Pega acquires Chordiant: Hybrid CRM makes the News

on March 15, 2010
SMARTS™ Data-Powered Decision Management Platform

Big news today… Pega is acquiring Chordiant…

Granted, those are relatively small companies. We are not talking about a giant acquisitions such as Oracle acquiring Sun. But for our space, the larger Decision Management space, this is an interesting development, that goes against the current in some ways.

BPM Acquisitions

In the past few years, we have seen many BPM acquisitions by the Platform vendors such as Oracle, IBM, SAP, etc. A lot of acquisitions with the most recent Savvion acquisition by Progress software. This may have been a turning point of somewhat smaller companies aggressively entering the fight with the big ones.

There were rumor that Chordiant was on the look out for an acquisition so that part was not surprising. That being said, we seem to hear such rumors from pretty much everyone, here in the Silicon Valley. We thrive on startup / acquisition news! As a hybrid CRM vendor, it may have been more logical to see yet another acquisition by one of those Platform vendors that are in the CRM space or want to enter it… Oracle or IBM come to mind of course. Possibly a smaller player like Tibco…

Pega definitely jumped into the bandwagon today with the announcement of the Chordiant acquisition. Pega paid a 30+% premium for a $161.5M acquisition in cash ($5 per share). This is not bad in that economy for a company with $76.3M revenue last year. Note that Chordiant just rejected an offer from CDC Software Corp for only $3.46 per share. Focusing on Pega as BRMS vendor, it is an unexpected turn but changing perspective, wearing their BPM or CRM hat, it makes plenty of sense. It seems that the street agrees with that assessment as Pega’s shares reach year-high.

Why does it make sense you may ask…

Well, if you remember that Pega started focusing on CRM last year with their Customer Process Manager product, then you probably understand Pega’s interest in one of the 2 other hybrid CRM vendors — the other one being a small Scottish company called Sword Ciboodle. Sandra Eisenberg provided a nice succinct overview of that market in her blog last July (http://bit.ly/c83tEv). By combining forces, Pega both removes a competitor from the map, wins marketshares and visibility, expands it partner network and becomes a de-facto “next generation” competitor to the big Platform vendors — becoming both a solution to consider for customers and a potential acquisition target for those Platform vendors.

The expansion of BPM in CRM is not new or unique though. Even open-source vendors bullishly paved a path in that direction. Ismael Ghalimi of Intalio acquired both CodeGlide (CRM) and ProcessSquare (BPM) last May and launched their Intalio|Cloud offerings.

The interesting play now is obviously to see if Pega will execute well on this acquisition. Execution is key as we all know. If my memory serves me well, Pega made smaller acquisitions in the past but none of that size (well, even comparative size). They have a lot on their plate though to integrate Pega’s process automation technology in Chordiant solutions and Pega’s customers will be able to tap into Chordiant Predictive Decision Management (interesting potential here…) and CRM.

Longer term, we should expect more acquisitions… Maybe Sword Ciboodle… Maybe Pegasystems… This would make bigger news!

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Update: Pega acquires Chordiant

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