Will Microsoft's Parature pick shake up CRM space?

Stuart Lauchlan Profile picture for user slauchlan January 7, 2014
Summary:
Microsoft's looking to Parature to beef up its Dynamics CRM offering and give pause for thought over at Oracle and Salesforce.com. Good plan?

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First week of January and already an interesting acquisition on the table with Microsoft’s planned purchase of cloud customer service firm Parature to beef up Dynamics CRM against Salesforce.com and Oracle (RightNow) and shake up the CRM space for 2014.

Parature - it comes from ‘paradigm of the future’ apparently - has been around since 2001 when it started life as Cyracle Technologies after being set up by five Cornell University students.

So what does Microsoft get for its undisclosed ($100 million seems to be a consensus close enough guess) amount?

  • Parature Knowledgebase, including documentation, product briefs, answers to FAQs, and news.
  • Parature Portal, for 24/7 self-service support.
  • Parature Chat, a live chat service that integrates with social networking services such as Facebook and Twitter.
  • Parature Ticket, a trouble-ticketing service that routes users to an organization's customer support personnel.
  • Parature Social Monitor solution, for tracking social networking information.
  • Parature Facebook Portal for access to the knowledge base,self service, and chat capabilities directly within Facebook. Parature for Mobile, allowing both agents and customers with cross-compatible access to the Parature service desk and portal from major mobile and tablet devices.

All that plus 70 million users of Parature’s cloud-based services.

So once you roll all that alongside Microsoft Dynamics CRM, you have something that looks more robust in standing up to Salesforce.com Service Cloud and Oracle’s RightNow Service Cloud offerings.

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Bob Stutz

From the horse’s mouth, Bob Stutz, Corporate Vice President Microsoft Dynamics CRM, confirms in a blog posting:

The addition of Parature’s cloud service solutions not only strengthens the Microsoft Dynamics CRM offering, but also accelerates our efforts to deliver differentiated customer care capabilities.

We strongly believe that the ability to deliver great customer care lies at the heart of a company’s efforts to build loyalty and trust. To succeed in this realm, organizations must seamlessly handle interactions across the many channels, including an ever increasing array of social channels.

Parature’s technology allows businesses to create brand champions by taking advantage of functionality that includes self-service customer care portals on the web and Facebook, mobile customer care, chat capabilities, and a strong knowledge base, giving their customers the ability to connect with them on the channels they prefer. These capabilities are a perfect complement to the existing Microsoft Dynamics CRM customer care offering as well as some exciting things we have planned for our next release.

As we welcome Parature employees and customers to the Microsoft family, we also celebrate the fact that that we are philosophically aligned in our approaches to developing software. Parature’s tagline, “Customer Service that revolves around you,” demonstrates their desire to put their clients at the heart of everything they do.

Making sense?

OK, fine words, but do they cut the mustard?

Nucleus Research reckons it’s a sensible move as a continuation of Microsoft’s efforts to build out its Dynamics CRM portfolio both organically and by acquisition:

There are two other main reasons why this announcement doesn’t come as a big surprise. First, Microsoft and Parature have had a partnership for some time, and already have a prepackaged integration between the Dynamics CRM and Parature products. Second, as heightened competition continues to accelerate product announcements and acquisitions in the CRM space, Microsoft needed to deepen its bench strength in customer service and support against its main competitors.

The acquisition instantly gives Parature a more complete message when competing against broader CRM products with marketing and sales support capabilities, and gives Microsoft a leg up when competing against best-of-breed products in the customer support (and, in particular, the self-service) space.

From a more strategic perspective, this acquisition shows that Microsoft is focused on investing in CRM to complete its vision. With Parature, it gains depth and breadth in its customer service-focused customer base and more fuel for thought leadership and innovation from both the Parature team and its intellectual property.

Kate Leggett at Forrester picks up on the ‘plugging the functionality gaps’ angle saying of Dynamics CRM:

The solution had some obvious deficiencies: no agent facing knowledge management or web self service capabilities, no chat capabilities and the solution lacked robust email response management capabilities. This prevented them from effectively competing in multichannel customer service deals against the likes of Salesforce's Service Cloud and Oracle RightNow. And the momentum for multichannel customer service solutions is increasing in 2014, partly due to an uptick in the economy which allows organizations to modernize their customer service solutions, and partly due to the increased focus on customer experience.

There’s a wider market impact, argues Leggett:

Best-in-breed multichannel customer service companies will struggle even more to compete against the behemoths of the likes of Oracle, Salesforce, Microsoft who have been maturing their solutions via acquisition for the last several years.

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Ray Wang

As for Microsoft’s next steps, Ray Wang over at Constellation Research advises:

Parature’s relentless focus on customer success has led to tremendous growth. In 2013, Parature doubled its end user count from 35 million in 2011 to 70 million. Microsoft’s team will need to retain key Parature talent and augment them to continue this level of momentum. More importantly, Microsoft will need to maintain the same level of marketing and sales support if it hopes to maintain the same growth trajectory. This may prove to be challenging given the current One Microsoft reorganization in progress.

As with any major acquisition, Parature customers should make sure that existing contracts and key personnel continue into the next 12 months. Microsoft Dynamics CRM customers should consider the new customer care offerings in future investment plans. Meanwhile, Dynamics CRM partners should get to know the Parature product lines as soon as possible in order to increase cross-sell opportunities.

Verdict

On the face of it, the cliched win-win scenario - and something to raise a few eyebrows inside Oracle and Salesforce.com.

A timely reminder that Microsoft Dynamics CRM is a serious player in a market sector all too often overshadowed by the louder noises raised by rival players.

 

Disclosure: at the time of writing, Oracle and Salesforce.com are premium partners of diginomica. 

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