Pegasystems Purchases Chordiant – Is CRM+BPM The Next Big Thing?

Big news for the CRM market today: Pegasystems announced plans to acquire Chordiant Software, the “customer experience optimizer.” Pegasystems and will be purchasing Chordiant for $161.5 million, or $5 per share. The deal was approved unanimously by both companies’ boards, and is expected to finalize in the second quarter of this year. As Pegasystems specializes in business process management solutions, their incorporation of Chordiant’s CRM technology is an interesting combination of the two spaces.

However, much of the buzz currently surrounding the acquisition notes that it isn’t going to be easy to consolidate Chordiant’s and Pega’s products. For starters, Pegasystems has never dealt with a merger of this size, and there are integration hurdles in any acquisition. Pega’s products offer a refined and rules-driven approach to modeling and executing business processes; the platform boasts some 30 industry-specific templates, and about twelve cross-industry frameworks. Chordiant CRM also offers vertical templates, and predictive analysis functionalities with adjustable rules.

But the bottom line is that Chordiant CRM is decision-based, and Pegasystems BPM is rules-driven, and reconciling the two will be no easy task. Tony Baer, a senior analyst at Ovum, noted in a guest blog on ZDNet that “the potential synergy is where Chordiant optimizes customer-facing front office processes while Pega’s BPM frameworks optimize the corresponding back office processes such as loan origination.” We’ll have to wait and see how they handle merging when the acquisition is finalized.

Another point of interest is the price Pegasystems is paying. In 2009, Chordiant’s reported revenue was $76.3 million, with $32 million of cash and investments. Those numbers are down from a couple years ago, as Chordiant was one of many companies to take a hit from the recession, but still, Pega is getting the company for a steal. Interestingly, Chordiant solicited the offer, after refusing an offer from CDC Software for $105 million, so maybe Chordiant knows something we don’t. It seems Pega made an especially good deal when you consider that Chordiant allows greater appeal in the front-office solutions market, and provides a solid reputation in telecom.

Again, it’s going to be interesting to see how these seemingly disparate systems come together, because if the two are successfully integrated, Pegasystems could seriously compete with companies like Oracle and SAP. But successful integration is also going to be significant for the CRM market. CRM platforms are constantly changing and incorporating other segments—the success of Chordiant and Pega’s marriage could indicate whether the CRM-BPM permutation is the next big thing.

Tags: Business Process Management, Chordiant CRM, Pegasystems, The Future of CRM