Intuit and Others Bid on Bankrupt Entellium

The soap opera surrounding Entellium continues to unfold, as the company filed this week for Chapter 11 bankruptcy protection amid efforts to sell its assets. Scandal broke out around the CRM player in October when its top two executives were charged with wire fraud.

[Editors' Note: Earlier coverage of the scandal can be found on our blog here and here, and on destinationCRM here; coverage in CRM magazine can be found here and here.]

According to Entellium's bankruptcy filing, the company is claiming assets worth $37.7 million against liabilities that total $12.7 million. Intuit, a provider of enterprise resource planning solutions for small businesses, has come forward with a bid of $7.6 million for the Entellium pieces, subject to the approval of the bankruptcy court

There's quite a bit at stake when one vendor starts picking over the parts of another, says Laurie McCabe, vice president of SMB insights and business solutions at AMI-Partners. In this case, she says, it's going to be more about Entellium's intellectual property. Entellium's customer base, she speculates, has likely dwindled since the scandal erupted. Part of this is due to well-timed offers from CRM competitors such as Avidian, designed to entice Entellium users to switch to their CRM products. McCabe notes that Entellium's actual software may be more attractive than its customer base. "They have a fairly strong product," she says, adding that Entellium's Rave offering was unique in the marketplace. "Anyone that is even cautiously interested is going to make sure they've really peeled back every layer on the onion and know exactly what they're getting into," she notes.

Brent Leary, cofounder and partner of CRM Essentials, a CRM consulting/advisory firm focused on small and midsize businesses agrees on this point. "Entellium -- the product itself -- was good," he says. "The [gaming-influenced] interface was really almost revolutionary.... It was clear, it was fun, the functionality was good." Leary is a proponent of Intuit's purchase of Entellium, saying that the match certainly makes sense, and that $7.6 million is a reasonable -- if not bargain-priced -- bid.

"Maybe [Intuit] is looking to add the missing piece to the small-business puzzle," Leary says. He points out that many of Entellium's existing customers might already be using Intuit's Quickbooks for accounting. Whereas many small businesses often sign on with accounting solutions right away, graduating to a full-fledged CRM system often comes further down the road for the typical SMB. For Intuit to pick up a CRM offering would round out its product line, Leary says. "It would be like a growth engine -- and if they could [make it] seamlessly integrated, it could be a total win-win."

Intuit did not respond to a request for comment.

Of course, McCabe says, whichever company picks up Entellium will be sure to do away with the branding -- and the stigma -- of the Entellium name. She says, however, a company with the breadth and reputation such as Intuit wouldn't have a hard time doing so. In addition to Intuit's bid, three other companies are rumored to be interested in Entellium's assets. McCabe speculates that a company with large- and upper-midmarket presence might be interested, provided the company wants to do something related to software-as-a-service downstream. Or, she says, a company might be interested in picking up just the sales force automation capabilities within Entellium's Rave product.

Both analysts say that, regardless of the outcome of the bankruptcy filing, it will be interesting to see how the Entellium saga plays out. "It's such a tragic story in terms of end results from employee and customer standpoints," Leary says. "I still wonder how this all could have happened -- a company that's been around that long for this to be discussed four or five years later is crazy to me. If I were a small business it would make me a little more hesitant to go with companies that aren't tried-and-true and that haven't been around a long time."

Leary goes on to emphasize that there are some small companies providing great value and service to customers that might be hurt by Entellium's wrongdoings. In the future, vendors might have to alter their approach with prospects to establish their credibility early on. "They will have to be extremely transparent," Leary says, "and focused on delivery and on service that much more."

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

Related Articles

Intuit Gets into Customer Management

From hodgepodge to homogeneity, Intuit provides a new home for customer information.

Keeping Your Financials Intacct

The provider of on-demand financial applications launches its Winter 2009 product.

The Rave Is Over

What happened at Entellium, and what it means for businesses.

CRM on Twitter: November 2008

The financial crisis -- and the customer service issues it raises -- makes itself felt on Twitter.

Gamer-Influenced Design Games the System

An update to the ongoing story of Entellium's self-destruction.

CRM on Twitter: October 2008

Customer experience tales across the Twitterverse.

The 2008 CRM Market Awards: Market Leaders -- Sales Force Automation

Some things don't change: The continuing trend toward "SFA plus something more" is accelerating, and Salesforce.com takes the title once again.

The 2008 CRM Market Awards: Rising Stars -- Twitter

Getting customers all a-twitter.

The 2008 CRM Market Awards: Influential Leaders -- Paul Greenberg

The Herald: Paul Greenberg -- chief customer officer, BPT Partners; president, The 56 Group.

CRM on Twitter: September 2008

The twitterverse opens up on open-source CRM.

CRM on Twitter: August 2008

Some recent tweets about CRM software.

A Code Win Doesn't Blow

CRM is all over this year's awards for programming excellence.

Entellium Builds a CRM Suite to Rave About

The vendor launches two new products for its Rave suite aimed at "true" small businesses, and hooks up with Boomi as an integration partner.

CRM on Twitter: July 2008

The microblogging site is rapidly becoming a destination of choice for the Web 2.0-savvy, and users of Microsoft Dynamics CRM 4.0 are certainly among them.

CRM on Twitter: June 2008

As Twitter, the microblogging site, explodes in popularity, CRM has become a common topic. To bring the Web 2.0 world full-circle, we'll be highlighting a few choice tweets.

Entellium Simplifies with Simplicity

An upgrade to the company's suite of CRM and sales force automation software aims to extend the relationship between sales and technology.

The 2004 Influential Leaders

In alphabetical order, the winners are...

Entellium Bucks On Demand

The company releases a wireless SFA product based on new smart-client technology, not a Web browser, and upgrades its hosted suite.

Intuit Owns the Back End

A report on ERP and accounting software places the QuickBooks publisher at the head of the SMB segment; Microsoft and Oracle have pull with the midmarket.

Let the Games Begin!

We can learn a lot from our pastimes...or not.

Entellium Is the Rave

The vendor delivers Usability Release 2006, the latest update of its on-demand CRM suite, and is getting set to release Rave CRM, a sales optimization application featuring offline synchronization.

Transparency

Web 2.0, social media, customer feedback, conversations. Transparency is the new currency in CRM—but are you really ready to let your customer behind the curtain?

SFA Vendors Come and Go in Gartner Magic Quadrant

Magic Quadrant for SFA '08: Gartner's latest sales force automation report shows some movement, including some dropouts, as the research firm focuses on big business; Oracle and Salesforce.com top the field.

Wouldja Look at That?

Vendors and users both now have an unprecedented degree of control over what a CRM application can look like. How should that power be used?