The Parature purchase will fill gaps in Microsoft’s Dynamics CRM and accelerate its cloud presence. In the long term, Microsoft will challenge best-of-breed Web customer support vendors such as eGain, Moxie, Verint and Oracle.
On 7 January 2014, Microsoft announced that it has reached a definitive agreement to acquire Parature, a privately held provider of cloud-based customer engagement solutions, for an undisclosed sum. Parature offers Web self-service, mobile device-based customer care, social media support channels, and chat for customer service and sales opportunities.
This acquisition deal is a major boost for the Microsoft Dynamics CRM product line. Microsoft has not maintained its leadership position in CRM customer engagement center services, and has not moved aggressively toward cloud, software as a service (SaaS) or multichannel customer support, like many of its competitors. It has partnered with vendors, among them Parature, to close that gap.
The Parature acquisition will bring Microsoft strong knowledge of tools for customer self-service, knowledge management and social media. Parature’s capabilities complement Microsoft Dynamics CRM customer care tools with its core strengths in workflow, extensibility and process-driven user experiences to assist contact center agents. Parature’s products are built on a Microsoft technology stack and are based on a cloud/SaaS model. Bringing this technology in will accelerate Microsoft’s migration to the cloud.
However, Microsoft has several challenges ahead:
Parature is relatively small, Gartner estimates it has just 100 employees and maintains a sales force of fewer than 15 full-time employees . Most initial sales at Parature are for less than $50,000. Gartner estimates 2013 revenue of between $15 million and $20 million, so it will not significantly enhance Microsoft's CRM revenue in 2014.
Parature has limited ability to scale globally: Close to 90% of its more than 500 customers are U.S. based, and primarily use its SaaS solution for Web customer service, knowledge management or chat, either for customer service or internal helpdesk. It has no data centers outside the U.S.
Microsoft’s sales team and partners will need to make big adjustments: Microsoft’s emerging direct CRM sales team and partners must receive training and make changes to help Parature compete effectively.
Microsoft’s next Dynamics CRM cloud release, the first with full customer service functionality, is due in 2Q14, during which time the suite must also rapidly integrate Parature. (Microsoft has had SaaS since 2008 or 2009.)
Microsoft is likely to change Parature’s pricing to reconcile it with its new pricing structure.
Nonetheless, this looks like a win for Microsoft. Microsoft Dynamics CRM should successfully scale its capabilities for its customer engagement center solution by 2Q15, placing pressure on other best-of-breed Web customer support technology companies, such as such as eGain, Moxie, Verint and Oracle.
Microsoft Dynamics CRM customers:
If you currently use a Web self-service product that competes with Parature, continue to do so, as Microsoft will continue its support.
If you are are not using a competing web customer self-service product, strongly consider Parature on a short list, if you require these solutions.
Seek price guarantees and press Microsoft about future bundles and pricing for a combined Microsoft Dynamics CRM and Parature solution.