Net-Net: RightNow Buys Salesnet

RightNow Technologies, one of the leaders in on-demand CRM, announced late Monday it had acquired on-demand SFA and workflow automation vendor Salesnet. The deal, totaling some $9 million in cash, is final and will be reflected in RightNow's Q2 2006 financial statements. RightNow founder and CEO Greg Gianforte indicated in a conference call that the acquisition would bring the company "significant domain expertise, as well as hundreds of customers added to our install base."

RightNow reiterated that Salesnet was operating in the black at the time of acquisition, and that this was a build-or-buy decision. "This is not a new direction, but a rapid advancement of our existing road map," Gianforte said. Per the terms of the acquisition, Salesnet cofounder and president Jonathan Tang will remain with RightNow, becoming vice president of sales solutions.

Denis Pombriant, managing principal of Beagle Research, was positive about RightNow's move. "RightNow is known for their customer service products and have a good reputation there," Pombriant says. "Acquiring Salesnet gives them a powerful, robust SFA product to anchor the other end of the CRM suite."

That anchor may be more of a grappling iron, though: RightNow admits it made this purchase to capture a new market with technology it would not have been able to build itself for at least a year. "It's true that [RightNow's] SFA product was much newer and less mature," Pombriant says. "The other thing you have to keep in mind is that RightNow is bringing along 2,500 installed Salesnet customers, so it's a new market for RightNow to sell into. There are plenty of [Salesnet] customers that are looking for a broader CRM solution than what an SFA footprint would provide."

One area where RightNow is likely to see an advantage is indirect sales. "We're very supportive of the indirect channel--Salesnet has built up a very loyal team of resellers," Gianforte said. "We're very encouraged by what we've seen. Salesnet differentiates itself in complex B2B environments with multistage sales processes."

Another is making call centers profitable. "There is an increasing trend of turning the call center into a profit center. Before you can do that you need a competent and robust sales technology," Pombriant says. "One thing that the Salesnet acquisition provides is [a record-keeping system] with workflow that will enable practitioners to take advantage of the embedded knowledge base that RightNow provides. It gives more capacity and flexibility to the call center to try things that have not been tried before."

According to Gianforte, RightNow has a three-phase integration plan in place, and he hopes to have the existing applications working together within three to four months. "Integration with on-demand is easier than on-premise," Gianforte said. "We should have a product ready by the end of the summer."

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