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8/19/2008
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Salesforce.com To Acquire InStranet For $31.5 Million

The purchase of a customer-service technology software provider is the largest acquisition to date for the software-as-a-service vendor.

Salesforce.com will announce Wednesday that it's made its largest acquisition to date: InStranet, which specializes in customer-service technology, for $31.5 million.

With the acquisition, the company that's famous for its red-slashed "no software" logo -- and is largely responsible for ushering in the software-as-a-service era -- gets, in fact, a software company. Although Salesforce.com plans to make a SaaS version, InStranet's software is installed on-premises at customers such as Comcast and Expedia, and Salesforce will continue to support and sell on-premises implementations, said Brett Queener, Salesforce's senior VP of apps.

But don't mistake it for a change in direction at Salesforce, Queener said. On-premises implementations aside, Salesforce wanted the company's technical architecture and functionality, which fills a gap in its own CRM offerings, Queener said.

InStranet makes software that's designed to help customers at self-service Web portals, and customer-service agents get better and faster answers to questions and problems. The software, developed by InStranet -- co-founded in 1999 by two former Business Objects executives, Alex Dayon and Jean-Noel Grandval -- centers around the use of multidimensional data cubes.

InStranet categorizes customer information into data dimensions, such as their geographic location and the specific products they've purchased. So if a telecommunications company customer searches the self-service site for help with a problem, for example, InStranet increases the chances that the site will deliver answers relevant to the customer's specific circumstances.

Other customers of InStranet, which was privately held prior to the Aug. 4 acquisition, include Russian telecom provider VimpelCom, France Telecom, 3M, and Manpower. To find out more about how companies like these are implementing SaaS, InformationWeek has published an in-depth report and survey. Download the report here (registration required).

Call-center agents also use the software to more quickly get answers for customers. InStranet has done smaller deployments that took just several weeks; Comcast's deployment to 20,000 customer-service agents took about three months. Some 350,000 customer agents at various companies use InStranet, Salesforce said. Most of InStranet's operations are in Paris, yet it's headquartered in Chicago.

The acquisition is more than double Salesforce.com's $15 million acquisition of wireless infrastructure provider Sendia in 2006.

Also Wednesday, Salesforce.com will disclose earnings for its fiscal quarter ended July 31 after the close of the stock market.

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