customer service supplier and product update 05-30-2013

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Patricia Seybold Group / Product Update

Customer Service Supplier and Product Update 1Q2013 Was a Good Quarter for Customer Service

By Mitch Kramer, Senior Consultant, Patricia Seybold Group May 30, 2013

NETTING IT OUT 1Q2013 was a good quarter for customer service, the second good quarter in a row.

Customer growth was the quarters highlight. Clarabridge, Creative Virtual, eGain, IntelliResponse, Moxie, and, Salesforce.com all had good customer growth quarters in acquisition, repeat business or both.

Financial performance reflected the good customer growth, especially for eGain and Salesforce.com.

Product activity was about the same as last quarter. Five of our suppliers introduced significant new products or major product versions.

Company activity was up. The biggest news was Nuances acquisition of VirtuOz, making a potentially major impact of the virtual agent space.

Salesforce.com earned a Customer Service Star for 1Q2013 with excellent and balanced performance across customer growth, financial performance, products, and company.

Voice of the Customer (VoC) applications monitor and analyze customer conversations on internal channels as well as on the social web. Theyre critical customer service applications and theyre hot. Attensity and Clarabridge are VoC suppliers. IntelliResponse introduced a VoC app this quarter.

QUARTERLY REPORTS ON THE PERFORMANCE OF CUSTOMER SERVICE SUPPLIERS AND THEIR PRODUCTS AND SERVICES

With this report, we begin our tenth year of quarterly updates on the suppliers and products in customer service. These updates focus on factors that are important in the evaluation, comparison, and selection of customer service products. More specifically, we examine these factors in our quar-terly updates:

Customer acquisition and overall customer growth

Product activity

Company activity including mergers and acquisitions, partnerships and alliances, and hiring

Company financial performance

Directlink: http://dx.doi.org/10.1571/pr05-30-13cc

2 Product Reviews

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In our evaluations of quarterly performance, we want to see continuing customer growth, ongo-ing improvements in products, steady company viability, and good financial performance. We dont want to change our evaluations based on a quarters news, but we do want to raise a red flag when that news deviates from a positive, multi-quarter trend, or to wave a green flag when that news is particularly good. When significant product and company events occur, we identify and highlight those that could have an impact on customer service products and technologies, suppliers, and the market landscape.

Customer Service Suppliers and Products Here, in Table A, are the customer service suppliers and products that we currently cover:

Customer Service Suppliers and Products

Company Product Product Type

Attensity Attensity Analyze

Attensity Respond

Voice of the Customer monitoring, analysis, interaction

Creative Virtual V-Person Virtual agent

eGain Service Case management, knowledge management, social monitoring, analysis, interaction

IntelliResponse Virtual Agent (VA) Virtual agent

KANA KANA Enterprise

KANA Experience Analytics

Knowledge, process management

Voice of the Customer monitoring, analysis, interaction

Moxie Spaces Knowledge management, agent and customer collaboration

Next IT ActiveAgent Virtual agent

Nuance/VirtuOz VirtuOz Intelligent Virtual Agent

Virtual agent

Oracle RightNow Oracle RightNow CX Case, knowledge, process management; Voice of the Customer monitoring, analysis, interaction

Salesforce.com Service Cloud

Knowledge

Marketing Cloud (Radian6)

Case management, process management

Knowledge management

Social monitoring, analysis, interaction

2013 Patricia Seybold Group, Inc.

Table A. In this table, we list the customer service suppliers and their products that we cover in this report.

Customer Service Supplier and Product Update 3

Unauthorized redistribution of this report is a violation of copyright law. Customers.com Research Service For Reprints/Redistribution rights, contact: [email protected] 2013 Patricia Seybold Group

We made three changes to the list of suppliers and products this quarter. Sadly, we dropped Aptean (formerly Consona CRM, formerly Kanisa) and its Knova knowledge

management product. Aptean is the product of the August 7, 2012 merger of CDC Software (CDC) and Consona Corporation (Consona), two software suppliers that were formed and grew through ac-quisition and that have overlapping product lines. We had covered Consona, its Knova offering, and their various predecessors for more than nine years. Knova does not seem to be a very important of-fering to Aptean. There has been no activity on it and no communication about it since the merger. Its product, product marketing, and communications staff have been reduced and/or reassigned. A new version planned for early 2012 has not appeared.

We add Clarabridge, a Reston, VA-based supplier of Voice of the Customer software. We pub-lished our evaluation of Clarabridge Analyze, Clarabridge Collaborate, and Clarabridge Engage on March 28. Its a strong offering from a solid company.

We also add Creative Virtual, one of the leading four suppliers of virtual agent software. (We al-ready covered the other threeIntelliResponse, Next IT, and Nuancein these Quarterly Customer Service Update Reports.) We published our evaluation of Creative Virtual V-Person on September 29, 2012. Its an attractive, widely used offering.

Calendar and Fiscal Quarters Note that these quarterly reports accommodate the fiscal years of suppliers that dont run on the

calendar yearIntelliResponse and Salesforce.com both have fiscal quarters that end a month later than calendar quarters. We wait for them every quarter.

A Good 1Q2013 Customer service had a good quarter in 1Q2013. Heres what we mean:

Customer growth was the quarters highlight. Clarabridge, Creative Virtual, eGain, IntelliResponse, Moxie, and, Salesforce.com all had good customer growth quarters in acquisition, repeat business, or both. We dont have quarter-over-quarter customer growth data for Clarabridge yet, but it touched almost 25 percent of its customer base in 1Q2013.

Financial performance reflected the good customer growth, especially for eGain and Salesforce.com.

Product activity was about the same as last quarter. Five of our suppliers introduced significant new products or major product versions.

Company activity was highlighted by Nuances acquisition of VirtuOz, making a potentially major impact of the virtual agent space. In addition, eGain and Salesforce.com made common stock-related announcements. Oracle RightNow opened a cloud computing center in Japan. Attensity has a new CEO.

In Tables B, C, and D, we present the details on customer growth, product activity, and company activity for the quarter and the year. Table B shows customer growth using arrows. To show signifi-cant increases or decreases, we use double arrows. Table C shows product activity, and Table 3D shows company activity. Our suppliers are a mix of public and private companies. We collect finan-cial performance metrics from the SEC filings of the public companies. We estimate the financial performance of the private companies as revenue ranges using the customer growth and deal detail information that the private suppliers disclose to us. Were uncomfortable presenting a table that

4 Product Reviews


contains a mix of the hard data from public companies with the soft revenue range information from the private companies. Youll find financial performance details for the quarter and for the year in the individual supplier sections of this report.

1Q2013 Customer Growth

Supplier New Customers Repeat Customers

Attensity N/A N/A

Clarabridge N/A N/A

Creative Virtual eGain IntelliResponse KANA N/A N/A

Moxie Next IT Nuance N/A N/A

Oracle RightNow N/A N/A

Salesforce.com 2013 Patricia Seybold Group, Inc.

Table B. We summarize customer growth in this table.

1Q2013 Product Activity

Supplier Activity

Attensity Group Announces Attensity Respond 6.0

Clarabridge None

Creative Virtual None

eGain None

IntelliResponse Announces general availability of mobile app for IntelliResponse Virtual Agent on Android and iOS

Announces general availability of IntelliResponse Virtual Agent 6.2



1Q2013 Product Activity (continued)

Supplier Activity

KANA None

Moxie Announces integration between Microsoft Lync contact center application and Spaces by Moxie

Next IT None

Nuance VirtuOz Intelligent Virtual Agent becomes Nina Web

Oracle RightNow Releases Oracle RightNow CX February 2013

Salesforce.com Announces Service Cloud Mobile

2013 Patricia Seybold Group, Inc. Table C. We summarize 1Q2013 product activity in this table.

1Q2013 Company Activity

Supplier Activity

Attensity J. Kirsten Bay named President and CEO.

Clarabridge None

Creative Virtual None

eGain Announces a public offering eGain shares by individual eGain shareholders

IntelliResponse None

KANA Announces partnership with Sydney, AU contact center outsourcer Salmat

Moxie None

Next IT Mary Cain, MPH, named to Next ITs Medical Advisory Board

Announces partnership with Dan Barry, former NASA Astronaut, in robotics

Nuance/VirtuOz Nuance acquires VirtuOz

Oracle RightNow Opens secure, cloud computing data center in Japan

Salesforce.com Private offering and placement of common stock

4:1 common stock split

2013 Patricia Seybold Group, Inc. Table D. We present a summary of 1Q2013 company activity in this table.

6 Product Reviews


Company Activity Just a note about company activity. Our suppliers issue many kinds of press releases. We cover

product related press releases in the Product Activity sections of our reports. We cover company re-lated press releases in Company Activity sections of our reports. Suppliers publish many types of company related press releases. These types are important to our analysis of quarterly performance:

Strategy, branding, and organizational announcements (see the Clarabridge and Next IT section of this report), Organizational activity

Mergers and acquisitions (see the Nuance section of this report)

Executive and board appointments (see the Attensity and Next IT sections of this report)

Financing and stock announcements (see the eGain and Salesforce.com sections of this report)

Partnership activity (see the KANA section of this report)

Suppliers also make many other types of company announcements. These most commonly in-clude customer acquisition and product deployment announcements and announcements of recogni-tion by (other) analyst firms about their products. While these announcements are certainly important to suppliers, theyre not germane to our analyses.

Salesforce.com Earns a Customer Service Star for 1Q2013 We award Customer Service Stars to those suppliers that deliver outstanding, improved, and bal-

anced performance across customer growth, products, financial performance, and company activity for a quarter. Salesforce.com earns a Customer Service Star for 1Q2013. Its customer growth and fi-nancial performance were excellent. It introduced Service Cloud Mobile, new capabilities for its cus-tomer service offering. It made three company announcements about significant financing activities.

Research Series on Virtual Agents We continued our research on virtual agents in 1Q2013, although the product of our research, an

update to our evaluation of IntelliResponse VA, was published in 2Q2013 on May 10. We now have current evaluations of the four leading suppliers (alphabetically): Creative Virtual; IntelliResponse; Next IT; and VirtuOz, now Nuance. The offerings are similar. We had to dig a little to discover dif-ferentiators. Basically heres how all of them work:

Customers enter a question, typically by typing in a text box on the screen of a PC browser or mobile device app.

Virtual agents use Natural Language Processing (NLP) technology select and deliver a single best, most suitable, or the one right answer from their knowledgebase of answers.

Answers are usually presented as text with links for additional/related information.

NLP technology is the core component of virtual agents and the key IP of Creative Virtual, Next IT, and Nuance. Each has its own, proprietary NLP implementation. Most are patented. Each does some type of parsing, entity and fact extraction, and intent identification/matching. Dictionaries of industry-specific, application-specific, and business-specific terms improve their accuracy and effec-tiveness.



Deployment of these virtual agents requires configuring and training the NLP technology, work that likely requires some consulting help from suppliers, building the knowledgebase of answers, and placing them appropriately within web and mobile content.

IntelliResponse uses machine learning technology rather than NLP. Virtual agents deployed on IntelliResponse VA deliver answers with the accuracy of NLP-based virtual agents, and their de-ployment and management is significantly faster and easier, approaching self-service. See the In-telliResponse section of this report for a bit more information. See our evaluation for the detail.

Youll find virtual agents ready to answer your questions on the web sites of telecommunications providers, airlines, retailers, and financial services provides. If youve been avoiding them, by all means, give them a try. They really do work. When they dont, its more likely that deploying busi-nesses havent trained them completely or built a complete knowledgebase than it is an issue with virtual agent technology.

All of the virtual agents let customers escalate to chat with live agents. Most of them integrate very nicely with external applications. For example, Jenn, Alaska Airlines virtual agent, which is a deployment of Next IT ActiveAgent, found flights for us. Mobile device support and voice integra-tion are the hot new features.

Nuance Acquires VirtuOz On the topic of virtual agent voice integration, Nuance acquired VirtuOz. The acquisition is both

a validation and disruption. The leading virtual agent suppliers were small, privately held companies, each with staff of 20 or fewer developers. The combined virtual agent customer base is about 200 businesses. Nuance is a large, public company with thousands of customers and a development staff that includes 1200 language scientists. It will be that 500-pound gorilla in the virtual agent market.

Social-Service Is Still Hot Social-service continues as a hot customer service trend. The social web has become an impor-

tant customer service channel because customers use it to get answers to their questions and solu-tions to their problems. Many customers, especially B2C customers, use the social web as their first source of answers and solutions. It is now a customer service requirement for organizations to be lis-tening to and interacting with their customers on the social web. Most of our suppliers have begun to offer customer service support for the social web channel.

Social-service is also a subset of Voice of the Customer (VoC) products and applications. VoC offerings monitor and analyze customer conversations on internal channels as well as social channels and also provide facilities for interacting with individual customers. Attensity and Clarabridge are VoC suppliers. This quarter, Attensity and IntelliResponse made VoC announcements. Attensity re-leased Attensity Respond 6.0, its application for interacting with individual customers. IntelliRe-sponse introduced VOICES, a VoC application that identifies the themes in the questions that customers ask virtual agents on both internal and social channels.

Now, lets get the details of 1Q2013 for our 11 suppliers.

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ATTENSITY

Attensity Has an Okay 1Q2013 1Q2013 was an okay quarter for Attensity. The company did not provide customer growth data

for the quarter, so we could not analyze customer growth or financial performance. However, Atten-sity made one product announcement and one company announcement and both were significant.

Note that 1Q2013 completes the first year for a new Attensity. During 1Q2012, the firm spun out the professional services organization of its EMEA division. The change reduced Attensitys staff to approximately 140 from 300. The change focused Attensitys strategy and resources on de-veloping, marketing, selling, and supporting its software offerings Attensity Analyze and Attensity Respond. The effect of the change was a reduction in customer growth, especially additional busi-ness from existing customers, and financial performance beginning in 2Q2012.

Customers Attensity has a base of approximately 170 current accounts. While we have no customer growth

data for 1Q2013, last quarter, the firm acquired 5 new customers and did additional business with 25 existing customers. Customer acquisition was down. Repeat business was up.

Products Attensity offers two products: Attensity Analyze and Attensity Respond. Attensity Analyze is Attensitys offering for monitoring and analyzing the Voice of the Cus-

tomer (VoC). Attensity Analyze monitors and analyzes customer conversations on internal chan-nelsemail, web, SMS, (snail) mail, and, via voice message, telephone, as well as on the social web.

Attensity Respond is Attensitys offering for responding to and interacting with individual cus-tomer conversations on the social web and on internal channels, such as Twitter, Facebook, and email. Attensity Respond automatically classifies these conversations, routes them, and queues them for handling by social-service and marketing teams or traditional contact center staff.

Product Evaluation We published our evaluation of Attensity Analyze and Attensity Respond on March 1, 2012.

Briefly, organizations license Attensity Analyze and Attensity Respond for cloud or on-premise de-ployment. To date, Attensity claims that 110 customer organizations have licensed Attensity Analyze and that 60 customer organizations have licensed Attensity Respond.

Attensitys social-service offerings earn excellent grades on the Customer Social-Service Report Cardexceeds-requirements grades in analytic functionality and in customer service integration, and meets-requirements grades in product viability and company viability. No major improvements are needed.

Attensity Analyze and Attensity Respond best fit customer social-service with these characteris-tics, characteristics that drive their selection:

Deep analysis of customer conversations through powerful and sophisticated technology Large volumes of customer conversation data Large B2C organizations



Product Announcements Attensity made one product announcement during 1Q2013. On March 11, the firm announced

the release of Attensity Respond 6.0. New and improved capabilities include:

A new ADA-compliant and iPad compatible web UI Access to the Twitter Firehose data stream Improvements to automatic categorization of incoming documents Improved monitoring and reporting Integration with Jive forums and Salesforce CRM

As we mentioned above, Attensity Respond eared excellent grades in our 1Q2012 evaluation of its previous version. The improvements in 6.0 strengthen its listening, analysis, and interaction capa-bilities.

Company Attensity made one company announcement during 1Q2013. On January 30, the firm announced

that J. Kirsten Bay was appointed President and CEO to succeed Ian Bonner, who will continue as chairman of the board. Most recently, Bay had been vice president of commercial business of iSIGHT Partners, a cyber intelligence/risk management firm.

Careers Attensity Group has a staff of 140. This quarter, there are 8 openings posted on the careers sec-

tion of its web site: three in development, three in sales, one in customer support, and one internship. There were 10 openings last quarter.

Financials These factors have been the bases for our estimates of Attensitys financial performance:

Typical deal size of $350k/year for Attensity Analyze

Typical deal size of $300k/year for Attensity Respond

Consulting services for implementing Attensity Analyze are approximately 30 percent of year one license fees

Consulting services for implementing Attensity Respond are approximately 25 percent of year one license fees

Customer base of 170 accounts, most with cloud deployments

Without customer growth data, we cannot offer estimates of financial performance. Note, though, that for 4Q2012, we estimated that 5 new customers and additional business with 25 existing cus-tomers generated revenues in the range of $7 million to $11 million.

Our Take on Attensity Group Based on its product and company announcements, Attensity had an okay quarter in 1Q2013.

Going forward, we hope that the firm will give us the input from which we can perform and docu-ment a more complete analysis.

10 Product Reviews


CLARABRIDGE

Clarabridge Has a Very Good 1Q2013 Clarabridge had a very good1Q2013. Very good customer growth drove very good financial per-

formance. The firm did not make any product or company announcements during the quarter, but, early in 2Q2013, it rebranded its offering and introduced a major new product version.

Customers Clarabridge has a base of approximately 250 current accounts. In 1Q2013, the company told us

that it had 3.5 percent growth in new customers and repeat business from 20 percent of its customer base. That sounds like 8 to 10 new customers and additional business from 45 to 55 existing custom-ers. Touching 23.5 percent of its base or approximately 60 of 250 customers in a quarter is very good customer growth.

Products Clarabridge offers three products: Clarabridge Analyze, Clarabridge Collaborate, and

Clarabridge Engage. Clarabridge Analyze monitors, analyzes, reports on, and alerts on customer conversations on social and internal channels. Its analyses use text analytics technologies to uncover meaning, intent, and sentiment, and to classify them within a flexible hierarchy of categories that represent customers emotions and businesss products and services, policies, procedures, applica-tions, and staff. Analyzes reports are built around the volume and sentiment of customers conversa-tions within these categories. Its alerts are sent to Collaborate and/or Engage for their handling and management. Collaborate manages all alerts and provides facilities for handling alerts on trends in volume, sentiment, and satisfaction of customers conversations on social channels, internal channels, and within documents. Engage provides facilities for handling alerts on individual customers posts, messages, and feedback that require response on Facebook, Twitter, or emailcustomer social-service alerts.

Clarabridge Analyze was introduced as the Clarabridge Content Mining Platform in October 2007. Clarabridge Collaborate was introduced in March 2012. Clarabridge Engage was introduced in November 2012. Clarabridge 5.5 which was released in November 2012. Clarabridge 6.0, the current version, was released in April 2013.

Product Evaluation We published our evaluation of Clarabridge Analyze, Clarabridge Collaborate, and Clarabridge

Engage on March 28, 2013. Organizations license Clarabridge Analyze, Collaborate, and Engage, for cloud or on-premise

deployment. Ninety percent of Clarabridges customer base has deployed the products in the cloud, Two factors, both product strengths, differentiate Clarabridge Analyze, Clarabridge Collaborate,

and Clarabridge Engage:

Powerful and configurable monitoring and analysis of customer conversations in multiple languages on social and internal channels

Configurable, classification-based alerting, routing, and management of customer conversations that require handling and response



Text analytics and sentiment analytics technologies are the key strengths and differentiators of the offering. These technologies facilitate fast, automated, and consistent analysis of all customer conversations on all channels in multiple languages and the identification of individual customer posts, messages, and feedback that require responses.

Clarabridges offerings for social-service earn good grades on our Customer Service report Card for Social-ServiceExceeds-Requirements grades for the critical Monitoring and Analysis criterion and Meets-Requirements grades in Product Viability and Company Viability. Their Needs-Improvement Grade in Customer Service Integration should improve soon through planned en-hancements in future product versions.

Product Announcements Clarabridge did not make any product announcements in 1Q2013 but, going forward into

2Q2013, introduced Clarabridge 6.0 on April 18. The new version has three significant new features:

Report Distribution. This new capability lets administrators distribute personalized, localized, and relevant reports to individual stakeholders on demand or via a schedule.

Insights Analysis. This new facility provides wizard-based comparison and analysis of customer conversations and feedback across multiple variables.

Support for Big Data. Clarabridge 6.0 supports Hadoop via HBase.

Company Clarabridge did not make any made any company announcements during 1Q2013. Going for-

ward into 2Q2013, on April 8, the company introduced a new corporate logo, launched a new web site, and rebranded its products all built on Intelligent Customer Experience, the firms new strat-egy and messaging. Clarabridge defines Intelligent CEM as an iterative process with these four steps:

Listen to customers posts, messages, and feedback on social and internal channels.

Analyze customers posts, messages, and feedback for meaning, intent, and sentiment. Also, classify them for fast, consistent, and appropriate action.

Operationalize the insights of analysis within the applications and processes of the customer experience.

Measure the effect of operationalization; repeat.

Clarabridge had focused its messaging and branding on its IPtext analytics technologies. The new focus is on the application of the technologies to improve customer experience and deliver business benefits.

This new focus is timely and relevant. It will help the market understand how Clarabridge can deliver business value. (Note that our product evaluation was based on this new strategy and brand-ing. Clarabridge had given us pre-release information.)

Careers The Careers section of Clarabridges web site lists 14 openings4 in engineering, 3 in sales, one

in customer service, 5 in professional services, and 1 in HR. There were 15 openings last quarter. Clarabridge has a staff of approximately 120 employees.

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Financials Clarabridge is a private company. It does not publicly report its financial performance. We esti-

mate financial performance from customer growth data using these factors:

Customer base of 250 accounts, 90 percent with cloud deployments

1Q2013 customer growth of 3.5 percent in new customers and of additional business from 20 percent existing customers

Deal-specific pricing ranging from $50,000 to $2.5 million

For 1Q2013, we estimate that Clarabridge generated revenues in the range of $7 million to $11 millionvery good financial performance. In the Company Viability section of our product evalua-tion, we had estimated that 2012 revenues were in the range of $25 million to $42 million.

Our Take on Clarabridge Clarabridge had a very good quarter in 1Q2013, highlighted by very good customer growth and

very good financial performance. From our evaluation, we learned that the firm has a strong product offering in a hot space. With the new messaging and rebranding in early 2Q2013, Clarabridge has positioned itself for a very good year.

CREATIVE VIRTUAL

Creative Virtual Has a Good 1Q2013 Creative Virtual had a good 1Q2013. With five new customers, customer acquisition was the

highlight. Creative Virtual did not make any product or company announcements.

Customers During 1Q2013, Creative Virtual acquired five new customers and did additional business with

two existing customers. The firm has a customer base of 36 accounts. Touching seven in a quarter is very good customer growth.

Products and Product Evaluation Creative Virtual V-Person is the Creative Virtual product offering. Its a virtual agent. We pub-

lished an evaluation of V-Person on September 12, 2012. Briefly, heres how V-Person works:

V-Person deploys on web sites, mobile devices, and social networks.

Customers (or users) enter a question, and virtual agents directly deliver a suitable answer or enter into a question and answer dialog with the customer to gather additional input to qualify an ambiguous question to deliver a suitable answer at the end of the dialog.

V-Person applies deployment-specific rules to question content to generate patterns from the content of customers questions and then matches those patterns with the patterns of knowledge items on which the same rules had been applied in building the knowledgebase.

Answers can include data from external applications, such as CRM, ERP, and customer service applications.



V-Person packages a comprehensive knowledge management system called V-Portal that includes tools, services for creating, editing, managing, and publishing knowledge, and reporting and analysis capabilities.

V-Person supports customers questions and knowledgebase answers in English. Support for additional languages may be added through professional services engagements.

V-Person earns very-good grades on the Customer Service Report Card for Virtual Assisted-ServiceExceeds-Requirements for Answers and for Analytic Functionality; Meets-Requirements for Question Analysis and Matching, Customer Service Integration, Product Viability, and Company Viability.

V-Portal, V-Persons knowledge management system, is the most significant strength and dif-ferentiator. Its truly a complete content management system. The specification and maintenance of the rules that V-Person uses to match customers questions with answers from its knowledgebase are the critical elements in successful deployments. Theyre the most complex and difficult, too.

Product Activity Creative Virtual did not make any product announcements during 1Q2013.

Company Creative Virtual did not make any company announcements during 1Q2013.

Careers The careers section of creativevirtual.com lists a total of nine job openings across the UK, the

US, and Australiatwo a new development group for future products and seven in customer and technical support. Hiring is aggressive. Creative Virtual has a staff of approximately 50 employees.

Financials Because Creative Virtual is privately owned, it does not publish statements about its financial

performance. We can try to use the data that the firm does publish and the data that it has given us to attempt an estimate financial performance.

Customer base of 36 accounts that are split 50/50 between cloud and on-premise deployment.

Annual subscription license fee based either on the volume of virtual agent conversations across all channels or a per channel fee with an unlimited volume of virtual agent conversations, where channels are web, mobile, and social.

A fee for setup services ranging from $250 to $800 per question. The setup services fee range depends upon complexity and availability of data. Annual management fees of approximately 50 percent of setup services fees.

Entry-level year-one subscription license fee is approximately $100,000.

Based on its customer growth information of five new customers, and repeat business with two existing customers, we estimate that revenues in 1Q2013 were in the range of $1.5 million to $3 mil-lion.

14 Product Reviews


Our Take on Creative Virtual Creative Virtual had a good quarter in 1Q2013, driven by very good customer acquisition. This

company has a strong offering in a hot market segment. 2013 should be a good year for Creative Vir-tual.

EGAIN

A Good 1Q2013, eGains 3QFY2013 eGain had a good calendar 1Q2013, its 3QFY2013. Customer growth was up. Financial per-

formance improved as a result. eGain made one company announcement and no product announce-ments during the quarter.

Customers eGains direct sales force focuses exclusively on acquiring enterprise customer accounts. Part-

ners target small and mid-sized organizations as well as organizations in Europe, Asia, and the Pa-cific. The company offers on-premise and hosted single-tenant licensing options for its products.

Because eGain does not disclose customer numbers, we use license revenue and recurring reve-nue as proxies for eGains customer growth. License revenue comes from sales of on-premise li-censes for eGains products. Recurring revenue comes from subscription licenses for hosted deployment and from maintenance and support contracts. In any given quarter, the combination of license revenue and recurring revenue is the sum of what new customers spend for software and what existing customers spend for additional software and software maintenance. That maps pretty well to customer growth but without the detail of numbers of customers, numbers of deals, and the split between new customers and existing customers.

We present license and recurring revenue for calendar 2012 and the most recent five quarters in Table E.

eGain License and Hosting Revenue

2012 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13

License 9.2 2.8 2.3 0.7 3.4 4.1

Recurring 27.1 5.8 6.3 7.2 7.8 8.3

eGains fiscal year ends on June 30 2013 Patricia Seybold Group, Inc.

Table E. eGains license and recurring revenue for calendar 2012 and its five most recent quarters are presented in this table.

Looking at Table E, customer growth was good for eGain this quarter. Both license revenue and

recurring revenue were up for the quarter. The lumpiness of license revenue is what wed expect for a supplier selling high-ticket software to large enterprisesbig deals slip from some quarters and close in others. Recurring revenue has had a slow but steady rise, reflecting a growing base of hosted deployments. That growth was up again this quarter, the fifth quarterly increase in a row. eGain has built a solid and predictable revenue stream.



Products Just a reminder. eGain offers customer service products.

eGain Service Suite provides multi-channel case management, response management, and knowledge management capabilities.

eGain Sales Suite provides marketing and customer service capabilities for B2C web sites. Marketing capabilities are contextual offers and promotions. Customer service capabilities adapt eGains knowledge management and customer interaction technology to web merchandising and ecommerce support.

eGain Social Experience Suite provides social-service capabilities, monitoring the social web, analyzing monitoring results, and responding to/interacting with social web posters.

Product Activity eGain did not make any product announcements during 1Q2013, its 3QFY2013.

Company eGain made one company announcement during 1Q2013, its 3QFY2013. On February 13, the

firm announced that certain of its shareholders made a public offering of 2,170,000 shares of com-mon stock at a price of $6.75 per share. Proceeds of the sales of these shares go to the shareholders. eGain will not receive any proceeds from the sale.

This offering looks like an opportunity for shareholders to cash-in without disturbing the market. eGain traded between $7.48 and $7.99 during February 2013 with an average volume of approxi-mately 50,000 shares.

Financials Financial performance improved slightly across all metrics for eGain in its 3QFY2013. The

highlight was the continued and improved profitability. We present eGains financial metrics for cal-endar year 2012 and the most recent five quarters in Table F.

eGain Financials

2012 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13

Revenue 47.5 11.5 10.6 10.7 14.7 15.5

Recurring revenue 27.1 5.8 6.3 7.2 7.8 8.3

Net income GAAP (6.9) (1.2) (3.4) (2.9) 0.6 1.0

($millions); eGains fiscal year ends on June 30 2013 Patricia Seybold Group, Inc.

Table F. eGains financial metrics for calendar 2012 and the five the most recent quarters are shown in this table.

With one quarter left, Gains raised its guidance for revenue and cloud revenue growth for the remainder of its FY2013. eGain will become a $50 million company cloud revenues of more than $30 million.

16 Product Reviews


Careers The careers section of eGains Web site lists 56 openings: 10 in engineering, 5 in marketing, 9 in

professional services, 22 in sales, 3 in technical support, 3 in cloud computing, and 4 in G&A. Hiring is up. eGain had 42 openings last quarter and 28 openings two quarters ago. The firm has approxi-mately 275 employees.

Our Take on eGain While eGain was relatively quiet in product and company activity, customer growth and finan-

cial performance were up for the second quarter in a row. Investments in staff and in marketing are paying off. Notably, cloud computing now comprises two thirds of eGains revenue, and eGain has a run rate exceeding $50 million.

INTELLIRESPONSE

IntelliResponse Has a Mixed 1Q2013, Its 1QFY2014 IntelliResponse had a mixed 1Q2013, its 1QFY2014, which ended on April 30. Product activity

was the quarters highlight as IntelliResponse added significant and innovative new features and ap-plications to its virtual agent offering, IntelliResponse VA. On the other hand, customer growth was down a bit in the quarter. Financial performance was down a bit as a result.

Customers During its 1QFY2014, IntelliResponse acquired six new customers and did additional business

with two existing customers. New customers include Arvest Bank, Cornell University, and Optus, Australias second largest telecommunications provider. Customer growth was down a bit from the very high levels of growth in the previous three quarters.

IntelliResponse has a base of 161 customers. The firm offers only hosted multi-tenant deploy-ment of its products. Its new customers sign up for an average contract length of over two years. Touching eight customers in the quarter is a reasonable level of customer growth. In Table G, we show customer growth for IntelliResponse.

IntelliResponse Customer Growth

FY2013 1QFY2013 2QFY2013 3QFY2013 4QFY2013 1QFY2014

New customers 32 3 8 10 11 6

Repeat business 26 7 7 5 7 2

IntelliResponses fiscal year ends on January 31 2013 Patricia Seybold Group, Inc.

Table G. Customer growth for IntelliResponse is summarized in this table.



Products IntelliResponse offers the IntelliResponse Virtual Agent (VA). Its virtual agents deploy in the

cloud on web, social, and mobile channels in a number of visual styles, each with a distinct brand and user experiencesingle question/answer, chat-bot, and animated digital character. They can understand questions that customers ask in any language, and, on mobile devices, they can under-stand spoken questions and can speak answers.

IntelliResponse VA was introduced in 2001. To date, 161 organizations have licensed it for more than 450 product-specific, application-specific, language-specific, or channel-specific deployments. IntelliResponse has, by far, the largest customer base among virtual agent suppliers.

Product Evaluation IntelliResponse Virtual Agent (VA) is IntelliResponses product offering. Its a virtual agent. We

published an evaluation of IntelliResponse VA on May 9, 2013. Briefly, heres how it works:

IntelliResponse VA virtual agents deploy on web sites, mobile devices, and social networks.

Customers ask questions by entering text in a search box, in a chat box, or, on Android and IOS devices, by speaking. Virtual agents deliver a single right answer within the text or speech context of customers questions.

Customers ask questions as text strings of words and phrases. IntelliResponse VA virtual agents deliver answers as text with images, links, and/or URLs or as spoken words, phrases, or sentences. IntelliResponse offers integration services for including data from external applications within answers.

IntelliResponse VA uses translation facilities of Google and Nuance for language support. As a result, customers may ask questions and receive answers in most Western and Asian languages.

IntelliResponse VA uses rules-based machine learning technology to match customers questions with answers. IntelliResponse VA stores and manages answers; prototypical questions, which are called Representative Questions; and matching rules, which are called Criteria, in a knowledgebase. Analysts specify answers and Representative Questions to deploy instances of IntelliResponse VA. IntelliResponse VA automatically generates matching rules.

IntelliResponse VA packages integration with chat, email, contact center, web self-service, community, and social network applications.

This is a very strong offering that earned excellent grades on our Report Card for Virtual As-sisted-ServiceExceeds-Requirements grades in Answers, Analysis and Matching Customers Ques-tions, Analytic Functionality, and Product Viability; and Meets-Requirements grades in Customer Service Integration and Company Viability.

IntelliResponse VAs distinguishing feature and key differentiator is fast and easy deployment. It uses machine learning technology for analyzing and matching customers questions, and it includes facilities and tools that IntelliResponse has built specifically to automate the generation of matching rules and to improve accuracy through their refinement with virtual agent usage. IntelliResponse VA automates most deployment tasks. IntelliResponse VAs clients have only to specify a small number

18 Product Reviews


of representative or prototypical questions (IntelliResponse calls them RQs for Representative Ques-tions) and the knowledge items that answer them. The technologies do the restgenerating rules (In-telliResponse calls them Criteria) that match the possible variations of RQs to knowledgebase answers at design time and using those rules to analyze and match customers questions at run time. IntelliResponse VA also provides facilities to extend and refine RQs and matching rules to improve effectiveness and expand scope. The approach is simple, elegant, and, over the years, proven to be effective and increasingly efficient. Virtual agents typically deliver the One Right Answer 85 to 90 percent of the time. And virtual agent deployment can approach a self-service process.

Product Activity IntelliResponse made three product announcements during 1Q2013, its 1QFY2014. On February 7, the firm announced the availability of i.Suggest, a new feature for IntelliRe-

sponse VA. i.Suggest is a major enhancement to the products question analysis and matching capa-bilities. It mimics the style of predictive search, delivering suggested answers as customers type their questions. However, where conventional search approaches look for exact matches on question con-tent, i.Suggest uses IntelliResponses patented matching technology to determine the intent of cus-tomers questions to suggest the most appropriate match. Results from beta customers demonstrated a 21 percent improvement in answer accuracy and a 22 percent reduction in customer effort (the number of questions customers ask in a single session to complete a task).

On February 28, IntelliResponse announced that IntelliResponse VA mobile device apps for were available in the Apple App Store and Google Play marketplaces for current customers to assist them in integrating IntelliResponses patented virtual agent technology into their own mobile appli-cations.

Also, without a formal announcement, in April, IntelliResponse introduced two new applica-tions: VOICES and OFFERS. OFFERS is a marketing application that delivers targeted offers within virtual agents answers. Think of OFFERS as one right answer coupled with one right offer. In-telliResponse VA is the first virtual agent product to include a marketing/recommendation applica-tion.

VOICES is a new Voice of the Customer analytic application for IntelliResponse VA. It applies NLP and statistics analytics to customers questions on web, agent, mobile, and social channels to identify their themes or topics. VOICES then presents the results of this analysis within visual and interactive word cloud-style charts,each theme is shown a cloud or a bubblethat make it easy to understand the themes that it identifies. See Illustration 1.



VOICES Theme Bubbles

2013 IntelliResponse Systems, Inc.

1. This illustration shows the credit card themes over the last month largest bubbles show the most important themes.

VOICES analyzes all questions of all customers across all channels. It extends the application of

IntelliResponse VA from virtual-assisted customer service to VoC, from delivering answers to cus-tomers questions, to providing customer service, product, and even marketing staff with information critical to developing, implementing, measuring, analyzing, and refining their strategies, plans, and programs. VOICES is a powerful analytic application for IntelliResponse VA, a significant strength and differentiator.

Company IntelliResponse did not make any company announcements during its 1QFY2014.

Careers The careers page of Intelliresponse.com lists three job openingstwo in sales and one in cus-

tomer service. The firm had two openings last quarter. It has a staff of 55 employees and contractors.

Financials Because IntelliResponse Systems is privately owned, it does not publish statements about its fi-

nancial performance. We can try to use the data that the firm does publish and the data that it has given us to attempt an estimate of its financial size and direction. Here are the financial data ele-ments:

161 customers and over 450 deployments

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Entry price of $25,000 and typical deal size of approximately $100,000 for IntelliResponse VA

Based on its customer growth information of six new customers, and repeat business with two existing customers, we estimate that revenues in 1QFY2014 were in the range of $1.5 million to $3 million.

Our Take on IntelliResponse While its 1QFY2014 was mixed, IntelliResponse is positioned for good to excellent quarters

ahead. VOICES, OFFERS, i.Suggest, and improved language support significantly strengthen In-telliResponse VA, the leading virtual agent offering in the market. In addition, IR told us that the slip in customer growth resulted from delayed decision making by very qualified prospects. So look for higher levels of customer growth and financial performance.

KANA

KANA Has an Okay 1Q2013 KANA had an okay 1Q2013. A partnership with Sydney, AU contact center outsourcer Salmat

for using KANA Enterprise as its agent desktop was the quarters highlight. The firm did not make any product announcements, although it announced a major new version of KANA Enterprise early in 2Q2013.

Note that KANA, a privately held company, no longer provides us with customer or financial da-ta.

Products KANA has four strategic offerings: KANA Enterprise, KANA Lagan, KANA Express, and

KANA Experience Analytics.

KANA Enterprise is KANAs customer service offering for large commercial organizations. It includes agent desktop, case management, knowledge management, process management, web self-service, live chat, social community and social listen and respond, and email response management capabilities. Approximately 400 customer accounts have implemented KANA Enterprise components, including 50 former Ciboodle accounts. KANA acquired Ciboodle in 2Q2012. Its mobile device support and its case management, process management capabilities for contact centers will be integrated into the next major version of KANA Enterprise.

KANA Lagan is a G2C (Government to Citizen) customer service offering for large, local government organizations with agent desktop, case management, knowledge management, web self-service, mobile, analytic, and integration components. KANA acquired Lagan Technologies, the developer of the product, in November 2010. Lagan Technologies was founded in 1994 in Belfast, Ireland. KANA Lagan has a customer base of approximately 250 government bodies.

KANA Express is the firms cloud-based customer service offering for mid-sized businesses and government organizations. This offering provides web self-service, email and knowledge management, contact management, live chat and chatbot, social community and listen and respond, and campaign management capabilities. KANA



Express is based on technology that KANA acquired with Trinicom, then a privately held, Wilp, Netherlands-based supplier with 50 employees in April 2012. KANA Express has a customer base of approximately 250 accounts.

KANA Experience Analytics is KANAs social-service offering. Its a standalone product, an integrated component of KANA Enterprise and, soon, of KANA Express that provides monitoring and analysis of the social web and internal channels and interaction with social web and internal channel posters. Approximately 20 customer organizations have licensed KANA Experience Analytics (and its predecessor product OpenMic).

These product lines address requirements for assisted-service, self-service, and social-service for businesses and government organizations of all sizes virtually worldwide.

Product Activity KANA did not make any product announcements during 1Q2013. However, going forward into

2Q2013, the firm made a major product announcement on April 16a major new version of KANA Enterprise. KANA called it the biggest product launch in its history.

This new KANA Enterprise integrates, unifies, streamlines, and extends the previous KANA En-terprise version with the key offerings of KANAs recent acquisitions: the contact center manage-ment offering of the former Ciboodle and KANA Experience Analytics, the social-service offering of the former Overtone. Its capabilities include case management; knowledge management; chat; co-browsing social listening, analysis, and interaction; and email, campaign, and white mail manage-ment. It supports contact center, web, social, and mobile channels. KANA organizes and packages KANA Enterprise into these components:

KANA Enterprise Agent Experience KANA Enterprise Web Experience KANA Enterprise Social Experience KANA Enterprise Mobile Experience

KANA told us that process support in the new KANA Enterprise is lighter weight. Developers reused process technology from the former Ciboodle. The IBM technology stack is no longer a pre-requisite.

KANA Enterprise offers a reasonable migration path for those of KANAs customer base still running KANAs legacy technologies. KANA Enterprise also has the breadth of functionality to compete with Oracle RightNow Cloud Service and Salesforce Service Cloud for new customers. Were anxious to evaluate it in detail.

Company KANA made one company announcement during 1Q2013. On March 27, the company an-

nounced a partnership with Salmat, a Sydney, AU provider of customer communications solutions. Salmat handles 60 percent of all business to consumer communications and 25 percent of outsourced telephone calls in Australia. Within the partnership, Salmat will implement will base its offerings on the KANA Enterprise agent desktop.

This appears to be a very good partnership for KANA. It will yield very broad use of KANA En-terprise in a new geography.

22 Product Reviews


Careers The Careers section of kana.com currently lists 22 openings 10 in R&D, 1 in sales, 5 in con-

sulting services, 4 in IT, 2 in technical support. There were 42 openings last quarter. KANA has a staff of approximately 700 employees.

Our Take on KANA KANA had an okay quarter in 1Q2013. The partnership with Salmat was the highlight. The new

version of KANA Enterprise positions KANA for future quarters.

MOXIE SOFTWARE

Moxie Has an Okay 1Q2013 Moxie Software met its goals in 1Q2013. Customer acquisition was the highlight. Moxie made

one product announcement and no company announcements during 1Q2013. Financial performance was about the same as last quarter.

Customers Moxie Software acquired 10 new customers and did additional business with 70 existing cus-

tomers in 1Q2013. New business was up as compared to last quarter. Repeat business was down. Moxie has a customer base of approximately 500 active customer accounts. Touching 80 in the quar-ter is good customer growth. We summarize Moxie Softwares recent customer growth in Table H.

Moxie Customer Growth

2012 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013

New customers 50 15 13 11 6 10

Additional customers 306 61 79 84 82 70

2013 Patricia Seybold Group, Inc.

Table H. Customer growth for Moxie Software is summarized in this table.

Products Spaces by Moxie, which was announced on March 21, 2012, is Moxies product offering. Spaces

integrates the former Customer Spaces and Employee Spaces into a converged offering that supports customer communications, employee collaboration, and, most significantly, customer/employee col-laboration.

Customer Spaces was Moxies customer service offering. Its capabilities are built on the founda-tion of Moxie Software Knowledgebase, which has been rebranded to Knowledge Spaces in Spaces by Moxie. Customer Spaces supports customer engagements across Moxies Channels productsEmail, Chat, Answer, Click to Call, Phone, and CoBrowse.

Employee Spaces was Moxies internal collaboration and social networking offering. Its capa-bilities are also built on the knowledge management foundation of Moxies Knowledgebase and around the way people work: with people, in groups, and on projects. Social networking capabilities include subgroups, blogs, wikis, discussions, documents, ideas, calendars, and listeners.



We list and briefly describe Spaces components below.

Knowledge Spaces is the rebranded Moxies Knowledgebase, a comprehensive knowledge management offering.

Email Spaces, Chat Spaces, Click to Call Spaces, and CoBrowse Spaces provide customer communication capabilities. Moxie and its predecessor companies, nGenera and Talisma, have offered them for quite some time.

Social Media Spaces is Moxies social web monitoring, analysis, and interaction platform.

Phone Spaces provides CTI integration.

Collaboration Spaces comprises the subgroups, blogs, wikis, discussions, documents, ideas, calendars, and listeners of Employee Spaces expanded to includes partners and customers to the this social networking.

Spaces Connect is an integration framework that includes APIs and packaged connectors to external CRM, ERP, content management, and HR applications.

Spaces by Moxie is a strong offering with broad and deep capabilities. Built around a knowledge management core, Spaces supports a broad range of channels including the social web. Its support for assisted-serviceEmail Spaces, Chat Spaces, Click to Call Spaces, CoBrowse Spaces, and Phone Spacesis especially deep. Collaboration Spaces is the key component. Enabling open col-laboration among customers, partners, and internal staff can be a great approach to resolving com-plex problems and issues effectively and efficiently.

Product Activity Moxie made one product announcement during 1Q2013. On March 19, the firm announced inte-

gration between Spaces by Moxie and Microsofts Lync contact center application. This integration extends Lync with the knowledge management, email management, chat, co-browse, and social net-work interaction capabilities of Spaces. Contact center applications remain the core applications of most customer service organizations and the sales organizations of businesses that sell from the in-side. Aligning and integrating with Microsofts Lync improves Moxies value proposition.

Going forward into 2Q2013, on April 22 Moxie announced that it would offer Collaboration Spaces for free. Makes sense. The core capabilities of Salesforce Chatter, the key competition for Collaboration Spaces, are free, too.

Company Moxie did not make any company announcements during 1Q2013.

Careers The Careers section of Moxie Softwares Web site lists 32 openings: 8 in development, 1 in

marketing, 7 in sales, 9 in customer support, and 7 in cloud computing services. There were 28 open-ings listed last quarter. Moxie Software has a staff of 200.

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Financials Moxie Software is privately held. So, there were no financial releases or regulatory filings on its

financial performance for the quarter. Weve been using information about customer growth to cre-ate an estimate of financial performance.

We base our estimates of financial performance on customer growth data.

In 1Q2013, Moxie Software acquired 10 new customers and did additional business with 70 existing customers. New business was up and repeat business was relative to last quarter.

The firm generates hosting revenue from approximately 250 customers.

In addition, Moxie Software has professional services revenue from new customer implementations and expert services and training provided to existing customers.

Summing these revenue elements, we estimate Moxie Softwares 1Q2013 revenue to be in the range of $10 million to $15 million, about the same as our estimates last quarter.

Our Take on Moxie Software Moxie made a quiet start to 2013. After a down 4Q2012, customer acquisition rebounded to the

good level of previous quarters. A drop in repeat business kept financial performance flat. Very stra-tegically, in products, Moxie tightened integration between Spaces and Microsoft Lync. Integrations and partnershipswith Salesforce.com and Nuance as well as Microsoftwill be the drivers for what could be a very good 2013.

NEXT IT

Next IT Has a Very Good 1Q2013 Next IT had a very good 1Q2013. Customer growth continued at a high level, resulting in good

financial performance. Alme (pronounced All-me) is the new brand for its virtual agent offering. Next IT also expanded its Medical and Technical Advisory Boards.

Customer Growth During 1Q1023, Next IT acquired one new customer and did additional business with five exist-

ing customer. On a base of 20 customer accounts, touching 6 in a quarter is very good customer growth.

Products Formerly known as ActiveAgent, Alme is Next ITs virtual assisted-service offering. It deploys

on web pages and mobile devices, presenting a software avatar and a text box that invites customers and/or users to ask it a question by entering a text string or speaking to it and delivering a best match answer comprising of text, links, and/or web pages in response.

Organizations purchase subscription licenses for cloud deployment of Alme or perpetual licenses for on-premise deployment. To date, Next IT claims that approximately 20 customer organizations have licensed their technology. Next IT offers professional services to help ensure successful de-ployments and to help in their ongoing refinement and management.



Product Evaluation We published an evaluation of Next IT Alme (then called Active Agent) on November 29, 2012. Alme earned very-good grades on the Customer Service Report Card for Virtual Assisted-

ServiceExceeds-Requirements grades for Answers, for Question Analysis and Matching, and for Analytic Functionality, and Meets-Requirements grades for Customer Service Integration, Product Viability, and Company Viability.

Based on our evaluation of Customer Service Best Fit, the key drivers for selecting Next IT Al-me are:

Deep natural language analysis of customers questions and delivery of very sophisticated answers that can integrate data from external applications

Virtual agents that can understand and speak any language

Solution that combines software technology and consulting services

Large, B2C organizations

Almes key strength is its capability to deliver very sophisticated answers to complex questions. Rather than simply presenting the web page that customers can use to find and select their flights, ActiveAgent prepared the web page using content from the customers question and integration with the application.

Like most of the virtual assisted-service offerings that weve evaluated, Alme is not software that deploys quickly and easily out of the box. Organizations that deploy it will have to invest in learning, using, deploying, and managing its natural language technology. Again, like all the virtual assisted service offerings that weve evaluated, Next IT provides consulting services to help its cli-ents with these tasks. Early deployments of Alme were managed completely by Next IT. Recently, Next IT has begun to give its clients the training and product documentation that promote less de-pendence on consulting services and more self-sufficiency. Note, though, clients face no price pen-alty for using consulting services. Entry-level and typical prices that include consulting services are in line with competing offerings.

Product Activity Next IT made one product announcements 1Q2013. On March 22, Next IT launched Alme, a

new brand for its virtual agent offering. To go along with Alme, the firm also launched a new web site. Next IT positions Alme to provide the personalized service of a concierge while delivering the business benefits of a technology-based self-service solution. Note that Alme implements the cur-rent release of Next ITs patented natural language processing technology, Its the release that we evaluated last fall.

Company Next IT is one of the pioneers in virtual assisted-service. The firm was founded in 2002 in Spo-

kane, WA and introduced its first virtual assisted-service offering in 2004. Its privately held com-pany with a staff of approximately 140 employees.

In addition to Alme, Next IT has three other customer service offerings: Alme for Account Ac-cess, Alme for Chat, and ActiveChat. Alme for Account Access is a specialized implementation of Alme, which helps customers unlock their accounts and sign up for new services. Alme for Chat of-fers to optimize existing web chat by handling the high volume, low value customer service online chats. ActiveChat is a web chat application for live customer service reps/agents.

26 Product Reviews


Company Activity Next IT made three company announcements during 1Q2013. On January 24, the firm an-

nounced that robotics pioneer and former NASA astronaut Dan Barry had joined its Technical Advi-sory Board. On February 6, Next IT announced that Mary Cain, MPH, had joined its Medical Advisory Board.

Careers The Careers section of Next ITs web site lists six job openingstwo in development, one in

sales support, two in customer support, and one an intern. There were seven openings last quarter. Next IT has a staff of 160.

Financials Next IT generates revenue from product licenses, maintenance fees, and consulting services.

Maintenance is included in subscription licenses for cloud deployments. For perpetual licenses, Next IT charges an annual maintenance fee that ranges between 15 percent and 25 percent of the license fee. Year one fees for an Alme deployment range from $150,000 to more than $1 million for a soft-ware license and an initial deployment consulting engagement.

Based on customer growth of one new customer and additional business from five existing cus-tomers, wed estimate that Next ITs revenue for 1Q2013 ranged from $5 million to $7 million.

Our Take on Next IT Next IT had a very good 1Q2013, highlighted by strong customer growth and a new brand, Alme.

The firm is off to a good start in 2013, after an excellent 4Q2012.

NUANCE

Nuance Acquires VirtuOz Without a formal announcement by either Nuance or VirtuOz, several third parties reported on

January 10, 2013 that Nuance would acquire or had acquired VirtuOz. The companies confirmed the acquisition in a product announcement on March 5, an announcement of Nina Web. Nina Web adds the capabilities of the former VirtuOz Intelligent Virtual Agent to Nina Mobile and Nina IVR, very nicely enhancing Nuances virtual assistant platform.

Nina IVR, introduced five years ago, is the original Nina offering. Nina IVR uses Nuances speech recognition technology within the IVR environment. Nina Mobile, introduced in late 2012, uses speech recognition and text-to-voice technologies to deliver virtual assisted-service on Apple iOS and Google Android mobile devices. Nina Web, introduced on March 5, 2013, uses the technol-ogy of the former VirtuOz Intelligent Virtual Agent, to deliver text-based virtual assisted-service on the web and on mobile devices.

Nuance Nuance Communications is a public company (NASDAQ: NUAN) founded in 1992, based in

Burlington, MA, and staffed by more than 12,000 employees. The company describes itself as a leading provider of voice and language solutions for businesses and consumers around the world, positions these solutions to reinvent the relationship between people and technology, and charac-



terizes its technology as intelligent, natural, and accurate. A staff of more than 1,200 speech scien-tists and an IP portfolio of over 3,900 patents certainly support the characterization.

Nuance offers its solutions to healthcare, mobile and consumer, enterprise, and imaging market segments. The company organizes itself into four Divisions along these segments. Nuance delivers its solutions through products, through hosting/cloud computing services, and within professional service engagements.

Offerings of the Enterprise Division use speech recognition, natural language understanding, text-to-speech, biometric voice identification, and analytics technologies. The offerings automate caller identification and authorization, implement virtual assistants, perform call steering, and assist in the completion of tasks such as data retrieval and update and automated outbound notifications. The Enterprise Division offers Nina.

VirtuOz VirtuOz, Inc. was a privately held and venture-financed company with a staff of approximately

50 employees. The firm was founded in 2002 in Paris, France and introduced a virtual assisted-service product. The firm came to the US in 2009, opened a US headquarters site in Emeryville, CA, and introduced a US version of the product the same year. By the end of 2012, VirtuOz had a cus-tomer base of approximately 25 accounts.

Nina Web, Nee VirtuOz Intelligent Virtual Agent We published an evaluation of VirtuOz IVA on July 26, 2012. Its very strong. VirtuOz IVA

helps businesses deploy virtual agents that are software avatars built on natural language processing and knowledge management technologies. Four features characterize and differentiate VirtuOz IVA:

Application of natural language processing (NLP) technology and text analytics technology to understand customers questions and match them with a single right answer.

Support for three virtual agent response styles: direct (customers ask a question; VirtuOz delivers an answer), guided response (virtual agents provide answers that navigate customers to web pages that contain complex, detailed or multi-media content), and proxy response wherein virtual agents actually complete tasks on behalf of the user (e.g., process a return, update an account profile, enroll people in a rewards program).

Tight and packaged integration with external applications, currently from Live person, Moxie Software, and Salesforce.com.

Two types of virtual agents. Micro-Agents are special-purpose virtual agents that support a narrow domain, shipping, password recovery, or order management, for example. Their specialization makes Micro-Agents fast and easy to deploy. Intelligent Virtual Agents (IVAs) are general-purpose virtual agents that support wide domains, marketing, sales, or support, for example.

VirtuOz earned very good grades on the Customer Service Report Card for Virtual Assisted-Serviceexceeds-requirements grades in all virtual agent technologies (answers, question analysis and matching, and customer service integration) and meets-requirements grades for analytic func-tionality, product viability, and supplier viability.

28 Product Reviews


We recommended VirtuOz for large B2B and B2C organizations in North America and Western Europe that want to add virtual assisted-service to their customer service portfolio to support web, mobile, and social channels for answering customers question across the entire customer lifecycle.

Product Activity Nuance made two products announcements about Nina during 1Q2013. On February 6, the com-

pany announced language and device support enhancements in a new release of Nina Mobile. Nina Mobile now understands and speaks 38 languages and supports Android and Apple tablets. This new release was available at announcement in an SDK.

On March 5, as we mentioned above, Nuance announced Nina Web, the offering built on the technology of VirtuOz IVA.

Company Activity The acquisition of VirtuOz was the big company news for the Enterprise Division of Nuance

during 1Q2013.

Careers The Job Listings section of nuance.com lists more than 250 openings across all business func-

tions, including 28 openings within NLP. Nuance has a staff of more than 6,000 employees.

Our Take on Nuance Nuance has very recently begun work to integrate the former VirtuOzs organization and the

former VirtuOz IVAs technology. Nuance has the resources, the experience, and the expertise to lead the virtual agent market. Well be watching the companys next moves.

ORACLE RIGHTNOW

On January 25, 2012. RightNow, the publicly held, Bozeman, MT-based software supplier, be-came the Oracle RightNow Global Business Unit (GBU), and RightNow CX the customer service product suite has become Oracle RightNow Cloud Service.

Note that Oracle does not provide any visibility into the customer growth or the financial per-formance of its GBUs. So we cannot provide analyses in those areas. We will offer an Oracle Right-Now section of our Quarterly Customer Update Reports with some detail on products, business unit announcements, and hiring.

ORACLE RIGHTNOW HAD A BUSY QUARTER IN 1Q2013

Oracle Was a Busy in 1Q2013 for Oracle RightNow Cloud Service During 1Q2013, the Oracle introduced Oracle RightNow Cloud Service February 2013 and an-

nounced a new, secure cloud computing data center in Japan for hosted deployments. Hiring contin-ues to be very aggressive.

Note that Oracle does not provide any visibility into the customer growth or the financial per-formance of its applications and the organizations that develop and maintain them. So we cannot provide analyses in those areas. We will offer an Oracle RightNow section of our Quarterly Cus-tomer Update Reports with some detail on products, relevant company announcements, and relevant hiring.



Product Activity Oracle made one product announcement about Oracle RightNow Cloud Service in 1Q2013. Con-

tinuing its string of consecutive quarterly product releases, on February 27, Oracle RightNow re-leased Oracle RightNow Cloud Service February 2013. Oracle RightNow Policy Automation is the key new feature. It provides facilities and tools designed to generate self-service answers to custom-ers questions about a businesss policies such as benefit eligibility, welfare payments, tax obliga-tions, education course credits, license and permit eligibility, or insurance premiums through dynamically generated, context-sensitive questionnaires.

Policy Automation is a useful and valuable feature. Customers frequently have questions within application processes in financial services, healthcare, government, and education. Delivering an-swers within the context of application processes is difficult for contact center agents and for cus-tomer self-service facilities.

Interestingly, delivering answers to these kinds of questions has been the driver for the virtual agent market. Oracle describes the new feature as delivering the right answers at the right time. That sounds very similar to the tag lines of virtual agent suppliers. For example, Creative Virtual V-Person delivers the single right answer and IntelliResponse VA delivers the one right answer. Different approaches and different technologies but both improve the customer experience.

Company Oracle made one company announcement relevant to its Oracle RightNow offerings 1Q2013. On

March 25, the company announced the opening of a cloud-computing data center in Japan. A local cloud-computing data center demonstrates Oracles commitment to the Japanese market

and makes Oracles cloud-computing portfolio more attractive to Japanese businesses.

Aggressive Hiring There are 140 job openings listed on http://www.oracle.com/us/corporate/careers/index.html for

the Oracle RightNow, down from 167 job openings last quarter. Hiring in sales continues to be is es-pecially aggressive.

Our Take on Oracle RightNow Oracle RightNow has a strong identity within Oracle, and it continues to thrive after four quar-

ters of doing business within Oracle. The quarterly release of Oracle RightNow Cloud Service, Ora-cles new cloud-computing data center in Japan, and continued growth of the Oracle RightNow staff prove Oracles commitment to and benefit from Oracle RightNow Cloud Service.

SALESFORCE.COM

A Very Good Quarter in 1Q2013 Salesforce.com had very good quarter in 1Q2013, its 1QFY2014, which ended on April 30, 2013.

Customer growth was excellent. Top-line financial performance set another company record. Sales-force.com balanced the quarter with one product announcement and three company announcements during the quarter, earning a Customer Service Star.

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Customers Beginning with its financial release and SEC filing for 3QFY2012, SFDC has stopped publishing

detailed customer growth data. However, because SFDC offers subscription licenses for all of its products and also offers support services on a subscription basis, subscription and support revenue, a data item that SFDC has consistently reported, is a reasonable proxy for customer growth. We show subscription and support revenue in the second row of Table I, which presents financial performance metrics.

Subscription and support revenue grew by $56.7 million to $842.2 million in 1QFY2014, a quar-terly increase of more than seven percentexcellent customer growth.

Based on customer growth data that Salesforce.com has released in the past, we estimate that the roughly $57 million in increased subscription and support revenue represents new and additional business by approximately 13,300 customers and that SFDCs customer base has grown to approxi-mately 165,000 accounts.

Note that, on September 19, 2012, at Dreamforce, Salesforce.coms annual user conference, the firm stated that the customer base for Service Cloud was 34,000 accounts, about 20 percent of the to-tal customer base.

Products Salesforce.com offers these applications, all for deployment in its cloud:

Sales Cloud provides sales force automation capabilities.

Service Cloud is the customer service offering. Case management capabilities are packaged. Knowledge management capabilities are an add-on feature.

Marketing Cloud, which was introduced during 3Q2012, provides campaign management capabilities, advertising capabilities, and listening, analysis, and interaction capabilities for social networks.

Desk.com is an entry-level customer service and help desk offering.

Chatter is an enterprise-class collaboration application. Its feeds are messages published to subscribing users and user groups through SMS or email. Feeds can attach files or use Salesforce Chatterbox to share files internally within an enterprise.

Data.com is a sales and marketing application that provides company profile data and individual business contact data.

Force.com Platform is the cloud computing infrastructure on which all of Salesforce.coms applications are implemented. Salesforce.com makes the platform available as the foundation for its customers to build, implement, and deploy their own cloud computing applications.

Heroku is a multi-language cloud application platform that allows developers to build and deploy apps in Java, Ruby, Python, Scala, Clojure, or Node.js.

Database.com is a cloud-based, multi-tenant RDBMS available for developers of applications that are developed, implemented, and deployed on Force.com.



Salesforce Site.com is a web content management system for websites built, implemented, and deployed on Force.com.

Remedyforce is an IT help desk application.

Do.com is a mobile collaboration application that lets workgroups create and share tasks, projects, and notes.

Work.com, the formerly named Salesforce Rypple, is an HCM/HR application with capabilities for social performance management.

Product Evaluation We published an evaluation of Service Cloud and the customer service capabilities in Salesforce

Winter 13 on January 24, 2013. Salesforce provides a wide range of customer service capabilities: account management, case

management, knowledge management, process management, internal communities, and social net-work management. Service Cloud is the Salesforce application that provides the case management capabilities and serves as the anchor for a collection of tightly integrated but variously packaged and priced features and additional applications that provide the rest.

The customer service capabilities of Salesforce Service Cloud Winter 13 earned very good grades on our Report Card for Customer Service. We awarded Exceeds-Requirements grades for core capabilities and channel support, knowledge management, UI content management, and com-pany viability. The offering Meets Requirements for search and product viability and Needs Im-provement in analytic functionality.

Service Cloud will be a Customer Service Best Fit for a very wide range of requirements. This offering is wide and deep. The key drivers for its selection are:

Very wide set of rich cross-channel customer service capabilities B2B and B2C organizations of all sizes in all geographies A collection of separately licensed applications and application features Easy upgrade from Salesforce CRM Sales Cloud

Product Activity During calendar 1Q2013, Salesforce.com made one product announcement. On February 26, the

firm announced Service Cloud Mobile, adding support on mobile devices for:

Co-browsing Branded communities Chat Service Cloud Touch (capabilities for creating and managing cases)

Branded communities, chat, and Service Cloud Touch were generally available on the date of announcement. Branded communities and Service Cloud Touch are no-charge features that are in-cluded in Service Cloud. Chat is a separately priced add-on at $50 per user. Co-browsing, also a sep-arately priced add-on, is planned for general availability in 2H2013, at which time its pricing will also be announced.

Company Salesforce.com made three company announcements during calendar 1Q2013, all financial. On

March 11, the company announced a private placement of $1 billion in unsecured, unsubordinated,

32 Product Reviews


convertible senior notes to qualified institutional buyers. The company stated that it would use the proceeds for acquisitions of or investments

customer service supplier and product update 05-30-2013

Documents

customer acquisition

customer service star

customer conversations

customer scenario

continuing customer

good customer growth

customer voc applications

customer flight deck