By Lori Hawkins Corporations hate paying for technical support every bit as much as consumers hate waiting on hold for someone to come to their rescue. But if any industry has figured out how to exploit the Internet to solve technical support problems -- and lower the cost of handling customer queries -- it's the makers of personal computers. Indeed, tech companies spent billions last year just keeping their customers up and running.
Now, an Austin (Tex.) company that helps computer makers put tech support online wants to bring the same Web help to financial services, communications, and other industries. Four-year-old Motive Communications, whose software is already at the heart of online support offered by Compaq, Dell, and Hewlett-Packard, wants to change the way financial institutions deal with customers.
In March, the company unveiled software for banks, brokerages, and insurance companies. Analysts say financial services, one of the fastest-growing sectors on the Web, is ripe for a new way to handle customer service. According to Jupiter Research, over the next four years the number of U.S. households managing their finances online will nearly triple to 43 million.
INSTANT ANSWERS. But in a recent survey Jupiter found that 93% of users encountered problems when conducting online transactions. In the past, customers would pick up the phone, call the help line, and wait. If Motive has its way, clicking an icon on their computer screen will instantly connect them to a database of answers, as well as a community of experts ready with the answers to their questions.
Motive is the "Intel Inside" of the tech-support business. Although its name rarely appears when users click for help, computer makers have come to rely on the company. "We wanted to eliminate mundane calls that tie up agents and could just as easily be handled over the Internet," says Melodie Sherwood, HP's e-support marketing manager. The company installs Motive's Duet software on its PCs, servers, workstations, and storage devices.
It works like this: Information about the machine and its software is stored locally. When customers have a problem installing new equipment, say a printer, they click on a help button on the screen, and a list of 10 things that could be wrong is presented. If none of those suggestions work, the software runs diagnostics on the printer.
Still no solution? Without touching the phone, customers are connected to a call center where they can exchange instant messages with a tech-support worker. Rather than starting from scratch, support staff can see what has already been tested. They pick up there and continue troubleshooting until the problem is fixed. Currently, about 20% of HP customers go the Motive route, double the company's initial goal of 10%.
REAL FIRST MOVER. Research firm IDC estimates spending for service solutions such as Motive's will jump dramatically from under $2 billion in 1998 to more than $14 billion by 2003. Motive is in a good position to cash in on that growth. It was the first to truly tap the Internet to handle tech support, says Geoffrey Bock, a senior consultant at Patricia Seybold Group in Cambridge, Mass. "They are one of the few Internet companies that can legitimately claim first-mover advantage," he says.
Motive's early start allowed it to win over major PC players first. And why not? Each call to tech support costs PC makers between $15 and $25. If a service call or product return is needed, add an additional $100. The typical new PC buyer calls the 800 number twice. Automating the process, eliminates many of those calls altogether. "The PC companies have figured it out, and now just about every other industry is realizing that the Web is the best way to handle technical support," says Bock. "This is the next big thing that's going to happen on the Web."
The company's next-big-thing potential is the result of good timing and good old-fashioned problem-solving. Motive's roots are in Tivoli Systems, the systems-management software company that IBM bought in 1996 for $743 million. Motive CEO Scott Harmon, who was Tivoli's strategy and marketing vice-president, and Mike Maples Jr., former director of product marketing at Tivoli, left in 1996 and began noodling ideas for a startup.
STOPWATCH SAVANTS. Rather than trying to create a new market, they looked for a problem that was costing businesses a lot of money. Before writing a line of code, the founders visited 30 companies over six weeks to watch tech support in action. At call centers, they used stopwatches to time how long it took people to answer phones.
Among their findings: 75% of a typical call is spent doing things such as confirming the user's identity and figuring out what kind of software the customer is running. Using the Internet, they decided, they could do all that without the customer and tech support even having a conversation. The end result: Tech outfits save millions, and users save time.
Although more companies are putting their tech-support services online, investors haven't been bullish on this sector. Last month, Motive killed plans to go public, citing a lousy IPO market. Rival Kana Communications in Redwood City, Calif., has seen its stock dive from $270 last February to less than $1 today. And Support.com, also in Redwood City, went public last summer at $10 and is now trading at less than $3.
YEAREND PROFITABILITY? According to Motive's securities' filings, it had hoped to raise about $49 million to finance its growth. But the company, which in the first nine months of last year posted $19.4 million in revenue and a net loss of $21.6 million, is in no need of quick cash, says Chief Executive Harmon. Of the $44 million Motive has raised from investors including Austin Ventures, Accel Partners, and Dell Ventures, it still has $25 million in the bank.
Harmon says Motive is on track to become profitable by yearend. "After seeing how tech stocks are performing, people are like 'Thank God we didn't go,'" he says. Despite the industry slowdown, Harmon claims the average size of each Motive sale has grown, now running between $500,000 to $1 million. The company, which has 330 employees, is hiring, not firing. The plan is to add 105 jobs in all areas to keep up with new business.
So far, the move to financial services and telecommunications has been smooth. Motive, which has more than 80 customers, has signed on more than 10 major financial-services clients and four communications customers. Merrill
Lynch is using the software to provide online support to its brokers and customers. If customers want to know how to transfer money, they simply click on an icon and get the answers online.
Fannie Mae is using the Motive software to offer online support to its 4,000 employees. And Zions Bank recently signed on to use Motive to support its online banking site. On the communications side, AT&T Broadband and cable company Adelphia are using Motive to help customers with problems setting up and using high-speed Internet services.
NIGHT TREMORS. The key to Motive's success moving into new areas, analysts say, is its ability to tailor its software to the unique problems facing each industry. When it began developing financial-services products, employees spent time with Merrill Lynch and others to determine where customers experienced the most difficulty. The answer: registering for the service, transferring funds, and making payments. Motive then focused on creating extensive databases to solve hundreds of questions related to those tasks. Now, nearly half of Motive's business is outside high-tech.
But Harmon still wakes up at night worrying. "Growth is hard, and there are a million ways to screw it up," he says. If he has a problem, at least he knows where to turn for support. Hawkins is a reporter for the Austin American-Statesman