Oracle Buys RightNow

Posted: October 24, 2011 in CRM
Tags: , , , ,

I found out about Oracle’s purchase of RightNow, a multi-channel contact center company, when Chris Kanarkus of IDG News rang my cell.  Ironically, I was sitting in the departure area waiting for a flight that will take me to the RightNow Summit, the annual user meeting which is being held in Colorado Springs at the Broadmore resort.

Kanarkus was looking for comment, which I am always happy to provide, and lots of thoughts ran through my head that I chose to pass by.  The deal was worth one and a half billion dollars at the $43 per share offering price, a nice bump to the share price.

It had been my observation that the stock prices of many companies rose just before or during their user meetings as good news was usually announced there and the financial press in attendance post their scoops.  A couple of years ago I watched RightNow’s stock gain two or three points as CEO Greg Gianforte gave his keynote but this year the news appears to be built in to the share price already.

One and a half billion bucks is a lot to spend and that’s even truer for a company that last year generated $200xxx million in revenue.  A multiple between seven and eight is usually reserved for less proven and smaller companies with some kind of social angle.  But RightNow has been around a while and it’s track record, while sterling made me, at first, somewhat skeptical.

True, RightNow has a great focus on the customer experience and on helping its customers craft great experiences for their customers.  Also, it’s a SaaS company with a SaaS strategy that mirror’s Oracle’s which is to say they are multi-tenant but not fanatics about it.  However, RightNow is not a Fusion application and Oracle has its share of customer service/call center, call them what you will, apps so they weren’t exactly desperate to get another one.  I recall that Oracle paid one billion dollars for ATG, a company focused on e-commerce, so perhaps the company only knows how to write checks with nine places to the left of the decimal.

Seriously though, Oracle, ATG and RightNow might be a thing in the future.  Multi-channel communication combined with e-commerce outreach could be very important.  Add to this Oracle’s success in what it has called clienteling (sp?) 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.

But this takes nothing away from RightNow’s core strengths today.  The company has become something of a missionary bringing the message of customer centricity to its customers.  In teaching the religion, RightNow has helped them navigate the social divide and some of that teaching might be very useful to Oracle which has a boat load of older technology products that it is in the process of “Fusing” and those applications need to adopt more socialized approaches.  Presumably, Oracle will protect the brand as it has with other acquisitions and Oracle RightNow does not appear to be that hard to say.

Competitively, this is interesting.  Salesforce.com another big CRM vendor recently bought Assistly which provides service functionality in an unassisted mode, or to say it differently, it is more of a customer self-service solution for the small business space.

Nonetheless, these are merely starting positions; it’s hard to know the ultimate destination some of these packages will have.  Part of that issue resides in a couple of social facts of life.  First, socially mediated processes are completely scalable working across the internet equally well for all sizes of company. Second, socially mediated business processes have very low costs and for that reason are attractive to anyone with a pulse especially in this economy.

There are other companies in the market that might make interesting buys for one of the bigger CRM companies and you can start with the CRM Idol finalists — Assistly’s stablemates, CrowdFactory, GetSatisfaction and Stone Cobra.  Each does something different and each is worthy of a vote or even a billion.

Finally, we should ask why in the middle of a terrible economy there is so much company buying going on.  The answer is that the corporate economy replete with M&A activity and some very good IPO’s this year has little to do with the real economy.  We’ve reached a point where some very good but siloed solutions have matured and a time when the big companies have ample cash that they aren’t spending on things like hiring people.  Buying a promising company is like R&D spending all bundled up and you get the result more or less right away.

So there it is.  Oracle buys RightNow for a king’s ransom.  I wonder if they’ll be serving champagne at the Broadmore tonight.

Comments
  1. RightNow is a clear leader in B2C CRM and CXM (customer experience management), however, I agree with you that the price paid seems very high, and it further suggests that Oracle seems content to indefinitely run a 2 headed applications company – Fusion apps and all-other-legacy apps (which RightNow will fall under). It seems to me a long-term (maybe permanent) two-fold applications strategy will dilute focus, cause market confusion and fail to achieve economies of scale that competitors will realize.

  2. […] Vendor conferences usually are a good source for industry news, but this year’s RightNow Summit was host to a bombshell before it even started. Oracle announced its intent to acquire RightNow Technologies for $1.5 billion. The deal is far from final, and most of the RightNow employees were themselves still reacting to the news when guests were arriving. The press release is here; you can read news coverage here, and some sharp analysis here. […]

  3. […] Meanwhile, Beagle Research’s Denis Pombriant offers a similar reaction to Wang’s, seeing the long-term potential for customer experience management. […]

  4. I like this view of #stonecobra🙂

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