Oracle Buys RightNow for $1.5B

By Ericka Chickowski

Oracle announced that it has agreed to acquire Bozeman, Mont.-based cloud services firm RightNow Technologies for $1.5 billion in a deal that should  close sometime at the end of this year or early 2012 and which likely positions Oracle to better pit itself head-to-head against Salesforce.com.

The acquisition is a huge win for the education-heavy CRM company, but some analysts wonder where RightNow's services will fit into the overall Oracle roadmap.

"Oracle will now have three CRM solutions targeting higher education, Oracle CRM On-Demand, PeopleSoft CRM for Higher Education and RightNow," says Nicole Englebert, analyst for Ovum. "There may be some short- to medium-term anxiety around Oracle’s product development & support strategy."

However, in an letter to customers and partners, Oracle's Tom Kurian reassured all interested parties that the pick-up is a strategic fit that complements its existing solutions base.

"RightNow's leading cloud-based customer experience software helps organizations deliver an exceptional experience across call centers, the web and social networks," said Kurian, executive vice president of Oracle Development. "RightNow's cloud offering is a complementary addition to Oracle's Public Cloud. Together, Oracle and RightNow are expected to enable a superior customer experience at every contact and across every channel."

Shareholders seemed blase about  the deal--when news of Oracle's bid went public on Monday it only experienced a modest 1.9 percent bump in value. But some analysts say the deal is a good one for Larry Ellison's crew.

"We believe Oracle's acquisition of RightNow will make it a more direct competitor and formidable threat to Salesforce.com's service cloud offering," Oppenheimer analyst Brad Reback told Reuters.

As of the agreement date, RightNow is serving close to 2,000 organizations in a number of industries. The solution is designed to unify the customer service experience across the web, social networks and contact centers.  Last year the 14-year-old company drew in $185 million in a hybrid customer-service and CRM market position that has it competing with both Salesforce.com and Constant Contact. It told the market in July that it expects to end 2011 with 27 percent revenue growth over 2010.

At the moment the two companies are telling existing RightNow customers that it plans to run the firm as a subsidiary.

"We look forward to combining our complementary capabilities along with maintaining and expanding our presence in Bozeman, Montana in order to better service our customers," Greg Gianforte, CEO of RightNow said in a statement.

This article was originally published on 2011-10-25