I Bendata, Take Thee Goldmine...
Is the Bendata/GoldMine merger a match made in heaven, or a marriage of convenience?
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Vance Brown, CEO of Bendata, almost waxes poetic when he speaks of the recent merger between his customer support software company and midmarket CRM golden child GoldMine Software. "The cultural fit of the two companies is amazing," says Brown. "It's as if this were a prearranged marriage."

While many in the industry might agree with Brown that the two companies are similar in some ways and that their union shows promise, others suggest that this "prearranged marriage" is actually a strategic defensive move, one made in reaction to increasing pressure from high-end CRM vendors. "I think these companies were coerced to form this merger," says Judy Hodges, research manager at International Data Corp. "One of the key drivers of it is that Siebel introduced a strategy to give its software away for free to obliterate the low-end vendors. In the face of this, as independents, neither GoldMine nor Bendata would have survived, or they would have found it a difficult environment in which to go forward."

As reported earlier in SFFA, Siebel Systems, the king of the high-end CRM hill, recently made a play for mid- and low-market share-a market in which Los Angeles-based GoldMine is a major player-by giving away its Siebel Sales software free to anybody inclined to use it. Siebel's strategy, says Hodges, is to both increase name recognition and eventually tie independent users into the Siebel system of products. "What Siebel is doing is a branding exercise in the hope that individual Sales users will need to be networked," says Hodges. "With this strategy, Siebel is encroaching on GoldMine's turf. This appeared as a significant threat to GoldMine moving forward as an independent. While the company has been recently successful, I think it would have shown signs of slippage because it didn't have the resources to compete."

Enter Bendata, a Colorado-based subsidiary of South Africa-based Ixchange Technology Holdings Ltd., and, after $83 million in cash and stock, GoldMine's new owner. Bendata and GoldMine are similar in sales, size and need, with each possessing several strengths lacking in the other. "GoldMine has brand and name recognition and a very broad VAR channel," says Chris Fletcher, research director for the Aberdeen Group. "Bendata has a very well-recognized customer support desk [product] and a strong international presence. This seems to be a merger of equals with good synergy and good division."

The newly merged company, which will operate under the name GoldMine Software Corporation, hopes to solidify its midmarket position by offering an integrated SFA/customer support/help desk technology. More importantly, though, it will have the combined resources of both Bendata and GoldMine, plus those of Ixchange Technology-which will own 80 percent of the new company-to draw upon in the future. "I don't think the goal of the merger was so much the joined product lines," says Hodges. "The combined resources are what these companies needed."

While in the long run this strategic union may prove advantageous to all involved, according to Fletcher, in the immediate future, the new GoldMine faces hurdles common to every merger. "They have to take technologies developed by two different organizations and make a seamless out-of-the-box solution," says Fletcher. "Their products are built on common platforms, but there are still different architectures that reside in there and they have to put those together. That is always a challenge.

"Furthermore, organizationally, Bendata and GoldMine are alike in some ways but different in others. GoldMine has VAR, and Bendata is direct sales. It is often a tricky thing to manage differing sales channel processes," Fletcher adds.

It remains to be seen if this corporate marriage will ultimately provide the resources necessary to compete as Siebel and other deep-pocket, high-end vendors target the mid- and low-end markets. But fiscally, the new GoldMine is currently ahead of other mid-market vendors. The combined 1998 Bendata/GoldMine revenues totaled $52.2 million. This figure dwarfs the revenues of the next largest midmarket CRM vendors, Onyx, which enjoyed 1998 revenues of $31 million, and Pivotal, which reported $20 million in revenues for the year. Such numbers inspire Brown to state that the company sees itself now as "the gorilla of the midrange."

"There hasn't been a Siebel in this market before," says Brown. "Now there is."

Not everyone, however, buys this assessment. "That's a rather biased opinion," observes Hodges.

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