Event

On 11 September 2000, Siebel Systems, a developer of customer relationship management (CRM) software, announced that it has agreed to buy Janna, a small Toronto-based competitor, in an all-stock deal worth approximately $972 million at the time of announcement.

Analysis

The planned acquisition is a confirmation of the many competitive successes of Janna, which since 1998 has chalked up a series of customer wins against the much larger Siebel due to lower cost and better ease of deployment. That Siebel was willing to pay nearly $1 billion for a company with past-12-month revenue of approximately $20.3 million and 1999 revenue of $13 million (for the year ended 31 December) indicates the size of the opportunity with Janna off the playing field.

This is a good time for Janna to make this deal. The financial industry is beginning another round of technology investment to standardize CRM packages for brokerage and institutional finance — Janna specialties — along with retail banking and insurance. Enterprises are also looking for an integrated view of the customer across all touchpoints — Web, call center and branch — and Janna lacked the capability to extend quickly into these areas. Furthermore, the release of the Siebel eBusiness 2000 suite earlier in 2000 gives Siebel a technology approach comparable to Janna's. These developments, coupled with Siebel's established strengths — more application partners and more access to systems integrators and consultants — meant that Janna would have been badly squeezed by Siebel through 2002.

Enterprises in the midst of Janna deployments or evaluations should stop and receive written assurances from Siebel that they will not be adversely affected by the acquisition. (Siebel has discontinued the software of past acquisitions, such as Scopus.) Enterprises can expect Siebel to show less flexibility in pricing its financial services applications now that its only compelling competitor in this niche has been erased.

Analytical source: Michael Maoz, Sales Leadership Strategies