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Leadership / Digital Transformation

RightNow aims to change SaaS contract world

On-demand CRM firm RightNow Technologies has unveiled a new pricing and licensing structure that it hopes will shake up the SaaS industry. The company said that its Cloud Services Agreement (CSA) will offer users a more flexible and fairer approach to SaaS.

Greg Gianforte, CEO and founder of RightNow, said that the CSA will finally deliver on the promise of cloud computing, which has changed the way companies implement and use IT but still suffers from a lot of the contractual problems that impact on-premise software. He also issued a challenge to other SaaS vendors to follow RightNow’s initiative.

“The promise of SaaS was that we could significantly lower the total cost of ownership of enterprise applications with faster deployment and more rapid innovation, but also that we could eliminate shelfware and long-term lock in,” he said at an event in San Francisco.

“But the reality is that as an industry we’ve only delivered on half the promise. We’ve solved the technical delivery issues but not the engagement issues. Some of the worst aspects of enterprise software procurement have been brought into the cloud.”

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These aspects, Gianforte explained, include paying for software not being used, long negotiations centred on tying customers into long-term contracts with little flexibility and hidden costs.

To combat these issues, RightNow has developed the CSA. The key points of the CSA include the ability to align usage up or down annually depending on business needs; a three-year price commitment with a three-year renewal price cap, so clients could pay the same price for six years; an annual termination for convenience, meaning clients can assess each year whether the deal is working and walk away from the deal if they wish.

The CSA also includes annual pools of capacity, enabling clients to adjust the number of seats they buy each year to accommodate seasonality and fluctuations in business; cash service level credits, where RightNow will refund a percentage of a user’s subscription fee if SLAs are not met; and unlimited capacity for 90-day trials.

Gianforte also attacked RightNow’s SaaS rivals, including Oracle and salesforce.com, as he challenged them to follow his company’s lead. “SaaS vendors are masquerading in cloud clothing. Oracle is the poster child for bad customer relations – escalating prices, increasing maintenance, contract lock-ins, unexpected fees. Salesforce.com, although it innovated on the delivery side, has embraced the worst of traditional enterprise software in the way they do their contracts.”

RightNow’s Cloud Challenge invites other players in the field to embrace the same ideas RightNow has, such as no shelfware, a minimum five-year price certainty, on long-term lock-ins, the ability to flex up or down, rollover usage and cash reimbursements.

“We believe to deliver on the promise of the cloud we have to significantly move the industry forward. We think the points raised in the cloud challenge should be part of every software contract,” Gianforte said.

The CSA was implemented as standard on January 1st this year and all new RightNow customers will be signed up to it. Existing customers will be transferred over to the new system during the contract renewal process.

 
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