Oracle RightNow acquisition promises CRM, SaaS, and more
Oracle has continued its billion-dollar acquisition pattern by buying RightNow Technologies for approximately $1.5bn. The acquisition makes good business sense for Oracle both for the stated reasons (adding customer service capabilities to Oracle Public Cloud, and enhancing Oracle’s customer experience management capabilities) as well as the unstated opportunity to use RightNow’s artificial intelligence-based customer service technologies in applications far beyond CRM. Oracle brings much-needed scale, resources, and experience to RightNow’s industry strategy, particularly in higher education and the public sector, but competing solutions in some verticals will be distracting to end users. Oracle’s acquisition of RightNow is also a key plank in the Commerce and Customer Experience Management platform that Oracle has been constructing during 2011 with the additional acquisitions of ATG, Fatwire, Inquira, and Endeca. Overall, the acquisition represents an interesting opportunity for RightNow and existing Oracle clients, and they should therefore neither be concerned about the acquisition nor consider an exit strategy.
The deal and its implications for traditional CRM
Oracle announced on 24 October 2011 that it had entered into an agreement to acquire RightNow, a cloud-based customer service application company, for approximately $1.5bn net of RightNow’s cash and debt. RightNow’s Customer Service Cloud helps organizations deliver customer experiences across call centers, the Web, and social networks.
Ovumâ€™s analysis is that Oracleâ€™s acquisition of RightNow is a smart move that will strengthen Oracleâ€™s customer service and SaaS-based offerings.
RightNowâ€™s offerings can be split into two broad components: case management/service tracking, and artificial intelligence (AI)-powered customer service to improve self-service and service staff effectiveness. The service-tracking aspect is the least interesting because it provides relatively undifferentiated functionality. The AI-based customer service component is the more interesting aspect. Apart from being part of a stand-alone product, the AI customer technology can be incorporated into all of Oracle’s existing CRM products as an underlying technology to enhance the functionality of the entire CRM portfolio. Another very useful aspect is the social media plug-in that surfaces the self-service through social networks such as Facebook.
Oracle will take RightNow’s progress with industries to the next level
Oracle brings much-needed scale, resources, and experience to RightNow’s industry strategy, but competing solutions in some verticals will be distracting to end users.
Ovum anticipates that clients of RightNow, which is based in Bozeman, Montana, will experience a significant uptick in the level of industry-specific support as a consequence of the Oracle acquisition. This will be particularly the case for colleges and universities, where RightNow has been especially successful, because they will now have membership access to the Higher Education User Group (HEUG), a third-party organization associated with Oracle, which is well-established, large, covers a broad set of products and services, and has global reach. In addition, RightNow has made considerable progress with the US federal government in terms of demonstrating the utility and security of its cloud-based solutions. This will be a strong complement to the continuing success of Oracle’s CRM practice in the global public sector. In fact, Oracle has remarked repeatedly that the public sector is the fastest growing market for its CRM solutions.
However, Oracle will now have three CRM solutions targeting higher education, and as least as many for the public sector, and there may therefore be some short-term to medium-term anxiety within the enterprise community about Oracleâ€™s product development and support strategy. Ovum, however, does not anticipate any negative material impact on customers, and the improved access to industry-specific resources will more than compensate for any potential ambiguity with regard to long-term product strategy.
Key for commerce and customer experience management strategy
Oracle’s acquisition of RightNow is also a key plank in the Commerce and Customer Experience Management platform that Oracle has been constructing during 2011 with the additional acquisitions of ATG, Fatwire, Inquira, and Endeca. These represent “best available” technologies in their respective areas and are clearly part of a strategic roadmap for Oracle in this space.
The challenge will be for Oracle to integrate these assets into a seamless whole, a process that can typically take up to two years to complete. Oracle will also need to dovetail RightNow’s service cloud into its recently announced Oracle Public Cloud strategy.
Beyond CRM and SaaS
Ovum has no reason to disagree with the publicly stated reasons for the RightNow acquisition (adding customer service capabilities to Oracle Public Cloud, and enhancing Oracle’s customer experience management capabilities) because these make good business sense. However, there are implications for the RightNow AI technology beyond customer service. There are a number of Ovumâ€™s IT Super Themes that could be addressed by enterprise applications powered by the AI functionality, including Connected Society, Consumerization of IT, IT-enabled Business Innovation, and Mobility. In all of these areas there is a need to broaden the constituencies served by applications, to automate certain decisions or actions, and to enable management by exception. RightNowâ€™s AI technology could address all of these.
Ovum predicts that Oracle will retain the RightNow brand, but restructure the RightNow R&D organization, moving elements into existing Oracle R&D teams that will focus on specific functionality such as CRM, social media, and mobility. The important questions surround what it will do with the AI expertise. If Oracle is smart, it will create a new core R&D team around this capability, which will feed not only the CRM portfolio, but also ERP, supply chain management, sustainability, and other applications. This will give Oracle an important weapon in the mega-vendor fight with IBM and its Smarter Planet initiative.
From a marketing point of view, Oracle could extend the RightNow brand from an application to a premium technological feature. In a manner similar to the “Intel Inside” campaign, Oracle could develop a “Powered by RightNow” campaign to differentiate enterprise applications that have been enhanced with the AI technology.
Enterprise and public sector IT: steady as you go
Oracle has demonstrated, in the face of significant skepticism, that it will continue to support and extend enterprise applications it has acquired. As a consequence, IT managers in negotiations with RightNow need neither delay nor cancel any pending deals. There is always the risk, however, that RightNow’s customer service tracking component will be eliminated, so IT should incorporate contract terms and condition clauses that will protect the company if Oracle does choose to keep the technology but eliminate the application aspect.
For more information
Ovum clients are encouraged to schedule an analyst inquiry to discuss the implications for their specific situation.
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