Pegasystems Collects Chordiant for $161.5 Million

There was a lot of excitement on the line during this morning's conference call announcing Pegasystems' acquisition of Chordiant. "We are excited about this acquisition because it will extend Pegasystems' ability to serve the needs of CRM customers, which we see as one of the most strategic opportunities as we go forward," said Pegasystems founder and chief executive office Alan Trefler. One software company may have been less than joyful by today's news, however. CDC Software, the company that placed a low bid on Chordiant ($105 million) in early January and was rejected, sold its stakes in Chordiant (approximately 1.3 percent of Chordiant's 30.4 million shares) soon after the deal fizzled.

The business process management (BPM) industry has seen its share of activity as of late. IBM acquired Pegasystems' competitor Lombardi in December and Progress Software purchased Savvion for its BPM software in January. Trefler said his company is increasingly doing work in the contact center and he certainly doesn't see that slowing down -- especially now with the predictive analytics and marketing capabilities it gains with Chordiant. "The call center is probably one of the most complex business processes out there," points out Forrester Principal Analyst Suresh Vittal. "From that standpoint, there's a natural fit." What Vittal says he finds most interesting is the possible combination of Chordiant's decision management engine with Pega's process automation. "This is truly the first time I'm seeing the automation of decision management," Vittal says.

Vittal belabors his point: "If we agree that customer channels are fragmented and there are numerous decisions points with the brand, the coupling of automation and EDM allows you to manage the plethora of decision points and allows the business to use data and analytics to make better decisions about the customer."

Trefler admitted that integration work takes time, but he said he anticipates that Pegasystems will have integrated offerings this year.

Trefler and Chordiant Chairman, President and CEO Steven Springsteel stressed the companies' overlapping customer base, which involve mostly large, global organizations. Trefler said that the Pegasystems' process automation technology coupled with Chordiant's predictive solutions and customer experience management expertise "will play beautifully." "Pegasystems' strength has been very much about automation. we are good at making it easy to automate a process," Trefler elaborated. "Chordiant has focused a lot on the customer conversation and how do you make sure the right thing is said and the best product is offered. We think that will integrate extremely well."

The acquisition also presents Pegasystems with a chance to expand in a number of verticals where Chordiant has a firm footprint including financial services, healthcare insurance, and telecommunications. Trefler discussed how the two systems compliment one another by using joint customer Citibank as an example. Chordiant is the standard desktop Citibank is deploying in its credit card business, Trefler said, and Pegasystems is responsible for handling the processes on the back end. For instance, if a Citibank customer calls into the credit fraud department, the call is handled by a representative using Chordiant, then when the customer requires certain types of processes, Pegasystems handles the question and closes the loop. 

When asked about the possibility for social networking integrations, Trefler assured listeners that social capabilities are coming soon. "We were already very invested in bringing social capabilities to the notion of the customer experience and the way people do their business process integrations," he said.

The acquisition is charting new territory, Vittal says. "It's embarking on this uber category of automation with a strong customer focus."

CDC executives were unavailable for comments, according to a company spokesperson.

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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