| Abstract: | Mid-market enterprise software vendor agrees to buy KNOVA Software, a provider of Web-based self-service CRM software, in a $47 million deal that complements the recent acquisition of Onyx Software. |
Adding another pearl onto a long string of acquisitions, Made2Manage Holdings Inc., today said it will purchase KNOVA Software Inc., a CRM vendor that would add Web-based, self-service capabilities to the CRM portfolio of recently acquired Onyx Software Corp.
The all-cash deal is expected to close in the first quarter of next year, pending regulatory approval, and is valued at $5.00 per share, or about $47 million, the two companies said in a press release.
Made2Manage Holdings, the holding company of mid-market ERP vendor Made2Manage Software Inc., has been on a buying spree of late. Today's deal marks the eleventh acquisition for the company and the second purchase of a CRM vendor.
"The idea was to start doing a CRM consolidation alongside the ERP consolidation we'd been doing for the last three to four years," said M2M Holdings CEO Jeff Tognoni in an interview with Managing Automation. "When we acquired Onyx we looked into other opportunities and KNOVA was high on the list at that time."
Made2Manage's interest in KNOVA pivoted around the e-service technology that the vendor adds to Onyx's CRM functionality. KNOVA has a suite of Web-based, self-service contact center and peer support applications. The software makes sense out of unstructured data to help answer customer service questions. Onyx's software, on the other hand, is more oriented toward salesforce automation.
"Our customers have been asking us for this," Tognoni said. "And it is a natural extension to what we are doing."
And more robust CRM is playing a significant role in the ever-expanding capabilities of integrated enterprise applications software.
Indeed, a recent report from AMR Research found that U.S. companies will increase their ERP budgets by 12.3% in 2007. Much of that spending is being driven by the functionality added by ERP vendors either through their own R&D or via acquisition. The report notes that the big ERP vendors, such as SAP and Oracle, will maintain their foothold in large global enterprises, making it difficult for second-tier vendors to compete.
Made2Manage has opted to take the battle to a different front. The company has gained momentum by acquiring software vendors that excel in underserved niche markets. For example, in December of last year, M2M acquired Capri Corp., an ERP vendor for printed circuit board manufacturers. And this past February it picked up AXIS Computer Systems Inc., which provides ERP software and services to metals and wire and cable manufacturers.
KNOVA currently has about 180 customers. As it has done with its other acquisitions that serve distinct markets, Made2Manage will maintain the KNOVA brand. To that end, M2M will continue to support KNOVA within competing CRM environments, such as Oracle's Siebel, an existing partner that uses KNOVA as an extension into the knowledge-based service area.
Made2Manage will also cross-sell KNOVA software to Onyx customers. And for new customers, Made2Manage plans to have an integrated Onyx-KNOVA offering, to be sold as a jointly branded product, Tognoni said.
"Leveraging Onyx's leading service-oriented architecture and KNOVA's existing application programming interfaces for customer relationship management integration, the two products can be quickly integrated with one another using Web services," Tognoni said in a company statement.
While KNOVA president and CEO Bruce Armstrong expressed optimism about the acquisition in a statement, calling it a "win-win scenario for both companies," the details of how the management structure will play out are not yet decided. Some Onyx executives now lead Made2Manage's CRM initiative, so there will be some leadership issues to sort through once the KNOVA deal is completed, Tognoni acknowledged.
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