Salesforce.com, based in San Francisco, has acquired its fourth company in the last two years. The provider of customer
-service support acquired Instranet, its largest acquisition to date, for $31.5 million in cash, which includes $4.2 million from Instranet's balance sheet. The two companies closed the deal on Aug. 4.
The acquisition of Chicago-based Instranet, a maker of call-center technology, will give call-center agents more specific information about a caller, including product or geography, to help agents find the best-matched answer to questions, according to Salesforce. The deal includes Instranet's 44 employees.
Instranet, according to Salesforce, provides the knowledge-management piece of the CRM puzzle. "They are an absolute killer in knowledge base," said Bruce Francis, vice president of corporate strategy for Salesforce. "They have 350,000 agents around the world using this technology and have incredible success in call-center technology."
A Fast-Growing Market
The move is expected to thrust Salesforce forward in a fast-growing market. The CRM support and services market is currently valued at $3.4 billion, according to Gartner reports. Instranet has 50 customers, including blue-chip companies such as Orange, Comcast, Vimplecom, France Telecom, Expedia and Transcom.
"We're very fired up about this deal," Francis said in an interview with us. "We feel that a customer service and support market is a fantastic one, and we feel this market is really poised to flip to software as a service. That is why we are saying we want to have all of the pieces in place for an absolutely killer offering."
The acquisition of Instranet comes on the heels of Salesforce announcing a new chief financial officer, a new president of alliances and services, and rolling out new content-management applications.
Salesforce.com provides sales, marketing and customer-service support to more than 41,000 businesses. In April 2006, Salesforce acquired Sendia, which led to Force.com Mobile. In August 2006, it acquired Kieden, which lead to Salesforce for Google AdWords. And in March 2007, Salesforce acquired Koral, which led to Salesforce Content.
A Perfect Fit
In its 2008 annual report, Salesforce said acquiring companies could prove difficult to integrate, could disrupt its business, and even dilute shareholder value, but Francis thinks that won't happen with this acquisition.
"When we look at an acquisition, we look at the track record of customer success, we look at the technology, and we also look at the team," he said. "We love all three in this case."
The biggest challenge, according to Francis, is grabbing the opportunity to provide services in a market that is underserved and ready to move.