Salesforce acquires InStranet; Will take it SaaS and better target call centers

Salesforce acquires InStranet; Will take it SaaS and better target call centers

Summary: Salesforce.com said Wednesday that it will acquire InStranet, which provides knowledge management software for call centers, and integrate its technology with its existing CRM customer service and support offering.

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Salesforce.com said Wednesday that it will acquire InStranet, which provides knowledge management software for call centers, and integrate its technology with its existing CRM customer service and support offering. Simply put, Salesforce.com is acquiring traditional enterprise software for $31.5 million and turning it into a service in an effort to target Oracle, SAP and Clarify.

In some respects, Salesforce.com is making a departure from its current playbook, which is to acquire SaaS companies and smaller firms that built businesses on its AppExchange or Force.com platform. This go round Salesforce.com is taking entrenched software, melding it into its SaaS lineup and creating something new. Salesforce.com and InStranet were partners on various integration projects. InStranet is used by 350,000 call center agents and counts TD Ameritrade, MySpace, HP and Qualcomm as customers. Those InStranet customers will also give Salesforce.com an avenue to sell more services.

Salesforce.com said InStranet's technology will become part of the Force.com platform as a service effort and be available in calendar 2009. Since InStranet isn't a SaaS provider Salesforce.com will have to devote a little time on the product integration.

According to Al Falcione, senior director of product marketing at Salesforce.com, the game plan is to use InStranet's Knowledge Base Dimensions technology and meld it with CRM data. The end result would be more effective call center responses. For instance, if I'm a wireless customer and typed in "dropped signal" into a self-service help site I'd typically get a bunch of answers to peruse. With the Salesforce.com-InStranet combination I'd get just one or two options because the service would know that I owned a Blackberry and was most likely asking about that topic.

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Falcione says that Salesforce.com sees an opportunity to go after call center products built on "1990s keyword search technology." Salesforce.com is betting that customers will want an integrated CRM-knowledge management package that can deliver answers over multiple channels. With InStranet, customers can categorize the knowledge base to filter out what Falcione calls noise--answers that clearly don't belong.

The rub: The demo that Salesforce.com gave me only works if a customer has the company's CRM service also. It's unclear how many InStranet customers use CRM tools from Salesforce.com rivals such as Oracle and SAP. Given that InStranet and Salesforce.com were strong partners it's possible that the customers overlap. However, InStranet's site lists Oracle (and its BEA and Siebel units) and Amdocs among others as partners. It'll be interesting to see if Oracle's InStranet partnerships last going forward.

More color on the deal is likely to emerge when Salesforce.com reports its second quarter earnings after market close. Wall Street is expecting earnings of 8 cents a share on revenue of $260.5 million. The InStranet purchase won't impact Salesforce.com's financial results.

Topics: Enterprise Software, Cloud

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  • Very much in line with what SaaS providers need

    The acquisition of a call center platform is very much in line with what is needed to deliver SaaS effectively. A robust SaaS delivery platform must include order provisioning, call center, metering and billing capabilities. Salesforce.com has recognized it and is filling the gaps. Astute observers will note that they are building an operational support system (OSS) very well known in the telecom industry.

    - Ranjit Nayak
    rnayak
  • Kudos to the Cloud Crowd for Re-Inventing the Wheel!

    One thing 30 years in the IT industry has taught me is that the more things
    change, the more they stay the same. Another is that the only memory we
    seem to access is short-term. Yet another is that techno-marketeers rely on
    that, so they can put labels like "revolutionary" and "innovative" on
    platforms, products and services that are mere re-inventions of the wheel
    ... and often poor copies at that.

    A good example is all the buzz about "Cloud Computing" in general and
    "SaaS" (software as a service) in particular:

    http://tinyurl.com/6let8x

    Both terms are bogus. The only true cloud computing takes place in
    aircraft. What they're actually referring to by "the cloud" is a
    large-scale and often remotely located and managed computing platform.
    We have had those since the dawn of electronic IT. IBM calls them
    "mainframes":

    http://tinyurl.com/5kdhcb

    The only innovation offered by today's cloud crowd is actually more of a
    speculation, i.e. that server farms can deliver the same solid performance
    as Big Iron. And even that's not original. Anyone remember Datapoint's
    ARCnet, or DEC's VAXclusters? Whatever happened to those guys, anyway...?

    And as for SaaS, selling the sizzle while keeping the steak is a marketing
    ploy most rightfully accredited to society's oldest profession. Its first
    application in IT was (and for many still is) known as the "service bureau".
    And I don't mean the contemporary service bureau (mis)conception labelled
    "Service 2.0" by a Wikipedia contributor whose historical perspective is
    apparently constrained to four years:

    http://tinyurl.com/5fpb8e

    Instead, I mean the computer service bureau industry that spawned ADAPSO
    (the Association of Data Processing Service Organizations) in 1960, and
    whose chronology comprises a notable portion of the IEEE's "Annals of the
    History of Computing":

    http://tinyurl.com/5lvjdl

    So ... for any of you slide rule-toting, pocket-protected keypunch-card
    cowboys who may just be coming out of a 40-year coma, let me give you a
    quick IT update:

    1. "Mainframe" is now "Cloud" (with concomitant ethereal substance).

    2. "Terminal" is now "Web Browser" (with much cooler games, and infinitely
    more distractions).

    3. "Service Bureau" is now "SaaS" (but app upgrades are just as painful,
    and custom mods equally elusive).

    4. Most IT buzzwords boil down to techno-hyped BS (just as they always
    have).

    Bruce Arnold, Web Design Miami Florida
    http://www.PervasivePersuasion.com
    MiamiWebDesigner