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E.piphany, Inc. is one of the leading developers and vendors of customer relationship management (CRM) software. Its flagship CRM software suite includes sales, marketing, service, and analytic applications. When the company went public in 1999, investors pushed its stock price to dizzying heights. With the recession of 2001, demand for CRM software slowed considerably. E.piphany's stock lost much of its value, and the company reported larger than expected losses. It introduced version E.6 of its CRM software suite in the first quarter of 2002, hoping that its new generation of CRM software would spark an increase in CRM spending.

Developing Customer Relationship Management Software: 1996-98

E.piphany, Inc. was founded in November 1996 as E.piphany Marketing Software. The company secured its first round of venture capital funding in March 1997 and a second round in January 1998. During this period the company was developing software for marketers that would capture and analyze customer data for enhanced marketing campaigns. This type of software would come to be known as customer relationship management (CRM) software. For 1998 E.piphany reported revenue of $3.4 million, with services contributing $1.2 million.

In May 1998 Roger Siboni joined E.piphany as president and CEO. Siboni, a graduate of the University of California at Berkeley, was formerly the deputy chairman and chief operating officer (COO) of the accounting and consulting firm KPMG Peat Marwick LLP. Siboni had a 20-year career at KPMG before joining E.piphany. At KPMG he helped numerous technology startups become major public companies, and he was centrally involved in driving the growth of KPMG's consulting and high technology practices.

Releasing Commercial Version of CRM Software and Going Public: 1999

At the beginning of 1999 E.piphany released the first commercially available version of its E.4 CRM software system. The web-based software suite was designed for organizations that wanted to use their customer data to create one-to-one marketing initiatives. According to Martha Rogers of the Peppers and Rogers Group, a consulting firm that specialized in one-to-one marketing, E.piphany's software made it easier for companies to adopt a customer-centric approach to marketing. The entire E.4 suite consisted of 16 modules, of which eight were released in January 1999 and eight later in the year. The modules enabled the analysis and integration of customer-related data in the areas of finance, sales, marketing, electronic commerce, and support services. A typical deployment of E.piphany's E.4 system cost about $500,000, with individual modules beginning at $200,000. Early adopters of E.4 included Charles Schwab & Co., Capital BlueCross, Visio Corp., and Hewlett-Packard Co.

E.piphany went public later in 1999 and held its initial public offering (IPO) on September 22. There was strong demand for the firm's stock, with 4.15 million shares offered at $16 a share. From the start E.piphany's stock price was extremely volatile. By the beginning of November it was trading at higher than $80 a share, having received a boost when the firm gained Amazon.com as a customer for its E.4 CRM system. The firm also released new and updated product modules for its E.4 suite, including modules for analyzing and reporting on customer behavior, for managing e-mail and web marketing campaigns, and others.

E.piphany made its first post-IPO acquisition in November when it announced that it would acquire RightPoint, Inc. for about $392 million in stock. RightPoint developed software that supported real-time, interactive communications with customers. Its software enabled call center representatives to make specific offers to customers on the basis of information retrieved from the company's database of customer information. The day after the announcement, E.piphany's stock surged 40 percent to an all-time high of $157.75.

Expanding Through Acquisitions and Releasing E.5 for E-Commerce: 2000

E.piphany's next acquisition gave analysts cause to question the fundamental valuations of Internet companies. In March 2000 E.piphany announced that it would acquire privately held Octane Software for $3.2 billion in stock. Octane specialized in software for multichannel customer interaction applications and infrastructure software for sales, service, and support. Octane had revenue of $3 million in 1999 and was expected to generate about $35 million in 2000. E.piphany's stock had recently peaked at $317 a share. With the acquisition of Octane, E.phipany would have more than 125 customers, including American Express, Compaq Computer Co., GTE, and Procter & Gamble.

In early April E.piphany announced two acquisitions: iLeverage, a marketing software provider, for about $28.5 million in stock, and eClass Direct, Inc., a direct-mail marketing company that specialized in e-mail marketing services, for nearly $60 million in stock. Following the announcement regarding eClass Direct, E.piphany's stock lost 32 percent of its value, reducing the value of the eClass acquisition to $35.6 million. During the month E.piphany's stock traded in a range from about $45 a share to $125 a share.

E.piphany introduced version E.5 of its CRM software suite in July 2000. The new version incorporated applications from recently acquired Octane Software, merging E.piphany's analytics, campaign management, e-mail marketing, and real-time personalization software with Octane's applications that automated sales, service, and support functions. Thus version E.5 merged CRM's operational and analytical capabilities. E.5 was capable of managing inbound and outbound customer interaction via the web. It had a base price of about $200,000. Through a three-way agreement with LoudCloud Inc. and Interelate, E.piphany's E.5 software was made available as a hosted service, which made it accessible to companies that could not afford to purchase it. Later in the year E.piphany released a version of E.5 for business-to-business electronic commerce.

In October E.piphany and Sun Microsystems entered into a strategic marketing agreement, with both companies joining forces on product development, sales, and marketing. Under the agreement E.piphany's CRM software would be integrated into the Sun Solaris operating system and be marketed as a CRM solution to both firms' customers.

Slowdown of Spending on CRM Software: 2001

By the beginning of 2001 E.piphany had about 300 customers in a wide range of vertical industries, including airlines, automotive, e-commerce, financial services, hospitality, and telecommunications. The company's revenue went from $19.2 million in 1999 to $127.3 million in 2000. It had formed alliances with the Big 5 consulting firms and partnerships with manufacturers such as Hewlett-Packard, Cisco Systems, and Sun Microsystems. Its principal competitors were Siebel Systems, PeopleSoft, and Kana Communications.

E.piphany added sales force automation software to its offerings with the acquisition of Moss Software Inc. in February 2001. Moss had more than 100 customers, many of them in financial services and high-tech. E.piphany also acquired the intellectual property of Radnet Inc., a Cambridge, Massachusetts-based developer of portal technology and groupware applications.

By the start of the second quarter of 2001 it was clear that demand for CRM software was softening. Analysts began lowering 2001 revenue estimates for E.piphany and other companies in the CRM sector. E.piphany's stock, which began the year around $53 a share, fell below $10 a share in April. The company announced that its first quarter revenue would not meet expectations. Losses continued to mount throughout the year, with E.piphany recording a $1.98 billion loss for the third quarter, which the company attributed primarily to the declining stock value of several companies it had acquired.

During the first half of 2001 E.piphany entered into partnerships with ChannelWave and Comergent to offer a platform for building a customer-driven demand chain. The platform would facilitate collaborative marketing, sales, and service efforts for manufacturers, resellers, retailers, and other channel partners. Later in the year E.piphany released its E.5 System Demand Chain Solutions package, which allowed manufacturers, channel distribution partners, and retailers to share customer information across the demand chain. Other modules added to the E.5 system in 2001 included an upgraded sales force automation module.

Introducing E.6, a New Generation of CRM Software: 2002

Although 2001 was a difficult year for E.piphany, the company hoped its next generation of CRM software would put it within striking distance of the top CRM vendors. The E.6 suite was introduced in March 2002 and offered more than 100 new features. The new suite supported a rich interaction with customers and included a set of designer tools to help configure applications. E.6 was built on top of a web-based system, Java2 Enterprise Edition (J2EE), and melded many of the technologies E.piphany had acquired from other companies. With E.piphany continuing to receive industry recognition for its CRM software in 2002, the company hoped that its new genera- tion of CRM software would spark more spending on CRM software in the year to come.

Principal Competitors: Kana Software, Inc.; Oracle Systems Corporation; PeopleSoft, Inc.; SAP Aktiengesellschaft; Siebel Systems, Inc.

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Source: International Directory of Company Histories, Vol. 49. St. James Press, 2003.