Peregrine Makes Its Mark in Customer Support
2001 may not have been a breakneck year for billion-dollar mergers, but the art of the deal yet lives. Acquisition-hungry Peregrine Systems of San Diego, Calif., a specialist in corporate asset management systems, agreed to purchase help desk software pioneer Remedy of Mountain View, Calif., in a deal valued just under $1.1 billion in cash and stock.
The move is a somewhat surprising end to independence for 11-year old Remedy, a lauded pioneer of customer support and help desk technologies. The company's recent attempts to branch out may have clouded its vision, however. Despite world-class adoption of its help desk technology, Remedy failed to make a lasting impression in the broader CRM suite market, says Meta Group Vice President Liz Shahnam.
still, Peregrine, a specialist in B2B transaction automation and asset lifecycle management, hardly took home damaged goods. "Remedy was absolutely the dominant player, especially at the midmarket," Shahnam says. Thus, Peregrine was largely motivated by a desire to protect its own leading interests among major enterprises against a rival that might move upstream, she says. "The acquisition eliminated Peregrine's only major competition and also gives Peregrine a VAR channel into the midmarket."
Peregrine has cited a desire to tap Remedy's rich midmarket presence, as well as its application development environment and expected $300 million in 2001 revenues. The fate of the CRM application suite is somewhat less clear, however. In a Forrester Research report describing the acquisition, Laurie Orlov notes that unnamed Peregrine sources have hinted that Remedy's CRM suite has a limited shelf life. Shahnam says it is unlikely that the acquisition is related to Peregrine wanting to get into CRM.
Peregrine was reluctant to make any strong statements on the future of the Remedy CRM technology. "I would emphasize that our CRM customers will continue to be supported," says Bill Keyworth, vice president of business strategy at Peregrine. "I think we'd like to withdraw from the CRM term and focus on how we're delivering customer support capabilities, which is a subset of CRM." Keyworth notes that "an enormous amount" of Remedy CRM customers focused specifically on customer support.
Orlov indicates that may be just as well, since new customers would have cause to worry about Peregrine's ability to advance a comprehensive CRM strategy. While the company has successfully penetrated a number of software markets, she claims Peregrine has not proven itself on the sell/service side or the partnerships required to sustain a viable CRM platform.
What Peregrine will benefit from is the easily customized support mechanism Remedy provides, along with the more rigid, process-enforcement technologies that have made Peregrine famous. Orlov indicates this will be a boon to Peregrine's efforts to fight off both CRM and e-procurement vendors eager to tap into the customer support and asset management markets. "Remedy gives Peregrine the platform to craft a full story that neither gorilla [i2 or Siebel] has."
Remedy may not be entirely ready to give up on comprehensive CRM, however. According to Larry Garlick, chairman and CEO of Remedy, the company's CRM development staff continues to work on the next edition of the suite, which he expects to be field-tested within Peregrine's own operations. "We hope to sell that to the Peregrine folks on an operational, marketing and support basis, and we assume they will adopt quite a bit," he says.