Oracle's acquisition campaign continued unabated with the Oct. 24 announcement that it is buying RightNow Technologies, a producer of cloud CRM and customer support applications, for $1.5 billion.
For Oracle, it's a new week
and time for another corporate acquisition. This week, it's RightNow
Technologies, which markets cloud customer service and support applications.
Oracle agreed to pay $1.5
billion for RightNow's stock at about $43 a share, which is about 20 percent
more than the company's closing price on Oct. 21. Oracle says it expects to
complete the acquisition by late 2011 or early 2012.
RightNow is a cloud customer
relationship management provider with an emphasis on multichannel customer
service and support. It has been a major competitor of Salesforce.com and
Oracle's own existing CRM offerings. The RightNow deal is a follow-on to
buyout last week of Endeca
, a producer of software that helps enterprises
manage unstructured data. Oracle didn't disclose the financial terms of that
Oracle likely acquired RightNow
mainly because of its multichannel customer support capabilities that work
across call centers, social networks and Web self-service applications, Denis
Pombriant, principal analyst with
, which specializes in CRM market analysis, told eWEEK.
The RightNow buyout
complement's Oracle's early 2011 acquisition of ATG, a producer of
cross-channel CRM, e-commerce and retail applications. The acquisition of
RightNow, along with ATG, combined with the existing Oracle CRM and Siebel on
Demand applications, gives Oracle "critical mass in the cloud" for its CRM
products, Pombriant said. RightNow should "gel well" with Oracle's other
CRM properties, he said.
The acquisition, Pombriant
said, also allows Oracle to further strengthen its CRM offerings in the face of
increasing competition with Salesforce.com, which is holding firm to its position
as the most successful pure-play on-demand CRM platform on the Web. This latest
Oracle acquisition may be a sign that it's "playing a bit of catch up" with
Salesforce in the software as a service (SaaS) space.
He also noted that the
Oracle deal comes soon after Salesforce.com announced the acquisition of
Assistly, which also provides an online customer self-service application.
In his Beagle Research blog
Pombriant suggested that Oracle is possibly taking the long view with the ATG
and RightNow acquisitions. "Multichannel communication combined with e-commerce
outreach could be very important. Add to this Oracle's success in what it has
called 'clienteling' in which store sales associates carry mobile devices that
can orchestrate customer-centric shopping, and you might see a pattern.
If the customer can't come to the store, perhaps the store will come to the
customer," Pombriant wrote.
It's unclear what these
acquisitions mean for Oracle's long-established CRM applications. Pombriant
noted that Oracle continues to say that the Siebel CRM on-premise application
has an important place in its product line with many thousands of seats still
active. But he said it's conceivable that in the long term Oracle may be
getting ready to "sunset" the Siebel platform.
The overall trend in
customer support is self-service and self-support where people go directly to
the Web to find information about their products, he noted. Recent research shows
that these days people are more likely to go to the Web to get answers to
product support questions than they are to call a product support person. That
is why modern customer relationship management applications need to have a
Research analyst Kate Leggett wrote
that the deal represents a continuation
of the consolidation taking place in the crowded and complex customer service/customer
contact center market. The deal will benefit customers who are looking for a "simpler
The deal is a win-win for
both companies because "RightNow gets the big-company marketing, professional
services, sales reach of Oracle to grow beyond their current run-rate, and to
compete more effectively with SalesForce, Microsoft and to a lesser degree,
SAP," Leggett wrote.
Oracle "gets a full-feature,
on-demand customer service solution, which has been a hole in their current
offering. It also helps build out their 'cloud' story," she wrote.
However, there are potential
downsides for RightNow employees and customers, according to Leggett. "There is
a mismatch between Oracle and RightNow cultures which threatens to put RightNow
employees and customers at risk unless this culture gap is bridged."
Leggett recommended that,
given Oracle's current overlapping CRM assets, the company should give RightNow
a unique place in its product portfolio to "steer customers to the right
solution for their particular business need."