Classmates.com 2005 Annual Report Download - page 25

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Our business is highly dependent on our billing and customer support systems, which are based on a combination of third
-
party
software and internally developed software.
The software that operates most of our billing and customer support systems for our access service is licensed from Portal Software, Inc.
and Remedy, a BMC Software company, and we use a combination of Portal, Remedy and other third-party and internally developed software
applications for such customer billing and support. The billing system for Classmates relies on a combination of software licensed from Art
Technology Group Inc. (“ATG”), other third-party software applications as well as internally developed software applications. Customer billing
and support is a highly complex process, and our systems must efficiently interface with other third parties’
systems such as the systems of credit
card processing companies and other companies to whom we outsource billing and support functions. Our ability to accurately and efficiently
bill and support our users is dependent on the successful operation of our billing and support systems and third parties’ systems upon which we
rely. In addition, our ability to offer new pay services or alternative payment plans is dependent on our ability to customize our billing and
support systems. Issues associated with these systems could cause a variety of problems including the failure to bill and collect from users on a
timely basis, over-charging or under-
charging users, inaccurate financial and customer data, excessive credit card chargebacks or refunds, delays
in new product or payment plan introductions and other billing-related errors. Such problems could lead to inaccurate reporting from time to
time, which could adversely affect our business, financial position, results of operations and cash flows. We have experienced billing and
support problems from time to time and may experience additional problems in the future. The failure of our software vendors to provide
software upgrades and technical support, the failure of the Portal, Remedy, ATG or internally developed software to operate accurately,
problems with our credit card processor or other billing and support vendors and any other failures or errors in our billing and support systems
could materially and adversely affect our business, financial position, results of operations and cash flows.
We are dependent on third parties for technical support and customer service and our business may suffer if they are unable to provide
these services, cannot expand to meet our needs or terminate their relationships with us.
Our business and financial results depend, in part, on the availability and quality of our customer support services. We outsource a majority
of the live technical and billing support functions to ClientLogic Corporation. As a result, we maintain only a small number of internal customer
service personnel. We are not equipped to provide the necessary range of customer service functions in the event that ClientLogic becomes
unable or unwilling to offer these services to us. At times, users seeking live customer support have experienced lengthy waiting periods to reach
support personnel who are trained to provide the technical or billing support they require. ClientLogic has also experienced outages and other
issues in the past which resulted in inadequate service quality and support which adversely impacted our business. Maintaining desired customer
support levels may require significantly more support personnel than are currently available to us, or significantly greater expense than we
choose to incur. If ClientLogic does not provide us with quality services, or if our relationship with ClientLogic terminates and we are unable to
transition such services in-house or to a replacement vendor in an orderly, cost-effective and timely manner, our reputation, business and results
of operations would suffer. In addition, we prepay significant amounts in advance to ClientLogic under our agreement with them, and any failure
by them to perform the services for which we have prepaid would negatively impact our financial position.
If our software or hardware contains errors or fails, if we fail to operate our services effectively or if we encounter difficulties
integrating our systems and technologies, our business could be seriously harmed.
Our services, and the hardware and software systems underlying our services, are complex. Our systems may contain undetected errors or
failures and are susceptible to human error. We have in the past
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