Jacada Sells Application Modernization Business
Jacada, provider of unified desktop and process optimization solutions for customer service operations, checked off the top of their 2008 New Year's Resolution list Tuesday with its sale of its application modernization business to Software AG, a Europe-based business infrastructure software company, for $26 million.
This deal finally allows the company to fully devote itself to its call center solutions business--a long-term goal of the company due to the fact the call center solutions business has grown more than 60 percent per year in the past three years, according to statistics released by the company. "About four years ago we began focusing on the customer service/call center market because we saw a tremendous opportunity to help call centers by simplifying the desktops within the call centers," says David Holmes, Jacada's executive vice president of global marketing. "We delivered new technology on top of existing technology, and [the call center solutions business] really has become the sole focus of the company over the past two to three years. With this deal, we are now 100 percent focused on the call center space."
Jacada and Software AG entered into the agreement on December 19, 2007, in which Software AG agreed to pay $26 million in cash to acquire Jacada products and related customer contracts. The products Jacada sold to Software AG include:
- Jacada Terminal Emulator;
- Jacada Studio;
- Jacada Innovator;
- Jacada Interface Server; and
- Jacada Integrator.
Under the terms of the transaction, Jacada retains the right to develop, market, sell, and support Jacada Interface Server and Jacada HostFuse in support of its call center solutions business as well as the intellectual property rights for Jacada WorkSpace and Jacada WinFuse. Holmes stresses the beauty of the deal is Jacada still has everything it needs for its call center solutions business. "We saw this as an opportunity to sell off old business, monetize and capitalize on that investment," he says. "However, we continue to have all the technology we need to go forward."
Sheryl Kingstone, director of enterprise applications at Yankee Group, says Jacada's deal is the right move for the company at this time. "They get $26 million and use of assets, technology, and money to focus more on contact center, where all their new deals are anyway," she explains. "The only thing is if all of a sudden [the] market changes and they want to shift focus away from contact center market, they've lost maintenance strength. But if you're living off maintenance base you're eventually going to die anyway."
Sheila McGee-Smith, president and principal analyst of McGee-Smith Analytics, also believes Jacada made the right call. "Twenty-six million dollars is a nice infusion of cash," she says. "With that, Jacada can now do marketing or build [a] sales force that allows them to expand its footprint dramatically in a more focused way."
Holmes also described this deal as a "true win-win" for Software AG. Software AG already has a very large focus on application modernization and application development in large systems or enterprise applications; they now have a large integration, Web services, and SOA practice. Holmes says the Jacada software will be easy for Software AG to incorporate into its arsenal and support customers. "This is a good match in terms of organization and the type of customers they serve," he explains.
Now that Jacada is exclusively focused on its call center solutions business, it can show its investors and customers worldwide just how important that market has become to the company. It can also offer them a preview of what Jacada has to offer in the coming year, including new innovations and partnerships beyond the global reseller agreements Holmes says Jacada signed with Accenture and IBM Global Services. "There will be a lot more strategic wins for us in this area [call center solutions]," Holmes says. "You'll see us to continue to innovate in this area." McGee-Smith agrees with Holmes' belief of continued strategic partnerships. "Without the unrelated businesses, it is an easier acquisition candidate for a company like Avaya or Cisco."
While the deal may make some believe contact center providers are moving away from offering a "one-stop shop" of CRM solutions, Kingstone says the contact center market never behaved that way. "The CRM application market has consolidated, but the contact center itself is usually using multiple applications--there's never the ability to go to one vendor," she says. "All the different applications that agents use, like CRM, has turned out to become what I call a silo on the agent desktop. People are now realizing this and that's where these solutions are focused.
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