RightNow Technologies is no stranger to social media. Just a few months ago, the on-demand CRM company unveiled its Cloud Monitoring functionality, which enables customer service representatives to follow discussions on third-party social networking sites such Twitter and YouTube. And RightNow also has a history of partnering with community platform providers such as Lithium Technologies. This time around, however, RightNow is bringing social capabilities in-house, announcing late Tuesday an acquisition of social networking company HiveLive for $6 million in cash.
"Long term, these social networking solutions can not exist as silos," said RightNow's Chief Executive Officer Greg Gianforte in a conference call Tuesday evening to announce the acquisition. According to RightNow, the deal is expected to be accretive to earnings in the fourth quarter of 2010. Gianforte said during the conference call that the HiveLive solution will be available to RightNow customers as soon as the deal closes — likely at the end of next week — and that the integrated offerings will be rolled out beginning in late November.
HiveLive, a software-as-a-service provider of online communities, enables groups to create their own sponsored communities fairly rapidly. The technology provides tools such as wikis, forums, blogs, proposal-rating systems, and user-generated content to connect employees with consumers. "Tapping into the world of company-built communities is not only a logical extension of our core mission but also represents a significant market opportunity that equals Web self-service in the contact center in terms of importance," Gianforte said during the conference call.
"We have spent a long time reviewing probably 100 different social networking companies," says Jason Mittelstaedt, RightNow's chief marketing officer. "It's a pretty crowded space with a lot of different teams and technologies out there." What attracted RightNow to HiveLive, he says, was an expansive view of the technology and its capabilities. "Many social networking companies are constrained by a forum-centric view of community and what really stood out was the breadth of [HiveLive's] social platform," Mittelstaedt says.
That sentiment echoes the position Gianforte laid out in the Tuesday conference call: "This is much more than a simple forum," he said about HiveLive's technology, citing a 2008 Gartner "Cool Vendor" report that not only praised HiveLive's innovative product but also suggested that "[w]hat makes HiveLive very interesting is its configurability." Gianforte noted during the call that, along with similarities between the technology stacks of the two companies, he expects HiveLive's configurability will aid in the integration process.
While noting that the HiveLive community solution will be sold separately, Mittelstaedt also underscores the technological alignment between the two companies. "Because the connection points are so strong…what this allows us to do is very easily add the community and social elements to the knowledge interaction that is already delivered [within RightNow]," he says. "It's a natural extension." It's also something much in demand among RightNow's users, he says. "Every consumer-oriented business has social and community on their agenda. Percentage-wise, virtually all of our customer- and prospect-base is interested in this."
That demand had to met, and had to met quickly, which is why Gianforte made clear during the conference call that having RightNow buy an existing community-platform solution rather than build its own was the only logical decision. "It would have taken us years to develop the capability," Gianforte said, whereas HiveLive has spent the past five years honing its community tools.
John Ragsdale, vice president of research with the Service and Support Professionals Association, says that RightNow's acquisition of HiveLive tackles one of the "big challenges" caused by the market's current return-on-investment focus. "[Companies] have got these great knowledge bases and discussion forums, but the two aren't related in any way," Ragsdale says. "You're not helping resolve the issue if you're just creating one more content source that's not indexed or searchable from anyplace else in the universe." Having an in-house community offering, he adds, will enable RightNow to help users create communities as more of a managed channel within the realm of support.
Ragsdale says he has no doubt the RightNow customer base is definitely interested in the offering — in fact, he recalls hearing RightNow customers express the desire for integrated community capabilities at the vendor's user conference several years back. "And this was way before you heard of it from other vendors," he says.
RightNow's first foray into the community-support space came in the form of a close partnership with Lithium Technologies. "It was the first example of how to do the integration extremely well," Ragsdale says. "It really was a blueprint for other vendors on how you should integrate this." Ultimately, however, companies want to own this technology outright, he says. "You will see CRM vendors trying to bring in more capabilities. To see someone as large as RightNow, and with the marketshare that RightNow has, make this move will really drive the point home."
Michael Fauscette, an analyst with IDC, makes a similar point in a blogpost about the potential competitive pressure RightNow's move might create: "[T]his could be the start of an acquisition frenzy among established software vendors that need to add significant social capabilities to their products or risk losing an edge with emerging social businesses [that are demanding] enterprise-class social solutions," he writes. "Some of the larger software vendors are starting to build out some social capabilities, but for a real jumpstart they will most likely look to the current innovative start-ups which are, I might add, very reasonably priced in our current economic environment (and not likely to get any cheaper)."
Calling RightNow's move "a smart idea," Denis Pombriant, founder and managing principal at CRM consultancy Beagle Research Group, says the deal "shows RightNow is moving to higher-quality customer interactions…. By getting social media, RightNow has the opportunity to delve deeper into customer needs and attitudes which will help improve their customers' service products."
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