Tag: customer service

Oracle buys big, again

Brenon Daly

Contact: Brenon Daly

Announcing its third deal in just the past month, Oracle said Monday that it will pay about $1.5bn for customer service software provider RightNow Technologies. The purchase brings the acquisitive software giant even closer into competition with salesforce.com, which has also used M&A to expand its customer service offering. However, true to form, the deals by the rivals underscore their wildly different approaches to dealmaking.

For Oracle, bigger appears to be better. The price of its planned purchase of RightNow, which is expected to close by early next year, is a whopping 50 times larger than the amount salesforce.com spent on InStranet back in August 2008. (Salesforce.com handed over $31.5m for InStranet.) While RightNow counts more than 2,000 customers, InStranet had just 50 at the time of its acquisition. And, finally, another key difference: Oracle is valuing RightNow at more than 6 times trailing sales, which is three times the multiple salesforce.com paid for InStranet.

Of course, as the chief consolidator of the software industry, Oracle is accustomed to making big moves. In fact, its pending purchase of RightNow ranks as only its sixth-largest purchase. (It has done more than 80 deals over the past decade.) As a point of comparison, we’d note that Oracle’s single acquisition of RightNow is larger than the $1bn or so that salesforce.com has spent on the 18 deals it has announced in its entire history. We’ll have a full report on Oracle’s pickup of RightNow in tonight’s Daily 451.

SaaS giant salesforce.com thinks small

Brenon Daly

Contact: Brenon Daly

Just several months after putting money into Assistly in its second round of funding, salesforce.com decided Wednesday to pick up the whole startup for $50m. The purchase should help the SaaS giant extend its customer service offering, Service Cloud, to small businesses. Founded in 2009, Assistly had drawn in more than 1,000 customers, although not all of those are paying. (Salesforce.com declined to give a breakdown on paying vs. nonpaying customers, but indicated revenue at the startup was a tiny amount.)

The acquisition marks the third time salesforce.com has stepped into the M&A market to bolster its customer service product. Three years ago, it reached for InstraNet, a startup that was led by Alex Dayton, who continues in an executive role for the customer service offering at salesforce.com. A year ago, salesforce.com quietly added Activa Live. (Although terms weren’t disclosed, we suspect the bill for that purchase probably only ran in the single digits of millions of dollars.) The net result of those acquisitions – along with healthy organic growth – is that Service Cloud is now the largest single product outside salesforce.com’s core sales force automation product.

Additionally, salesforce.com says Assistly will be part of its upcoming launch of a ‘small business cloud’ product. In that, Assistly will be joining the collaboration offering that salesforce.com picked up with its acquisition of SMB-focused startup Manymoon in February. The reason for the new downmarket products is pretty clear when you remember that salesforce.com gets roughly one-third of its overall revenue from small businesses.