Kana Adds Professional Services to Mix

Financial terms of the deal have not been disclosed. The acquisition is expected to be accretive to Kana for 2007 and is expected to close during the second quarter of Kana's 2007 fiscal year.

eVergance's core competencies -- including CRM optimization, knowledge management and Web self-service deployments -- complement Kana's product line, according to Kana.

"eVergance brings a proven track record of more than 200 successful customer service engagements, as well as a history of thought leadership in the knowledge management and Web self-service space," said Michael Fields, Kana CEO and chairman of the board. "We believe this acquisition will further realize our goal of helping companies ensure that customer service is a top line strategic business differentiator."

New Services

Offering professional services is not an entirely new model for Kana, Marchai Bruchey, Kana's chief marketing officer, told CRM Buyer.

"We have had a small team of professional service providers and have done some small engagements prior to this acquisition," Bruchey noted.

The uptick in demand for service integration services is one reason the company decided to acquire additional bandwidth in this space, she added.

With the incorporation of eVergance, Kana will double the size of its professional services team and will be able to expand the range of integration services it offers to clients in all areas, including deployment support , customer service strategy, optimization and managed services.

New Strategy

The acquisition is a smart move for Kana in that convergence continues to characterize the CRM space, and vendors continue to seek increased revenues by providing professional services to existing clients, Rebecca Wettemann, vice president of Nucleus Research, told CRM Buyer.

That said, the most common trend in the CRM space has been for vendors to acquire other software companies that can fill functionality gaps in their product portfolios, she pointed out. Oracle's (Nasdaq: ORCL) acquisition of Siebel and RightNow's (Nasdaq: RNOW) acquisition of Salesnet are notable examples.

In other words, the desire to gain market share has been a stronger driver of acquisitions -- among Kana's counterparts, at least -- than interest in incorporating pure services firms.

"The challenge for Kana will be to integrate the acquisition effectively to ensure that they're not just adding staff but standardizing best practices and economies of scale to deliver more than Kana and eVergance did as two separate companies," Wettemann concluded.