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UPDATED: Oracle makes billion dollar swoop for RightNow Technologies

24th Oct 2011
Managing editor MyCustomer.com
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MyCustomer.com

Oracle has announced that it has reached an agreement to acquire RightNow Technologies.

Expected to close late this year or early 2012, the deal will see the tech giant snap up the Cloud-based customer service firm for an estimated $1.5bn of RightNow’s cash and debt, with the Board of Directors unanimously approving its takeover.
RightNow has carved out a strong reputation with its Customer Service Cloud, which helps firms deliver customer experiences across the web, call centres and social networks, and its focus on the Cloud has struck a chord with Oracle, which believes that it will complement its own Cloud offerings.
Thomas Kurian, executive vice president at Oracle Development said: "Oracle is moving aggressively to offer customers a full range of Cloud Solutions including sales force automation, human resources, talent management, social networking, databases and Java as part of the Oracle Public Cloud. RightNow's leading customer service Cloud is a very important addition to Oracle's Public Cloud."
"RightNow's products add leading customer experience capabilities that help empower companies to interact with and provide a consistent experience to customers across channels," said Greg Gianforte, CEO, RightNow. "We look forward to combining our complementary capabilities along with maintaining and expanding our presence in Bozeman, Montana in order to better service our customers."
In a presentation on the RightNow website, a diagram outlines how the companies envision the Customer Service Cloud will dovetail with Oracle's tools to deliver a complete B2C customer experience throughout the customer's journey.
Oracle's acquisition makes for a fascinating move following his recent spat with Salesforce.com CEO Marc Benioff, and Kate Hanaghan, research manager at K2 Advisory, believes that it sends out a clear message.
"This acquisition is an annoying blow for Salesforce.com," she explains. "First off, it gives Ellison ammunition for further venomous attacks similar to the 'roach motel' dig he threw at Benioff during Oracleworld. While RightNow is a way off Salesforce.com in terms of revenue, let’s see what Oracle’s aggressive sales team can do to grow that.
"Undoubtedly Salesforce.com is going to have to remain flexible and ‘on guard’ with regards to what happens next, not just in terms of the organic growth Oracle might be able to crank up – but in terms of what further related acquisitions Oracle might make." 
However, other commentators believe that the move will have little impact on Salesforce.com. 
"I don’t see Oracle’s acquisition of RightNow as bad for Salesforce.com – it's yet more validation for the Salesforce model," says James Governor of Redmonk. "Salesforce CRM is in fine shape, and the type of customers choosing it are not looking to embrace Oracle more deeply anytime soon. Let’s face it – Oracle’s purchase of Siebel hardly made it an innovator in CRM. It needed to get in the modern game."

But Angela Eager of market research firm TechMarketView said the takeover was one that “fills you with dismay” and predicted the demise of the standalone Cloud pureplay as Oracle instigated a new shopping-spree with a list that includes HR, talent management and social networking.

She said: "Oracle’s intentions are pretty clear. Having announced its late entry in the Cloud with the Oracle Public Cloud at OpenWorld last month it is acquiring to build its Cloud portfolio. RightNow is the first, it won’t be the last…Having decided the cloud is a threat, Oracle is countering it by doing what it has become good at and buying its way into the market. The RightNow acquisition will also enable Oracle to issue a direct challenge to Salesforce.com and its Service Cloud, which has been an important growth driver and a good large enterprise access mechanism for the Cloud native. Salesforce.com will probably be facing stiffer native Cloud competition from now on. 

“More significantly, we think the acquisition is a sign that many pure play Cloud providers have limited futures as independent suppliers – with Salesforce.com as an obvious exception. As has always been so in the enterprise software area, once a minor player gets to a certain size and threatens the dominant players they act to neutralise the threat and claim the opportunity – normally by acquisition. The big get bigger, the smaller are enfolded. SaaS vendors need to acquire or at least form consortiums if they want to maintain their independence.”

But there may be some further twists and turns to this story ahead. In a surprise announcement on Wednesday (26 October) law firm Levi & Korsinsky revealed it was investigating the Board of RightNow for possible violations of state law in connection with the sale.

The investigation is said to focus on whether the Board breached their fiduciary duties to RightNow stockholders by selling up to Oracle without adequately shopping the company, thereby allowing Oracle to underpay for the RightNow share and harming the stockholders.

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