First Coffee for 8 April, 2006

David Sims : First Coffee
David Sims
| CRM, ERP, Contact Center, Turkish Coffee and Astroichthiology:

First Coffee for 8 April, 2006

By David Sims
david@firstcoffee.biz

The news as of the first coffee this morning, and the music is Eric Clapton’s Timepieces:

So what’s the deal with salesforce.com?

They issue a press release this past week touting their near-perfect availability after high-profile crashes in December and January, knocking out service to customers. The ancient Greeks had a name for this: hubris. Whenever it made its appearance in a drama you’d know what was coming in the next act: the Tragic Fall. Which followed from the Tragic Flaw.

See? All that money for those freshman lit classes wasn’t totally wasted.

Industry observer and fellow blogger Paul Roberts has a good take on the on-demand CRM software vendor and “Wall Street darling� salesforce.com, whose stock took a hit Friday “just one day after the company acknowledged yet another service interruption which affected customers in North America.�

The company’s stock was down almost five percent in midday trading, Roberts says, “with news of the service outage a likely source. According to the company’s monitoring service, trust.salesforce.com, the company’s hosted CRM service is back up and running� as of last night.

The site notes that there was an interruption on Thursday, beginning at 8:11 Pacific Daylight Time and affecting its North American operations. The cause was “a software patch affecting the cache server.�

Not that anybody who couldn’t get their business data really cares what the excuse is, salesforce.com can call it little green men from Mars flicking their garage door openers for all the difference it makes.

According to salesforce, “the service was restored to full operations after removing the software patch, resetting the cache system configuration, and re-starting the cache servers. Changes to operational procedures have been made to protect the service from similar issues going forward.� Many customers say service was out for several hours, almost all of business Thursday, salesforce.com statements don’t confirm or deny that.

Roberts opines that this latest outage is “bad news… for investors: the market is willing to believe that Salesforce’s ‘software as a service’ or SaaS model is the future of enterprise computing -- as long as they can keep their service running and available.�

Industry observer Stacy Cowley cited to JMP Securities analyst Pat Walravens, who had “harsh words� for salesforce.com on Friday morning following the crash: “To have this kind of downtime the very next day [after the press release] raises concerns about salesforce.com’s understanding of its own system issues,� Cowley reports he wrote in a research note.

“While we have found very few customers switching because of the reliability issues to date, the downtimes have caused some customers to consider alternatives and slow deployments. Such downtime episodes are also likely to complicate sales cycles with new customers.�

First Coffee wouldn’t go so far as to say that these annoying outages will hole the entire SaaS business model below the waterline any more than Disneyland’s famed opening day glitches rendered the park dead in the water, but I will say three major outages in five months is reasonable grounds for a company with significant data needs not to jump to SaaS right now.

First Coffee’s quite a fan of salesforce.com and the SaaS model, it must be said, and it’s not good for the industry to keep having these outages. Sure installed software crashes on occasion as well, but that’s no excuse for it happening there either. And salesforce.com’s competitors shouldn’t be indulging in schadenfreude about now, as the industry poster boy if salesforce.com’s seen as unreliable everyone in the industry suffers.

Incidentally, Cowley notes that last week’s press release noting the company’s improved service record has been quietly removed from the salesforce.com site.
…

Got some other to-do brewing here: Astea International Inc., which produces software tying the contact center in with the rest of the organization, is evidently the target of a class action lawsuit filed by Shalov Stone & Bonner LLP. The law firm’s website to address investor interest and to facilitate joining the class action is available at www.asteaclassaction.com.

On April 6, 2006, Shalov Stone & Bonner LLP commenced a class action on behalf of purchasers of the common stock of Astea International Inc., in the period between May 11, 2005, and March 31, 2006, inclusive.

According to the complaint, Astea materially overstated and exaggerated its financial health throughout the relevant period. �In particular,� the law firm’s site says, “it is alleged that the defendants failed to accurately account for the company’s software development costs under Generally Accepted Accounting Principles.�

As a result, the complaint alleges, Astea overstated its earnings by failing to comply with GAAP when recording its expenses.

On March 31, 2006, the company announced that it would have to restate its financial results for the three quarters ended September 30, 2005, in order to adjust for the improper accounting, the news of which lowered the price of the company’s stock from $16.50 to $11.73 per share.

According to Astea it’s all horse feathers: “Astea International Inc., a global provider of service lifecycle management products, has become aware that a putative class action lawsuit was filed this week in the United States District Court for the Eastern District of Pennsylvania against the company and certain of its officers alleging violations of the federal securities laws with respect to the company’s recently announced restatement of its quarterly financial statements in 2005,� the company says in a statement:

“Although the company has not yet been served with a copy of the complaint filed in this lawsuit, the company believes that this reported lawsuit lacks merit and intends to defend the action vigorously.�

Earlier this week Astea had introduced a hosted enterprise-class service management
product targeted at small to mid-size businesses. The acquisition of FieldCentrix, a mobile field force automation company, was made to help Astea get a jump start in the OnDemand service management market, according to company officials.

The FieldCentrix product will be offered as an on-demand option and is called Service Management OnDemand, powered by FieldCentrix.

Astea’s Service Management OnDemand product is a hosted “field-centric� service management offering that “mirrors and optimizes the workflow of field service engineers on service calls,� according to company officials:

“The hosted offering helps small and mid-size companies streamline and automate business processes, improve compliance with service level agreements, and synchronize customer touch points for increased customer satisfaction… by seamlessly connecting the call center, back-office, and field.�
…

The Courier News Online is reporting that AT&T Illinois has filed a federal lawsuit against the village of Carpentersville, Illinois “over its refusal to grant permits for Project Lightspeed, a video service that the village officials say requires a cable franchise agreement.�

According to the lawsuit, “Carpentersville is violating the company's right to use public rights of way to upgrade its telecommunications network. Project Lightspeed is a ‘$5 billion initiative to upgrade the network to a fiber-rich infrastructure capable of delivering innovative new services to consumers and improving the service quality of existing services,’� according to the News.

According to its Web site, Project Lightspeed will provide voice over Internet protocol video, and voice and Internet access services.

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