Oracle Buys RightNow Technologies for $1.5B to Expand CRM Portfolio

 
 
By John Pallatto  |  Posted 2011-10-24 Email Print this article Print
 
 
 
 
 
 
 

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 Oracle's buyout last week of Endeca, a producer of software that helps enterprises manage unstructured data. Oracle didn't disclose the financial terms of that deal.

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 Beagle Research, 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 self-service component.

Forrester 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 technology ecosystem."

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." 

 
 
 
 
John Pallatto John Pallatto is eWEEK.com's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.
 
 
 
 
 
 
 

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