CRM

M2M to Acquire KNOVA

M2M Holdings has signed an agreement to acquire CRM provider KNOVA Software, in an all cash transaction valued at approximately US$47 million. The deal is expected to close at the end of the first quarter of 2007, subject to approval by KNOVA shareholders.

KNOVA provides a niche CRM application called Intelligent Customer Experience, which leverages adaptive search, guided selling and knowledge management functionality in the platform. Its customers include AOL, Ford, HP, Novell, McAfee and H&R Block.

Integrating With Onyx

According to M2M, which acquired Onyx earlier this year, KNOVA’s features are complementary to the mid market CRM vendor and will integrate easily.

“Leveraging Onyx’s leading service-oriented architecture and KNOVA’s existing application programming interfaces for customer relationship management integration, the two products can be quickly integrated with one another using Web services,” Jeff Tognoni, CEO of M2M Holdings said.

“In a short period of time, Onyx customers will be able to seamlessly enhance their application with sophisticated tools for the contact center, as well as with powerful Web-based self-service,” he said.

In general, it appears to be a good strategy for the firms, Rebecca Wettemann, vice president of Nucleus Research, told CRM Buyer. “Adding self-service capabilities to Onyx’s technology portfolio will give M2M a more complete CRM offering; there’s likely some upsell opportunities for KNOVA in Onyx’s customer base too,” she explained.

That said, the challenge for any vendor building by acquisition is in showing that the whole is greater than the sum of its parts. “The litmus test will be if M2M can deliver referenceable customers that are getting value from both solutions,” she added.

Crowded Middle Market

This may be difficult to achieve because the customer bases are skewed, suggested Marchai Bruchey, CMO of Kana. She noted that KNOVA was sold primarily into the enterprise space while Onyx was a pure mid market play.

Kana competed occasionally with KNOVA, Bruchey told CRM Buyer, but does not view it as a direct competitor, especially as it readies to launch a full on demand suite for the mid market in January.

The company has already launched a few on demand point applications, such as e-mail marketing management, according to Bruchey. In January, Kana plans to roll out an entire CRM suite incorporating these point applications and adding knowledge center and contact center functionality to the mix.

“There may be some opportunity for the KNOVA application in the mid market,” she conceded. “However I think this space is moving more and more towards on demand. That is where the growth is,” Bruchey concluded.

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