ATG Acquires Primus in an All-Stock Deal

Art Technology Group (ATG) plans to acquire Primus Knowledge Solutions in the fourth quarter of this year. The purchase--a stock swap--values Primus at roughly $30 million. ATG's current strength lies in customer-facing, transactional systems, and the company's e-commerce technology is widely deployed among many large retail, service, and hospitality firms. Primus has enjoyed success in internal knowledge base and customer-facing self-service applications. ATG deployed its own self-service technology earlier this year, but the decision to buy Primus was made because building a top-class customer interaction system for service proved challenging. "You really have to be rocket scientists to get it right, and [Primus] has a great core technology in search," says Cliff Conneighton, ATG senior vice president of marketing. "It's a technology which is not [a] matter of doing the programming, but having the right intellectual property, and it would take us a while to get there [without Primus.]" "[ATG's] adaptive self-service was not best-of-breed," says Esteban Kolsky, a Gartner research director. "They were looking for a good company to acquire, and Primus was the leader in informational [self-service.]" "We're not trying to compete with Siebel," Conneighton says. "What we're doing [with the acquisition] is not intended to face or serve the management of the company, but intended to present an [improved] user experience to the customers." Primus's technology already integrates with popular CRM systems, including those from Siebel and PeopleSoft. ATG touts the benefits of bringing together the offerings of both companies, but cost savings are clearly a concern for both firms, which have suffered losses and revenue drops in recent times. The company expects to save more than $10 million in annual expenses, bringing ATG closer to its stated goal of profitability and positive cash flow next year. Kolsky says that the acquisition should give ATG the renewed direction it needs for a strong showing. "This is the strategy for the next year to two years. They could make small acquisitions to supplement, but I don't think they should do that for the next 12 months while they figure out what they have" in the combined company. Chris Hall, vice president of product marketing at ATG and Primus competitor KANA, says that while Primus's acquisition was expected, the fact that ATG is the buyer is "surprising, but we see potentially other smaller vendors...being acquired, and see potentially PeopleSoft or Siebel next to buy" a customer-facing knowledge-base vendor. "The technology integration will begin immediately, and [Primus] customers will have exactly the same capabilities they have now," Conneighton says. Related articles: MarketWatch: Improving Self-Service Results With Search Capabilities The Week In Review: July 2, 2004 10 Strategies for Customer Service Success