Oracle announced October 24 that it will buy RightNow Technologies, a provider of cloud-based customer service, for $43 per share, or approximately $1.5 billion net of RightNow's cash and debt.
The deal, which analysts are describing as a surprising move, is expected to close by late 2011 or early 2012.
Founded in 1997, RightNow is headquartered in Bozeman, Mont., employs more than 1,000 people, and serves nearly 2,000 organizations worldwide. Its Customer Service Cloud and RightNow CX suite help organizations deliver exceptional customer experiences across call centers, the Web, and social networks.
"Oracle is moving aggressively to offer customers a full range of cloud solutions, including salesforce automation, human resources, talent management, social networking, databases, and Java, as part of the Oracle Public Cloud," said Thomas Kurian, executive vice president of Oracle Development, in a statement. "RightNow's leading customer service cloud is a very important addition to Oracle's Public Cloud."
The move to buy RightNow comes less than a week after Oracle announced plans to acquire Endeca Technologies, a provider of unstructured data management, Web commerce, and business intelligence solutions, for an undisclosed amount.
Based in Cambridge, Mass., Endeca provides products that enable companies to analyze unstructured data and retrieve business intelligence using its core technology, the MDEX engine.
Oracle has its own data management product, called Secure Enterprise Search (SES), which is able to sort through unstructured data but, as analysts point out, has limited capabilities.
Kurian referred to a "changing data environment" in which the combination of Oracle and Endeca would be extremely compelling. "Together, we will provide best-in-class technology to manage structured and unstructured data together; business intelligence tools to analyze structured and unstructured data together; and a broad suite of packaged applications which extends the value of unstructured data into ERP, supply chain, CRM, EPM, Web commerce, and specialized applications," he said.
By acquiring Endeca, Oracle appears to be acknowledging the need to pursue the unstructured data market, notes Nick Patience, research director of information management at 451 Group. "For years, Oracle has championed the use of relational databases, but now they're finally acknowledging that not everyone is on a relational database and they need a company like Endeca, which has a mix of enterprise search, analytics, and e-commerce management [for dealing with unstructured data]," he says.
Whit Andrews, a vice president and distinguished analyst at Gartner Research, says the Endeca acquisition makes sense for Oracle. "Oracle is more agile in its business intelligence solutions, but it is also looking for ways to increase its e-commerce footprint, which makes this acquisition interesting," he says. "There's no reason to think that Endeca won't be a huge asset."
Other analysts are a little more skeptical when it comes to Oracle's acquisition of RightNow.
Esteban Kolsky, principal and founder of ThinkJar, says the deal was unexpected and might have been triggered by a few factors, not the least of which was Salesforce.com's acquisition of Assistly, a provider of customer service help desk technology built for the cloud, for approximately $50 million in mid-September.
Assistly lets small companies and emerging businesses set up and deliver social customer service in minutes over a range of channels, including Facebook, Twitter, Web chats, email, and phone, all from one interface. Companies pay for the service by the hour. For Salesforce.com, the acquisition further expands its reach into the small business space. And as part of the Salesforce.com Service Cloud family, Assistly customers that continue to grow will have the option to migrate to other Service Cloud products and services over time, according to George Hu, executive vice president of platform marketing and operations at Salesforce.com.
Salesforce.com already has about 17,000 customers using its Service Cloud applications, and the deal gives it potentially millions more, considering the number of small businesses in the country, Hu explained during the conference call announcing the acquisition.
Kolsky adds that Oracle's decision to acquire RightNow Technologies should be monitored during the next two to three years "to see if it develops into something.
"I am not quite sure yet it will, and I am very concerned about the technical integration issues as well as coexisting with other applications already in Oracle's bag-o-tricks," Kolsky says.
Paul Greenberg, managing principal of The 56 Group and author of CRM at the Speed of Light, also questions the wisdom behind the RightNow acquisition. "While I thought that Endeca and InQuira were smart acquisitions by Oracle, I'm not really sure about how smart this one is," he says. "On the plus side, RightNow has been around a long time, and the CX platform is a solid offering on the market…. Honestly, though, I didn't think that Oracle was that needy in the on-demand customer service offerings via Oracle CRM on Demand, which was more than adequate though, granted, not nearly as strong as RightNow. Additionally, with [Oracle CEO] Larry Ellison's recent railing against multitenancy at Open World 2011, I'm a bit surprised that he bought one of the leading advocates of multitenancy with a cloud offering based on it."
Despite his reservations, Greenberg says he hopes the acquisition will prove fruitful. "I hope it works because I want the industry to succeed," he says. "But there are a lot of factors at play in this one that make me less sure of its success, though if it succeeds, I will be glad for both of them."
Other acquisitions in the past few weeks have included the following:
- Just two weeks after closing its deal to acquire VoIP and unified communications technology provider Sipera,Avaya on October 20 announced it has acquired Aurix, a provider of speech analytics and audio data mining technology, for an undisclosed amount. Aurix's technologies, which include a phonetic audio search engine, will be incorporated into Avaya's contact center and unified communications portfolios. The first products incorporating the new technology will likely be available in the first quarter of 2012, according to an Avaya spokesman.
- Alcatel-Lucent announced October 19 that it has received a binding offer of $1.5 billion from a company owned by private equity firm Permira for the acquisition of its Genesys Telecommunications Laboratories business. Genesys is a recognized leader in customer service software and contact center solutions for enterprises. Genesys will continue to enhance its core product portfolio and strengthen its offering in the growing areas of cloud computing, analytics, workforce optimization, process workflow, and social engagement.
- HP on October 3 acquired control of Autonomy in a stock deal. Autonomy's software powers more than 25,000 customer accounts worldwide and, as part of HP, will provide high-value business solutions to help customers manage the explosion of unstructured and structured information. Autonomy offers solutions that are complementary across HP's enterprise offerings and strengthens the company's data analytics, cloud, industry, and workflow management capabilities.
- NICE Systems on September 25 acquired Fizzback, a provider of voice-of-the-customer (VoC) applications, for approximately $80 million. By adding direct customer feedback with the Fizzback solution, NICE enhances its customer experience management and workforce optimization solutions by combining on one platform the VoC from direct, indirect, and inferred feedback dimensions.
- IP telephony provider 8x8 on September 16 completed its acquisition of Contactual, a developer of virtual call center solutions, in an all-stock transaction. The deal will enable a deeper level of integration between 8x8's suite of services and Contactual's remote customer service technology, which 8x8 has been reselling since 2007. The acquisition will allow 8x8 to produce a light version of Contactual's software that strips out enterprise-level functionality for smaller customers.