KANA Acquires Trinicom; Enters SMB CRM Market

Today KANA announced it had acquired Trinicom a Nederlands cloud-based customer service provider.  According to the company, this move was to complete their offer for all company sizes and delivery models – from small to large enterprise, and from on-premise to cloud-based.  Terms of the transaction were not disclosed.

On the surface, this may seem like a move by KANA to match Salesforce’s acquisition of Assistly (now Desk.com).  However, there is more to it that what seems.

I had had discussions with  KANA prior to this  acquisition and my answer  when they asked whether it was a good idea was that there were two ways to justify it: either they acquired  terrific technology in the process that could be used to complement or replace what they were already using in their Enterprise offer, or to offer a solution in a market (SMB) where they could not enter with their products today (for many different reasons, but mostly because it is a very different market and it requires not just a scaled-down version of an Enterprise product, as most vendors erroneously presume, but also a different business model to do it successfully).

I also said that the cloud-delivery was critical for the SMB market, but it did not add anything to Enterprise solution right now.

With that in mind, I can see where Trinicom delivers.

With 200 SMB customers the company is small, well placed vendor in the EMEA market (they do have some customers in the US, but nothing  significant).  The product seems to be well built, delivering value according to statements from theirr customers, and  management seems to understand SMB market quite well.  This could be a good way for KANA  to show a more complete spectrum of products and offerss in the market and complete their lineup.

I am also looking for this deal to bring  expertise in cloud to the company and hopefully see it trickle into other areas of delivery, helping them move away from on–demand and into true-cloud territory.  Baby steps.

I am not looking for significant  revenue from this acquisition, a SMB vendor with 200 customers does not bring in a lot of cash by comparison to a large-enterprise vendors with 200 customers — or even 600 customers.  The addition to the bottom line of this deal is likely to be just an add-on for the first year (cannot know for sure as terms of the acquisition were not disclosed and Trinicom never revealed their revenues).  However, if KANA can train their sales force successfully and use it to extend Trinicom into the Americas and APAC markets, there may be more revenue coming in the next 12-24 months that would add to the bottom line.

I can see long-term value from this acquisition coming to KANA, but I have a wait-and-see position at this point until i see movement in the areas highlighted above.