The deal may help U.K.-based Graham extend the global reach of its ciboodle CRM product, but analysts caution that growth may be more elusive in the United States.
Posted Apr 1, 2008
Partnerships and acquisitions continue to shape the CRM space -- not just in the United States, but internationally, as well. United Kingdom-based customer-oriented business software provider Graham Technology seems headed down that path, announcing today its acquisition by Sword Group, a global IT company, in the hopes of increasing its reach across the pond and worldwide. Terms of the deal were not disclosed.
Mike Hughes, managing director for Graham Technology, says that he expects his company will be able to leverage Sword's resources and widespread global reach to help drive sales of ciboodle, Graham's flagship customer interaction platform. "The whole [acquisition] makes sense for us," Hughes explains. "Geographical reach is very important, particularly in America, but also in the U.K. and Europe." (Sword Group has offices in 16 countries and employs more than 2,000 people, according to its Web site.)
Hughes says the deal was inspired by his company's desire for "financial stability and more reach," citing Sword's large professional services unit and its 2008 revenue forecast of 184 million euros (approximately $287 million) as other strengths Graham Technology will be able to exploit. He adds that the deal includes no branding changes at this time: Graham Technology will retain all of its employees, current management, and ciboodle branding.
With these expected benefits, the deal came together quickly -- Hughes says talks between the two companies began in February. "If you spend a lot of time [on acquisition talks], it is detrimental to business," Hughes explains. "What you really want to do is join up quickly, go forward, and generate and grow more business. That's why [the acquisition] happened as fast as it did."
Sword is mostly known for snapping up midsize businesses geared toward process optimization of different types, and views itself as a software-as-a-service (SaaS) vendor, according to Michael Maoz, Gartner vice president and distinguished analyst. Maoz says that the acquisition of Graham -- which he characterizes as specializing in large enterprise, on-premise offerings -- marks a departure from Sword's prior acquisitions. "Graham differs in that it is geared for large enterprise, not small enterprise, and goes after areas where there's more complexity," Maoz says. "One of the reasons [Graham] has [its solutions] on-premise is because there's so many integration points, they need to have visual processes for their client."
The departure from prior strategy should not worry current Graham Technology customers, according to Maoz. Potential clients, on the other hand, may need to pay close attention before moving ahead with a ciboodle purchase. "If you're a prospect, then you have to maybe extend your decision-making period for a few months until you can really see what is going to go on with Graham Technology," he says.
Maoz also suggests that potential customers find out if Sword plans to convert Graham Technology's offerings into a SaaS model to pattern it after prior Sword acquisitions or if ciboodle and other Graham products will remain geared toward large enterprise on-premise deployments. "If [Sword] decides they're going to convert [Graham's solutions] into a service offering for midsize businesses, they'll run into some difficulty in trying to pull that off because it's not anything that Graham Technology has a solid track record with," Maoz explains.
While Maoz agrees that the acquisition does give Graham more options and a broader overall reach, he contends that the move may actually damage the vendor's American expansion plans. "I don't believe it's going to have a positive impact compared to what they already had in place," he contends. "Graham Technology had a U.S. plan in place. In fact, [the acquisition] will likely slow Graham's plans for growth in the United States until they can synchronize with Sword and figure out what their go-to-market strategy will be worldwide."
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