Customer Service Supplier and Product Update 05-30-2013

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 quarterly updates:
Customer acquisition and overall customer growth
Product activity
Company activity including mergers and acquisitions, partnerships and alliances, and
hiring
Company financial performance

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2 Product Reviews
In our evaluations of quarterly performance, we want to see continuing customer growth, ongoing 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
Attensity
Product
Attensity Analyze
Product Type
Voice of the Customer monitoring, analysis, interaction
Attensity Respond
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
Knowledge, process management
KANA Experience
Analytics
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
Case management, process management
Knowledge
Knowledge management
Marketing Cloud
(Radian6)
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.
Customers.com Research Service

2013 Patricia Seybold Group
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Customer Service Supplier and Product Update 3
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 acquisition 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 offering 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 published 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 already 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 significant 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 financial 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
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

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
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 related 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 include customer acquisition and product deployment announcements and announcements of recognition 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 balanced 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 financial performance were excellent. It introduced Service Cloud Mobile, new capabilities for its customer 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 differentiators. 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 effectiveness.


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 deployment and management is significantly faster and easier, approaching self-service. See the IntelliResponse 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 businesses 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 integration 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 important customer service channel because customers use it to get answers to their questions and solutions 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 listening 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 released Attensity Respond 6.0, its application for interacting with individual customers. IntelliResponse 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.


8 Product Reviews
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, Attensity 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 developing, 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 business 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 Customer (VoC). Attensity Analyze monitors and analyzes customer conversations on internal channelsemail, 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 customer 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 deployment. 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 characteristics, 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 capabilities.
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 section 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 customers 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 document 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 performance. 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 customers. 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, applications, and staff. Analyzes reports are built around the volume and sentiment of customers conversations 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 socialservice 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 NeedsImprovement Grade in Customer Service Integration should improve soon through planned enhancements 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 forward 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 strategy 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 branding. 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.


12 Product Reviews
Financials
Clarabridge is a private company. It does not publicly report its financial performance. We estimate 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 evaluation, 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 published 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 AssistedServiceExceeds-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 differentiator. 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 million.


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 Virtual.
EGAIN
A Good 1Q2013, eGains 3QFY2013
eGain had a good calendar 1Q2013, its 3QFY2013. Customer growth was up. Financial performance improved as a result. eGain made one company announcement and no product announcements during the quarter.
Customers
eGains direct sales force focuses exclusively on acquiring enterprise customer accounts. Partners target small and mid-sized organizations as well as organizations in Europe, Asia, and the Pacific. 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 revenue as proxies for eGains customer growth. License revenue comes from sales of on-premise licenses 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
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 common 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 $7.99 during February 2013 with an average volume of approximately 50,000 shares.
Financials
Financial performance improved slightly across all metrics for eGain in its 3QFY2013. The
highlight was the continued and improved profitability. We present eGains financial metrics for calendar year 2012 and the most recent five quarters in Table F.
eGain Financials
2012
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
Revenue
47.5
11.5
10.6
10.7
14.7
15.5
Recurring revenue
27.1
5.8
6.3
7.2
7.8
8.3
Net income GAAP
(6.9)
(1.2)
(3.4)
(2.9)
0.6
1.0
($millions); eGains fiscal year ends on June 30
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 approximately 275 employees.
Our Take on eGain
While eGain was relatively quiet in product and company activity, customer growth and financial 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 applications 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 deployment 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
10
11
Repeat business
26
IntelliResponses fiscal year ends on January 31
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 understand 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 selfservice, community, and social network applications.
This is a very strong offering that earned excellent grades on our Report Card for Virtual Assisted-ServiceExceeds-Requirements grades in Answers, Analysis and Matching Customers Questions, 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 Questions) and the knowledge items that answer them. The technologies do the restgenerating rules (IntelliResponse 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 IntelliResponse VA. i.Suggest is a major enhancement to the products question analysis and matching capabilities. 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 content, i.Suggest uses IntelliResponses patented matching technology to determine the intent of customers 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 applications.
Also, without a formal announcement, in April, IntelliResponse introduced two new applications: 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. IntelliResponse VA is the first virtual agent product to include a marketing/recommendation application.
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 customers 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 customer 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 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 of its financial size and direction. Here are the financial data elements:
161 customers and over 450 deployments


20 Product Reviews
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 IntelliResponse 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 data.
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 Enterprise version with the key offerings of KANAs recent acquisitions: the contact center management 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; cobrowsing social listening, analysis, and interaction; and email, campaign, and white mail management. 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 prerequisite.
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 announced 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 Enterprise 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 consulting 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 customers 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 quarter is good customer growth. We summarize Moxie Softwares recent customer growth in Table H.
Moxie Customer Growth

2012
New customers
Additional customers
1Q2012
2Q2012
3Q2012
4Q2012
1Q2013
50
15
13
11
10
306
61
79
84
82
70
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 collaboration.
Customer Spaces was Moxies customer service offering. Its capabilities are built on the foundation of Moxie Software Knowledgebase, which has been rebranded to Knowledge Spaces in Spaces
by Moxie. Customer Spaces supports customer engagements across Moxies Channels products
Email, Chat, Answer, Click to Call, Phone, and CoBrowse.
Employee Spaces was Moxies internal collaboration and social networking offering. Its capabilities 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 collaboration among customers, partners, and internal staff can be a great approach to resolving complex problems and issues effectively and efficiently.
Product Activity
Moxie made one product announcement during 1Q2013. On March 19, the firm announced integration 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 network 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 inside. 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 openings listed last quarter. Moxie Software has a staff of 200.


24 Product Reviews
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 create 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 strategically, 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 existing 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 deployments 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 AssistedServiceExceeds-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 Alme 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 clients 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 dependence on consulting services and more self-sufficiency. Note, though, clients face no price penalty 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 current 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 Spokane, WA and introduced its first virtual assisted-service offering in 2004. Its privately held company with a staff of approximately 140 employees.
In addition to Alme, Next IT has three other customer service offerings: Alme for Account Access, 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 offers 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 announced that robotics pioneer and former NASA astronaut Dan Barry had joined its Technical Advisory 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 software license and an initial deployment consulting engagement.
Based on customer growth of one new customer and additional business from five existing customers, 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 technology 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 scientists 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 assistedservice 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 customer 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 AssistedServiceexceeds-requirements grades in all virtual agent technologies (answers, question analysis
and matching, and customer service integration) and meets-requirements grades for analytic functionality, 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 company 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 functions, 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, became 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 performance of its GBUs. So we cannot provide analyses in those areas. We will offer an Oracle RightNow 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 announced a new, secure cloud computing data center in Japan for hosted deployments. Hiring continues to be very aggressive.
Note that Oracle does not provide any visibility into the customer growth or the financial performance 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 Customer 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. Continuing its string of consecutive quarterly product releases, on February 27, Oracle RightNow released 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 customers questions about a businesss policies such as benefit eligibility, welfare payments, tax obligations, 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 answers within the context of application processes is difficult for contact center agents and for customer 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 VPerson 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 especially aggressive.
Our Take on Oracle RightNow
Oracle RightNow has a strong identity within Oracle, and it continues to thrive after four quarters of doing business within Oracle. The quarterly release of Oracle RightNow Cloud Service, Oracles 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. Salesforce.com balanced the quarter with one product announcement and three company announcements
during the quarter, earning a Customer Service Star.


30 Product Reviews
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 quarterly 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 approximately 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 total 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 network 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 company viability. The offering Meets Requirements for search and product viability and Needs Improvement 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 included in Service Cloud. Chat is a separately priced add-on at $50 per user. Co-browsing, also a separately 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 in complementary businesses, services, or technologies,
for working capital, and for capital expenditures.
On March 12, Saleforce.com announced that the interest of the notes will be payable semiannually at a rate of 0.25 percent per year and the initial conversion rate is 3.7628 shares of common
stock per $1,000 principal amount of notes.
Salesforce.com is taking advantage of historically low interest rates and a very good credit to
raise a significant amount of cash at very low cost.
On March 21, Salesforce.com had a four-for-one (4:1) split of its common stock. As a result, the
number of authorized shares of salesforce.com common stock will increase from 400 million to 1.6
billion. Trading on a split-adjusted price basis began on April 18, 2013. The split brings down price
per share to approximately $40 and makes the stock more attractive and more accessible to new investors. The split also gives the company more flexibility in using stock-based compensation.
Financials
Salesforce.coms top-line financial performance continues to be excellent, setting yet another
company record for revenue, a record that the firm has broken for every one of the 17 quarters that
weve covered the firm in these Quarterly Customer Service Update Reports. Bottom-line financial
performance continues to be not so good, although not so good on purpose. SFDC is in control here.
For its 1QFY2014, this quarter, SFDC recorded a larger than usual $67.7 million loss. Three reasons for this less than stellar bottom line performance: First, SFDCs business strategy is to generate
cash and revenue. The firm spends significantly to develop and promote its products. Second, a key
component of SFDCs product strategy is to enhance and extend functionality through acquisition.
The firm had $24 million in the amortization of purchased intangibles during the quarter. Third,
SFDC uses its stock as a compensation incentive. Stock-based compensation expenses are quite
high$115 million in 1QFY2014.
Table I summarizes SFDCs recent financial performance.
Salesforce.com Financials
FY13
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
Revenue
3050.2
695.5
731.6
788.4
834.7
834.7
Subscription and support revenue
2868.8
655.2
687.5
740.6
785.5
785.5
Net income GAAP
(270.1)
(4.1)
(24.9)
(220.3)
(20.8)
(20.8)
($millions) Fiscal year ends January 31
Table I. Salesforce.coms financial performance is shown in this table.

Note that these numbers reflect business across all of Salesforce.coms products and services.
Salesforce.com does not report revenue and income by product line and does not report revenue by
new customers. As a result, we dont know the financial contribution of Service Cloud.
Salesforce.com is forecasting continuing improvement in its financial performance. The firms
guidance for FY2014 revenue is up from last quarters guidance to a range of from $3.84 billion to
$3.88 billion or 27 percent to 28 percent year-over-year revenue growth. Last quarter, the guidance
was for year-over-year revenue growth of 25 percent to 27 percent.

Very Aggressive Hiring

Salesforce.com continues to hire aggressively to fuel its growth. The Careers section of Salesforce.coms Web site lists 831 jobs across organizations in every business function. R&D and sales
have the highest number of open positions. There were 742 jobs listed last quarter.
As of April 30, 2013, Salesforce.com had 10,283 employees (full-time equivalent headcount), up
from 9,801 employees January 31, 2012, a quarterly growth in staff of almost five percent!
Our Take on Salesforce.com
Another very good quarter for Salesforce.com, highlighted by excellent customer growth and record breaking financial performance. Salesforce.com is forecasting continuing excellence and
growth for its FY2014.
1Q2013 was yet another very good quarter for Salesforce.com, a quarter that was once again
highlighted by excellent customer growth and record breaking financial performance but also balanced with significant product and company activity. Salesforce.com earned its Customer Service
Star for the quarter.
THE BOTTOM LINE
Another Good Quarter for Customer Service in 1Q2013
Customer service continued strong in 1Q2013, posting a very good quarter driven by customer
growth. First quarters in software are typically seasonally slow. Not so for customer service. Salesforce.com was the Star once again, but eGain and IntelliResponse also had noteworthy quarters,
eGain in customer growth and financial performance, IntelliResponse in products.
Going forward into 2Q2013, there have already been significant product introductions and company announcements. We look forward to a very good year in customer service.
2013 Research Calendar
2013 will be a busy year in our customer service research. Here in are the reports that weve
published and for which we have definitive plans so far:
Salesforce Service Cloud Winter 13 product evaluation was published on January 24,
2013.
Clarabridge Analyze and Clarabridge Engage (VoC monitoring, analysis, and interaction)
product evaluation was published on March 28, 2013.
IntelliResponse VA (virtual agent) product evaluation was published on May 10, 2013.
Salesforce.com Marketing Cloud (Social monitoring, analysis, and interaction) product

evaluation is underway 2Q2013.
Moxie Software Social Knowledgebase product evaluation.
Attensity Analyze and Attensity Respond product evaluation.


About Mitchell Kramer and Patricia Seybold Group
ABOUT THE AUTHOR
MITCHELL I. KRAMER is a Senior Vice President and Senior Consultant at

the Patricia Seybold Group. Kramer currently focuses on customer
relationship management technology, architecture, and analytic applications
as well as the computing infrastructure and information technologies that
support this customer-centric domain. Kramer applies his experience and
expertise to help customers evaluate, compare, and select CRM products and
develop approaches toward successful implementation. Product vendors
continue to leverage Kramers skills and insights to develop product
requirements, to better understand the competitive environment, and to
assist in planning and delivering marketing programs.
Kramer draws on his extensive primary and secondary market research in the architecture,
design, evaluation, and selection of enterprise-wide distributed computing infrastructures.
In consulting engagements, Kramer often uses the technology frameworks hes developed with
corporate IT organizations to help them with architecture and product selection decisions. He
frequently works with companies to help them determine product requirements, market and
product positioning, competitive analysis, and customer satisfaction. Kramer has successfully
managed company launches, product introductions, and business and product repositioning. He
has also developed and documented business plans for raising capital and for mergers and
acquisitions.
Patricia Seybold Group

Trusted Advisors to Customer-Centric Executives
If you're a visionary customer-focused executive, the Patricia Seybold Group should be your first
choice for ongoing strategic advice, business and technology guidance, customer experience best
practices, and help with customer-centric initiatives.
Founded in 1978 and based in Boston, we provide consulting, research and advisory services,
peer groups, and interactive workshops. We help clients to design and continuously improve
their customer-focused business strategies and processes using our proven consulting
methodology, Customer Scenario Design.
The CEO and founder, Patricia Seybold, is the New York Times best-selling author of
Customers.com and The Customer Revolution. Patty's latest book, Outside Innovation, is
now available.
Patricia Seybold Group
P.O. Box 783
Needham, MA 02494
Phone: (617) 742-5200
Fax: (617) 742-1028
Email: feedback@customers.com
Web: http://www.customers.com/



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Customer Service Supplier and Product Update

May 30, 2013

Customer acquisition and overall customer growth

Company financial performance

Customer Service Suppliers and Products

Case management, knowledge management, social

Virtual Agent (VA)

Knowledge, process management

Voice of the Customer monitoring, analysis, interaction

Knowledge management, agent and customer

VirtuOz Intelligent Virtual

Case, knowledge, process management; Voice of the

Case management, process management

Social monitoring, analysis, interaction

Customers.com Research Service

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Customer Service Supplier and Product Update 3

Company activity was highlighted by Nuances acquisition of VirtuOz, making a

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Customers.com Research Service

1Q2013 Customer Growth

2013 Patricia Seybold Group, Inc.

Table B. We summarize customer growth in this table.

1Q2013 Product Activity

Announces Attensity Respond 6.0

Announces general availability of mobile app for IntelliResponse Virtual Agent on

Customers.com Research Service

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Customer Service Supplier and Product Update 5

1Q2013 Product Activity (continued)

Announces integration between Microsoft Lync contact center application and

VirtuOz Intelligent Virtual Agent becomes Nina Web

Releases Oracle RightNow CX February 2013

Announces Service Cloud Mobile

Table C. We summarize 1Q2013 product activity in this table.

1Q2013 Company Activity

J. Kirsten Bay named President and CEO.

Announces a public offering eGain shares by individual eGain shareholders

Announces partnership with Sydney, AU contact center outsourcer Salmat

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

Nuance acquires VirtuOz

Opens secure, cloud computing data center in Japan

Private offering and placement of common stock

Table D. We present a summary of 1Q2013 company activity in this table.

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Customers.com Research Service

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

Partnership activity (see the KANA section of this report)

Customers enter a question, typically by typing in a text box on the screen of a PC

Customers.com Research Service

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Customer Service Supplier and Product Update 7

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Customers.com Research Service

Deep analysis of customer conversations through powerful and sophisticated technology

Customers.com Research Service

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Customer Service Supplier and Product Update 9

A new ADA-compliant and iPad compatible web UI

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

Consulting services for implementing Attensity Respond are approximately 25 percent of