buy more than they need." [A Webcast of Gianforte's address can be found here.]

When companies began innovating in the cloud ten years ago, there was tremendous promise, Gianforte said; however, as vendors have established firm footing in the space so have they established contract lock-ins, rigid subscription settings, and oftentimes software that goes unused. Gianforte's speech touched upon the flaws evident in software-as-a-service (SaaS), but more importantly, introduced RightNow's Cloud Service Agreement, which the vendor is calling "the industry's first transparent, flexible contract that enables clients to take full advantage of the cloud."

"SaaS vendors are masquerading in cloud clothing," Gianforte said. "They haven't embraced the flexibility and accountability that the SaaS world is making possible." RightNow's service agreement ensures that the vendor will deliver upon the benefits of running in the cloud including:

• lower total cost of ownership of enterprise applications,
• faster deployments,
• rapid innovation,
• elimination of shelfware,
• no long-term lock-in, and
• vendor accountability.

"We've solved the technical issues," Gianforte said about cloud technologies, "But we have not solved the engagement issues." He went on to mention Altimeter Group Partner Ray Wang's work, "A SaaS Customer's Bill of Rights" -- a collaborative report that outlines what enterprise software customers should look for in their contracts with SaaS vendors. "Any time an industry has to issue a bill of rights, you know somebody's rights are getting trampled on," Gianforte said.

The CEO then announced the six points that the company thinks should be part of every software contract and that comprise RightNow's Cloud Service Agreement. "Here's the fine print," he said, "But there really is no fine print."

1. Annual usage up or down without penalty: To think a customer will know how many seats they will need for a contact center 3-5 years down the road is unreasonable, Gianforte said.
2. Three year price commitment plus three year renewal price cap: This means a transparent contract with no hidden fees.
3. Annual termination for convenience: RightNow's stance is that a vendor should have to earn the right to renew a customer's business -- it should never be assumed.
4. Annual pools of capacity: Think of it like a cell phone plan's roll-over minutes, Gianforte said. A company that often scales up or down its number of contact center seats for seasonality is able to make use of unused seats without penalty or fee.
5. Cash service level credits: If RightNow fails to deliver upon its service-level agreement, customers will get paid. According to Gianforte, RightNow customers can expect a check in the mail if the company fails to perform.
6. Unlimited capacity for 90-day pilots: Customers get to try the software as they would with full deployment.

A number of these points have previously been incorporated into RightNow's business model; however, this agreement will be put forth to all new customers and for all renewal contracts moving forward. Gianforte, appropriately making use of the event's "Cloud Challenge" title, challenged RightNow's competitors -- namely Oracle, Salesforce.com, and SAP -- to return to a state of simplicity with SaaS contracts and to follow RightNow's lead.

Independent enterprise software analyst Frank Scavo writes in a blogpost, "RightNow's announcement not only differentiates itself from SAP and Oracle but also from some of the cloud providers. Cloud-based vendors, such as Salesforce.com and NetSuite may be up-to-date in terms of technology (SaaS, PaaS, muli-tenant, etc.) but in many respects the way they sell, negotiate, and contract with customers is not much different from how SAP and Oracle deal with customers," he writes. "Perhaps it's because most of their executives grew up in the traditional on-premise world, where customer lock-in is considered a positive thing."

"I think it's what the industry needs to deliver upon the promise of the SaaS model," said Altimeter Group Partner Ray Wang. "A lot of those promises around SaaS and cloud services have been broken." Beagle Research Principal Denis Pombriant makes an interesting point in his blogpost about the Cloud Challenge event: "The adjustments Gianforte introduced amount to risk sharing between the vendor and the customer," he writes. "That was what SaaS was supposed to be but the original benefits have commoditized so a new round was needed, at least according to RightNow."

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