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A Winning Combination: Software-as-Services Plus Business Consulting and Process Services
By Laurie McCabe
January 30, 2004

For the second time since ASPnews started compiling its Top 20 list, a Microsoft acquisition has caused a reshuffle.

The first occasion was the completion of Microsoft’s acquisition of Great Plains Software, which closed in April 2001, having been announced the previous December. This time around it’s PlaceWare, an online conferencing ASP, whose acquisition was announced last month (see Microsoft to Acquire PlaceWare). Whereas Great Plains had been a NASDAQ-listed company, Placeware is privately held, and consequently closing the deal is a formality that is expected to be completed in short order.

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PlaceWare only recently joined the Top20 Providers list, having labored for some time in the shadow of its better-known, NASDAQ-listed rival WebEx (Quote, Chart). One of the contributing factors that brought PlaceWare onto the ASPnews list was a high-profile marketing campaign that included the staging of live desktop conferencing calls from a special billboard high above Times Square in New York City. Evidently the stunt turned heads further afield than 42nd Street.

Great Plains All Over Again?
It remains to be seen whether buying PlaceWare will turn out to be more astute than the purchase of Great Plains, which last year had to be supplemented by acquiring its European rival Navision. So far Microsoft has done little more than maintain the market share of the two business software firms, rather than using them as a platform for expansion.

There appears to be more scope for synergy between PlaceWare’s technology and Microsoft’s own office productivity and collaboration products, but some observers are skeptical that Microsoft will be able to integrate the company’s offerings without causing disruption to its existing customer base. With fresh financials from WebEx demonstrating the strength of demand for online conferencing, it will be unfortunate if Microsoft can’t sustain similar revenue growth in its PlaceWare division.

Right Here, RightNow
The new entrant to our list is RightNow Technologies, the customer services ASP recently featured in an ASPnews profile (see RightNow Finds Success in Customer Satisfaction). RightNow specializes in integrated online customer support and has built up an impressive roster of almost 1,000 customers. The business is cashflow positive and 80 percent of its revenues come from hosted implementations.

The addition of RightNow Technologies brings the number of customer relationship management (CRM) software providers in the ASPnews Top 20 to five, or a quarter of the total — Liveperson, Salesforce.com, Salesnet, UpShot and now RightNow. No other application category seems to lend itself quite as readily to the online model, which is perhaps something that Microsoft should bear in mind as it rolls out its new CRM offering, which relies heavily on its conventionally installed server software suite.

Still, if the software giant decides to go shopping for further help in refining the online credentials of its CRM proposition, at least it will find plenty of names to choose from among our Top 20 listing.

Who knows? It might be a case of the third time being the charm for Microsoft.


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