Why Oracle paid $1.5B for RightNow

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Oracle continued its buying spree on Monday, paying roughly $1.5 billion for RightNow Technologies, a provider of SaaS-based call center automation, sales force automation (SFA) and customer relationship management (CRM) services.

RightNow, seen as something of an also-ran to Salesforce.com, will bring some customers into the mix, but more importantly it will bring a mid-market CRM solution to Oracle. RightNow, based in Bozeman, Mont., claims 2,000 customers. The purchase could also bring some needed cloud computing credibility to Oracle, which is seen as being late to the party.

RightNow could bring Oracle more coverage in small and medium accounts, said Ray Wang, the principal analyst and CEO of Constellation Research. Oracle’s current Siebel Systems–rooted CRM — which is available in both on-premise and SaaS models — is seen as a high-end enterprise CRM play. RightNow’s call center expertise could also help Oracle compete better with Salesforce.com’s Service Cloud 3, according to Nomura Securities analyst Rick Sherlund.

The fact that RightNow was already an Oracle customer itself — an Oracle data sheet lists RightNow as a reference account for Coherence, Oracle’s in-memory distributed data grid solution for clustered applications — probably greased the skids for this deal. Oracle CEO Larry Ellison disclosed plans for an Oracle public cloud earlier this month at Oracle OpenWorld, but few details on timing or a road map were forthcoming.

In a brief statement, Oracle said the acquisition adds “a leading customer service cloud offering to the Oracle public cloud.” Oracle is paying $43 per share, a 19.6 percent premium over RightNow’s closing price of $35.96 on Friday. RightNow’s board unanimously approved the deal, both companies said.

This acquisition comes within a week of Oracle’s purchase of Endeca, a big-data analytics company.

Photo courtesy of Flickr user Images_of_Money

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