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Accel-KKR Purchases Kana
A private equity firm's acquisition moves the customer experience management player out of the public sphere.
Posted Jan 7, 2010
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As announced in late December, private equity firm Accel-KKR closed an acquisition on customer experiences management solution provider Kana for just under $41 million. Kana will continue to operate under its own brand, but will no longer be public. "As a public company, and with the economy as it was last year, we had customers questioning our financial viability," says Keith Goldberg, Kana's vice president of marketing. "That all goes away." Customers need not worry about Kana's financial viability and whether or not the roadmap is financially secured, Goldberg adds.

John Ragsdale, the vice president of technology research for the TSIA, says that in conversations prior to the closing of the acquisition, Accel demonstrated a keen interest in furthering Kana's vision. "[Accel-KKR] did more due diligence on the industry trends and drivers than I've seen from most venture-backed firms, and they honestly felt there was a lot of money to be made with Kana technology and services," Ragsdale says.

In the spring of last year, Kana announced a strategic alliance with IBM in order to bring to market a customer service solution based on a collaborative services-oriented architecture (SOA) using open technologies from both companies. Goldberg insists even with the Accel-KKR acquisition, the alliance with IBM will remain untouched. "Accel-KKR looked at IBM as being a huge asset," Goldberg says. "We expect to continue and grow that relationship." Ragsdale does note that although Accel was very mindful of the tight development relationship between Kana and IBM, he wouldn't be surprised to see a "cooling" of the IBM relationship on the implementation side. "With the attractive margins on services, I would think Accel would want to take ownership of as much consulting as possible," he says.

Dr. Natalie Petouhoff, a senior analyst at Forrester Research, says that the addition of the IBM SOA layer in the Kana product allows customer service and CRM professionals to be able to make changes more quickly and easily to the system and thereby be more responsive to customer's needs and the marketplace. "This is a very important aspect of the infrastructure that can dramatically affect the customer experience," she says.

Petouhoff speculates that there was a bit of lag time in getting Kana's version with the new IBM SOA layer out the door - and that may in fact have hurt the vendor's ability to win new business. However, she adds that it's a crucial part of the software -- an aspect that contributed to Kana's leadership positioning in Forrester's evaluation of contact center platforms. In other accolades, the TSIA recently presented Kana with a Recognized Innovator Award for its success with a major North American retailer of consumer electronics.

In May, 2007, Kana acquired management consulting and systems-integration firm eVergence. "With eVergence, Kana's positioning has shifted away from touting the latest features to put more emphasis on business process modeling, user interface design, ease of customization and integration," Ragsdale says. "Bringing eVergence on board was a key element in Kana moving from a customer service vendor to a world class enterprise software provider."

Moving forward under the Accel-KKR umbrella, Goldberg conveys that for Kana customers everything shall remain business as usual. The main difference is that Kana will no longer be publically traded. "We are now private but within a billion-dollar portfolio," he says. "Being able to be private really gives us the ability to completely focus on our experience strategy and rolling out our new offerings and giving our customers a roadmap for the future."

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.

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