KANA is back, ready to rumble in the Cloud with “Express” customer service solution


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Hard to believe it’s been 3 years since I last wrote about KANA, when it launched the Service Experience Management solution as part of KANA 10. To be candid, I haven’t paid much attention because all the real action in the industry seemed headed to the Cloud.

But recently KANA has been acquiring a number of companies, which CMO James Norwood says is how they intend to be the “undisputed customer service leader.” Recent acquisitions of note:

  • Overtone, a social media and customer listening platform (April 2011)
  • Trinicom, a small vendor based in the Netherlands selling cloud-based customer service solutions to the mid-market. (April 2012)
  • Ciboodle (from the Sword Group), which focused on contact center customer service (July 2012)

Forrester analyst Kate Leggett sums up recent activity in this post:

KANA has been on an acquisition streak during the past two years. It acquired Lagan, a government-to-citizen (G2C) CRM solution in 2010; Overtone, a social media listening company in 2011; and Trinicom, a midmarket, cloud based multichannel customer service vendor in 2012. This is a lot of acquisitions, which introduces short-term organizational and product road map challenges that can negatively affect the existing customer base.

With these acquisitions KANA sets out to “take advantage of an extensive $5 billion+ market opportunity for customer experience management.” Or so the press release says. Of course, press releases and market execution don’t always match up. But neither does perception and reality.

When a company has a history of doing well and starts having problems, it will take some time for customers and industry watchers to figure it out. Likewise, when a company is on the comeback trail, perception will lag reality. In part, it’s the job of marketing leaders like Norwood to close the perception gap as quickly as possible.

Cloud strategy… finally

In KANA’s case, one reason I had put the firm on my mental back burner was the lack of a cloud strategy. That’s where all the growth is. I’m not saying on-premise solutions will go away, or that cloud is the only way to go. But clearly the market is moving in that direction, so companies that want to grow and lead an industry had better have a cloud strategy. Just ask Microsoft, Oracle and SAP, who were late to the cloud party, but are making up for lost time with both acquisitions and R&D.

That’s where the Trinicom acquisition comes into play. Now KANA has the technology to build a viable cloud business. In fact, the company just announced KANA Express for multi-channel customer service with functions, pricing and implementation geared for midsized companies.

Norwood says KANA Express is positioned between entry level case management solutions like Zendesk and large enterprise solutions from Oracle/RightNow, SAP, etc. In the midmarket space, I think Parature and Salesforce.com (Service Cloud) will be formidable competitions, along with CRM and ERP providers that include customer service as a part of a suite.

But as I’ve argued in my post on Why Microsoft, Oracle and SAP won’t succeed in the Cloud, culture and business models are a big factor in success. KANA is not just acquiring another product, it needs to create an entirely new business. Only time will tell whether KANA’s management really understands all the nuances of building and running a business that must deliver a great customer experience, while also providing tools (cloud-based solutions) to help its customers do the same. It’s not as simple as building and shipping a product.

Taking the long view

Another question I’ve had is whether KANA was in the game for the long term, given its ownership by a private equity firm. Sometimes PE firms step in to rescue a failing company, sell off the parts, and move on. For a profit of course. In other cases PE investors will take the long view, and keep building towards a more distant future exit such as an IPO.

In this case, KANA is one of the portfolio companies of Accel-KKR, a $2 Billion PE firm focused exclusively on technology companies. Norwood says Accel-KKR wants to build an industry leader. The portfolio seems to back that up, as does the spate of KANA acquisitions.

So KANA has an owner with a leadership strategy and deep pockets; a portfolio of strong multi-channel customer service (call it Social CRM if you must) software aimed at large enterprises; and now a fledgling cloud business that could grow rapidly with the right attention. That’s pretty good progress for a company that was on life support just a few years ago.

Further reading:
* More Market Consolidation as KANA Software Buys Sword-Ciboodle. Its A Sound Strategy, But The Proof Will Be In The Execution (Kate Leggett, 2012)
* Is KANA Making a Comeback? (Esteban Kolsky, 2010)
* KANA Partners with IBM, Launches “Service Experience Management” (Bob Thompson, 2009)


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