First Coffee for 13 May 2006: Chinese Chip Fraud Uncovered, CRM Vendor eLoyalty's Results, 311 Contact Centers Hampering 911 in Dallas?

David Sims : First Coffee
David Sims
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First Coffee for 13 May 2006: Chinese Chip Fraud Uncovered, CRM Vendor eLoyalty's Results, 311 Contact Centers Hampering 911 in Dallas?

By David Sims

The news as of the first coffee this morning, and the music is John Mellencamp’s Dance Naked:

ELoyalty Corporation, a vendor of enterprise CRM services and products, has posted first quarter financial results for the period ended April 1, 2006.

For the first quarter of 2006, total revenue was $19.6 million and, on a GAAP basis, the net loss was $3.4 million. The net loss available to common shareholders was $0.58 per share.

On a non-GAAP basis, eLoyalty realized an “Adjusted Earnings” loss of $1.9 million for the first quarter of 2006.

Company officials say that in addition to “exceeding the high end of our revenue estimates and our Q1 Managed services bookings target,” eLoyalty achieved a number of other milestones in the first quarter of 2006, including signing a multi-year enterprise license and support contract to provide the BA product to Uniprise, a UnitedHealth Group company and entering into a joint marketing agreement with Uniprise to provide the BA product to the healthcare market.

Officials also pointed to finalizing the contracts at another large healthcare client for the deployment and multi-year operation and support of the BA product, including the initial enterprise deployment of Self-Service Analytics application; and booking what officials called a “record $23.4 million of new and renewal managed services contracts.”

During the quarter eLoyalty also increased managed services backlog 68 percent sequentially and approximately 300 percent from one year ago to approximately $44.9 million, and sold $1.1 million of third-party software, a step company official say is “the first component of a $3.5 million implementation of an advanced speech application.”

In addition to the revenue reported under GAAP, eLoyalty generated and deferred $1.4 million of BA deployment and subscription revenue during the first quarter of 2006. Of this amount, the company expects approximately $0.7 million will be recognized in the latter half of 2006; the remaining amount is expected to be recognized over subsequent years.

The CRM vendor expects to achieve total revenue in the second quarter of 2006 in the range of $20.3 million to $23.3 million, including services revenue in the range of $16.0 million to $17.0 million.

In addition to these revenues, the company expects to generate approximately $1.6 million of deferred BA revenue in the second quarter of 2006. eLoyalty expects that its ongoing investment in Behavioral Analytics will continue to negatively impact earnings in the second quarter.

According to the Press Trust of India, China has “dismissed a senior scientist for a major fraud in the country’s prestigious and high-profile computer chip research program,” citing reports in the state media.

Shanghai Jiaotong University said that the Hanxin computer chip series are fake, and the state-funded chip research is fraudulent. Scientist Chen Jin was punished when investigations found that Chen was leading his team to conduct fraudulent research and development of the Hanxin chips for digital signal processing (DSP).

“Chen, who formerly chaired the Micro-electronics School at Shanghai Jiaotong University, was found to be deceiving technological appraisal teams from the government, Shanghai Jiaotong University, Shanghai municipal government and relative ministries which invested public funds in his research project,” the state media said.

Shanghai Jiaotong University has dismissed Chen from his post as the dean and professor.

Media sources say the Ministry of Science and Technology and the State Development and Reform Commission announced they would stop financing Chen’s research project. Chen was ordered to give back the investment, Xinhua news agency reported without mentioning the amount.

In December 2005, the university received a letter reporting possible fraudulence in the research project of Chen, who is also general manager of the Hanxin Sci-Tech Company.

The investigation focused on chips in the series from Hanxin I to Hanxin IV. Government investigators found that the Hanxin I, a simple DSP chip developed by Chen, could not fulfill the functions of verifying fingerprints or playing MP3s.

Hanxin had claimed that their chips were at the high-end of world-level DSPs, a claim found to be false by the investigation.

According to the Dallas Morning News, “Dallas 911 faces an emergency of its own.” And it seems the problem, at least in part, is the city’s municipal 311 contact center.

“Massive numbers of calls, understaffed and overwhelmed crews are rushing to get people off the phone so they can move to the next call,” the newspaper finds.

What’s sometimes lost in the urgent messages to police officers is essential information, the paper says, such as the criminal’s physical description or whether he carries guns or knives: “This can lead to situations that endanger lives.”

“911 is in serious trouble,” Mike Multop, a veteran police dispatcher and former Dallas 911 operator told the newspaper. “If the citizens of Dallas knew what was going on, they’d be scared. My biggest fear is seeing an officer get hurt or killed.”

Unfortunately, some people are fingering the city’s non-emergency 311 contact center as the culprit. First Coffee says “unfortunately,” not because it’s wrong to find the problem wherever – and whoever that problem may be, but because First Coffee is pro-municipal call centers, such as the ones in Chicago, Albuquerque and Hampton, Virginia this column has written about.

In 1997, the city began offering the non-emergency 311 service, according to the Morning News, and “in 2001, the call center was given the responsibility of customer service for the water department.”

The call center, which lets citizens call in non-emergency situations such as potholes or no garbage being collected, was popular, as such call centers have been wherever they’ve been introduced. The Morning News says “total call volume rose from 2.3 million in 1995 to 3.6 million in 2005.”

Operators told the newspaper that 911 calls are played down while 311 and water customer service get too much emphasis. The same operators handle both calls.

“I think they were putting so much effort in running 311 and water customer service and making sure the trash got picked up, [911’s] been let go on autopilot,” Acting Assistant Fire Chief Joe Kay told the Morning News.

Chief Kay thinks a state-of-the-art dispatching system being installed could help solve the problem, and it will surely help, but technology itself rarely solves big problems if the human element doesn’t change. And what gives First Coffee hope that the problem will be solved is that the operators themselves are being differently motivated.

Previously, the newspaper writes, “operators had been evaluated on how quickly they could get off of 911 calls. They were expected to spend no more than an average of 84 seconds on such calls – when conducted in English – to get the highest rating.” Sensibly, Chief Kay has eliminated this silly requirement.

Even better, Dallas has recently implemented a trial program “in which some operators focus solely on 911 calls and others take only 311 calls,” the Morning News explains, another common-sense move. But some say nothing short of moving 911 back to the Police Department’s control, “as is the case in many large cities, such as Philadelphia, San Diego and Los Angeles,” the newspaper says, will solve the problem.

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