Magazine article CRM Magazine

The Rave Is Over: What Happened at Entellium, and What It Means for Businesses

Magazine article CRM Magazine

The Rave Is Over: What Happened at Entellium, and What It Means for Businesses

Article excerpt

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The CRM industry received a shock in early October when news of trouble at sales force automation (SFA) vendor En tellium began to surface. (We blogged about some of those early happenings at wwwdestinationCRMblogxom.)

Founder and Chief Executive Officer Paul ("PJ") Johnston and head of finance Parrish Jones abruptly resigned, and rumors--soon substantiated--of mass layoffs began to circulate. Johnston and Jones were arrested on charges of wire fraud, having allegedly misrepresented the company's revenue to secure larger investments from its backers.

How could this have happened? It had been a year of note: The Seattle-based vendor had received several awards and commendations, including one from this publication, and had been garnering the kinds of reviews for its new Rave product that lived up to the brand name. And yet Entellium went from industry darling to fire-sale candidate almost overnight.

Brent Leary, a CRM consultant with particular interest in small businesses, recalls his reaction. "When I first heard about it, my concern at the time was that maybe the economic crisis had shut down their revenue stream," he says. "Entellium's been around a while, and their software has been getting rave reviews--no pun intended--so of course I was surprised at what I heard coming out in the news. How is it that nobody had ever completed an audit of Entellium? It reminded me of what happened to the housing market: lenders throwing money at people without checking whether they could pay it back."

Customers aren't sure which way to turn. "We were on a conference call Friday morning [October 6], talking about going further with Entellium and moving our plans along, and while flipping through Twitter I found mention of Entellium and scandal. I thought, hey, I wonder what that's about," says Dave Whelan, founder of Bespoke Strategy, an Entellium customer since January 2008.

"We thought we'd be much further along in our own business plan by now ... and wanted to have CRM in place," Whelan says. "We're in a unique situation--only in the past month or two have we really started to add contacts and data, and there are only two months left in our contract. To some extent, we feel fortunate that we haven't invested much time and money in the Entellium product. …

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