AMR Research gives CRM vendor RightNow kudos for moving towards a mixed on demand/licensed model; planning for the future

Customer relationship management (CRM) vendor RightNow has taken that rarest of actions in the world of American business: a short-term loss in the interests of long-term gain.

The company's decision to push its on demand model alongside its traditional installed model brought Q3 revenue to $28 million, missing estimates of $31 million, as some installed prospects came in as on demand customers instead.

"The reality is that this shift for RightNow is a good thing. While it has the potential to create a short-term deficit, it creates a more predictable and stronger long-term outlook," noted AMR Research analyst Robert Bois.

Bois, for one, didn't make much of the market's reaction, which was to punish RightNow's stock: "Wall Street is either very impatient, or still doesn't completely understand the business model behind SaaS [software as a service]."

Bois praises RightNow for being "slightly unique" in the CRM world, as it offers traditional licensing, a perpetual license hosted by RightNow, or pure on demand hosting.

RightNow's perpetual license business currently accounts for about one fourth of its total volume. Losing a perpetual license customers means the loss of a big up-front charge (accounting for some of the drop-off in RightNow's expected revenue), but could distribute that revenue across a longer lifecycle.

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