The new company will take on a rapidly consolidating market for self-service and help-desk applications.
Posted Dec 28, 2004
The end-of-year rush of enterprise software mergers and acquisitions shows no sign of slowing. Two players in customer service technology, Kanisa and ServiceWare, announced their intention to merge operations by the end of the first quarter of 2005. The stock transaction gives the shareholders of ServiceWare, a publicly traded company, a stake of approximately 60 percent in the combined operation, which has yet to be formally named. The new firm will operate from Kanisa's California offices, with that firm's CEO, Bruce Armstrong, continuing in the same role for the joint operation. ServiceWare CEO Kent Heyman will be the new corporation's chairman, and Kanisa founder and CTO Mark Angel will lead technology development.
"Both Kanisa and ServiceWare believe that critical mass and profitability are critical for success in today's enterprise and CRM software market," says Ben Kaplan, Kanisa vice president of marketing and products. "This merger of two independently successful companies will give us an underpinning of strong technology [and]strong products, and [it] sets us up as a dominant player in service resolution management."
Painted as a merger of, at worst, near-equals, ServiceWare has traditionally focused heavily on help desk and other assisted service environments. Kanisa's strengths have historically been in automated and self-service deployments. Kanisa, the younger company, has made more marketing waves in recent years, but Allen Bonde, president of consulting firm ABG, says the move provides a prompt payoff to Kanisa's backers, while allowing its management team to continue along its established course. "There are a lot of similarities between the companies, and they have been selling to some of the same customers."
Although both companies are well known in their respective specialties, neither company is an industrial powerhouse. ServiceWare reported earnings of $11.5 million in 2003, and $13.3 million over the last four completed quarters. In a statement Heyman said he anticipates revenue between $25 and $30 million for the combined company. "It brings up questions of how they will now compete with larger players, such as Primus [acquired recently by ATG] and companies like Siebel and SupportSoft, and even KANA, which are focusing on this space now," Bonde says.
The ATG purchase of Primus and Siebel's recent acquisition of edocs are all part of a trend to bring knowledge management and customer support vendors into larger organizations. For now, Kanisa and ServiceWare intend to pool their resources and grow naturally. "This is still a viable specialty, but over time [knowledge management] is going to become a product set or a feature set of larger companies," Bonde says. "And I suspect we will be having this conversation again in the next few months as one of these [service] players combines with someone else."
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