Pegasystems Strengthens Its CRM Presence by Acquiring Chordiant


Archived Published: 18 March 2010 ID: G00175434

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Summary

Business process management suite vendor Pegasystems will acquire Chordiant to gain CRM market share, a steady stream of maintenance revenue and valuable predictive analytic and outbound marketing capabilities.

News Analysis

Event

On 15 March 2010, business process management suite (BPMS) vendor Pegasystems announced a cash tender offer of $161.5 million to acquire Chordiant, a software and services vendor that focuses on customer relationship management (CRM). The transaction is expected to close during the second quarter of 2010.

Analysis

Chordiant is a CRM vendor that offers marketing, customer service and decision management solutions with some BPMS capabilities. The company has chosen to go to market as a CRM vendor, where it has struggled to retain market share. Chordiant's share of the worldwide CRM market is currently less than 1% of the worldwide CRM market (see "Market Share: CRM Software, Worldwide, 2008" ).

Pegasystems is a visionary in customer contact centers and Chordiant is a niche player (see "Magic Quadrant for CRM Customer Service Contact Centers" ). Nevertheless Chordiant's Decision Management and Visual Business Director products provide a powerful real-time predictive decisioning engine that complements Pegasystems' rules and complex event processing (CEP) capabilities. Additionally Chordiant's "marketing director" offering gives Pegasystems a new framework for outbound multichannel campaign management, and Chordiant has a number of industry-focused solutions for retail banking, insurance and communications that will complement Pegasystems' own vertical industry offerings.

Vendors in the BPMS market are following five different evolutionary paths (see "Signs That a BPMS Vendor Is Following One or More Technology Evolutionary Paths" ). The Chordiant acquisition will move Pegasystems further along the path toward "process templates" and "composite application development" offerings.

With this acquisition agreement, Pegasystems complements its current CRM capabilities and expands its CRM market share. Pegasystems and Chordiant have some customers in common that have integrated their two solutions. Pegasystems will incorporate Chordiant's process frameworks and predictive analytics software into its BPMS, and has stated it will continue support for Chordiant's Contact Center foundation platform. Over time, it will need to replace the Chordiant Foundation and BPM capabilities with Pegasystems’ products.

Recommendations

  • Banking customers: Consider a combined Pegasystems and Chordiant offering to improve multichannel integration across channels and lines of business (such as credit cards, consumer banking and business banking) and to provide increased customer personalization, transparency and communication.

  • Pegasystems customers: Watch to see if an increased focus on the CRM market rather than the BPMS market stretches Pegasystems' sales, consulting and support resources.

  • Chordiant customers: If you use Chordiant's marketing and real-time decisioning products, expect to benefit from Pegasystems investments in product futures.

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