E.piphany should change its Business Model to survive

What does an erstwhile star company, with a stock price now stagnating between $3-$6 and a ~$250M market cap do next? Revenues have fallen from $125M in 2001 to the $80M 2004 sales number. Maintenance and Professional Services account for more than two-third of the company’s sales.

If you look around in the CRM space, E.piphany is still better than the other fallen stars like Kana, eGain, and so forth. Siebel is still the remaining pure-play CRM leader with $1.3 Billion 2004 sales, and a $4.7 Billion market cap, and the top acquisition target in the category.

It looks like E.piphany’s destiny will depend somewhat on who acquires Siebel: SAP or Oracle? If the Retek drama is any indication, I would say, Oracle will win the bidding battle against SAP. However, there is a potential wild card: IBM. Siebel’s current CEO is an IBM alumni. IBM has so far not entered the business application space. Acquiring Siebel would change that.

In any case, under all the above scenarios, E.piphany looks like a lonely, passive girl at the ball who doesn’t get asked to dance, but keeps hoping she would be. Meanwhile, she ages and withers.

Here are some ideas to dress her up and give her a make-over, so that suitors come flocking:

* Turn E.piphany into a technology-enabled services play, with an India-based BPO operation.
* Develop core competency in delivering business intelligence as a service, using the product suite as enabling technology.
* Build, Operate and Transfer (BOT) world-class off-shore business intelligence operations on behalf of Fortune 1000 / Global 2000 customers.
* Engineer a potential CRM roll-up in conjunction with private equity investors, using the story of such a business model change that warrants a much improved P&L structure.