Kana Returns to Hosted App Service Model

Company to offer its iCare service resolution management suite as a hosted service.

Nearly three years to the day after Kana Software announced it was pulling the plug on its hosted Kana Online service, the customer service software vendor announced on Tuesday a new hosted application service as well as more flexible pricing terms for its licensed software.

Kana Software Inc. will offer its iCare service resolution management suite as a hosted service and will also offer subscription-based pricing for those companies that continue to license the software on premises. Kana already offers its Response Live online collaboration tool as a hosted service.

The Menlo Park, Calif.-based company looks to be jumping back on the hosted services bandwagon. The move comes just a day after rival RightNow Technologies Inc., which claims leadership in the hosted customer service applications space, announced that it had registered for an initial public offering with the Securities and Exchange Commission.

Kana officials insisted however that the return to hosting was predicated by demand from their own customers, most of whom are large enterprises.

"The market has changed since Kana Online was launched," said H.A. Schade, Kanas vice-president of products. "Back then, most of our customers were dotcoms that were focused on growing their business and capturing customers at any cost. Now were focused on a different type of customer. Large enterprise customers are coming to us and telling us theyre interested in this on-demand model."

Kana will continue to outsource its software to other ASPs. Kana OnDemand will be offered through hosting partners, that the company refused to name.

The hosted service will be priced at between $400 and $500 per agent per month, Schade said, in Manchester, N.H. Customers who choose to license the software will be able to take advantage of more flexible pricing models. For example, the cost of a $500,000 upfront software license with $100,000 in maintenance charges per year could be spread out over the duration of the contract, Schade said.

"It gives customers the advantage of spreading payments out rather than paying the entire license upfront," Schade said.

Kana recorded just $13.3 million in revenues in its most recent quarter, ended March 31, down from $18.1 million in the same period a year ago and $35 million in the first quarter of 2001, the last full quarter that Kana Online operated. The hosted service had about 35 customers at the time it was shut down.

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