New Kana Launches By Integrating Broadbase Products

Kana completes its acquisition of Broadbase.



Kana Communications plans to complete its $75.8 million acquisition of Broadbase Software Inc. Monday. But because the business demand for a single platform of customer-relationship-management applications has pushed the industry toward consolidation, Kana will ultimately be composed of 12 different technology vendors that once tried to make it as independent eCRM point-solutions providers but have merged since 1999.

The new Kana launches with more than 1,200 business customers and a staff of 850. Analysts see the move as critical for the two companies to compete in the eCRM space, which has shown some resilience to the economic slowdown. But with integration issues and heavy competition from vendors like Siebel, E.piphany, and PeopleSoft, the struggle is far from over.

Key to offering a full suite of eCRM products is the integration of the two companies' products and eliminating overlap. Broadbase's three core competencies were business analytics, marketing automation software, and knowledge management for self-service. Kana brings to the table a Java 2 Enterprise Edition platform-based contact center software and inbound/outbound E-mail applications.

In September, Kana expects to launch Kana E-Marketing, which will integrate the Broadbase E-marketing Suite with Kana Connect, allowing businesses to combine analytics with E-mail direct marketing. Kana Service will marry Broadbase E-Service, an analytics-based campaign management application, with Kana Response, which automatically generates intelligent responses to inbound customer queries, so businesses can build and manage E-mail and Internet self-help sites for contact centers.

Chris Schmidt, director of business development at National TechTeam Inc., a help-desk outsourcing company, was apprehensive about the merger. Schmidt is a Broadbase customer who depends on the E-Service campaign management suite to maintain high levels of both automated and agent-based customer service. "Broadbase is such a key piece of our technology solution, and anytime you have a merger where there's overlap with applications there's always trepidation," says Schmidt.

Schmidt says features in Kana Response addressed some of his needs that Broadbase's E-mail campaign management tools were just beginning to touch on, like creating multiple inboxes for customers. "[Broadbase was] making strides, but our goal is to move to Web-based support vs. just E-mail," says Schmidt.

By migrating to Kana Response, he'll be able to utilize all service tools via the Web and not have to rely on E-mail as the primary support center. Integrating the Kana and Broadbase E-mail, Web, and agent-based contact will help customer service levels, he says, but the Kana integration timetable is important. "How long until the products run is of concern to us, but they have aggressive deadlines," says Schmidt.

For short-term point product integration, the September deadline is realistic, says David Daniels, an analyst with Jupiter Media Metrix. But when the deal was announced, integration wasn't even complete on Broadbase's December acquisition of business-intelligence vendor ServiceSoft, and Kana still hadn't finished its integration of SilkNet, so a fully integrated company is at least two years away.

But there's good news, too. A report issued by Jupiter says that operational CRM functions such as contact center and self-help will see a 25% to 50% increase in IT spending, because they involve customer service improvements as well as headcount reductions. That puts Kana, along with companies like RightNow, Siebel, and eGain, in a healthy position.

Bob Chatham, an analyst with Forrester Research, agrees that Kana's best chance for success is with businesses that start small in their CRM strategy but plan to expand. "There are always companies looking for E-mail management capabilities but feel it is too big to go around a heavyweight like Siebel," says Chatham.

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