|Denis Pombriant, founder and managing principal, Beagle Research Group|
The Sant Corp. of Cincinnati, Ohio, and Kadient of Lowell, Mass., announced a merger Tuesday. The two companies appear to have complementary offerings and I think the merger will be a good one for both parties — and for the combined customer base.
Over the last couple of years, Kadient — once known as Pragmatech — has been on a difficult quest, one made harder by a uncooperative economy. Chief Executive Officer Brian Zanghi (who will remain on the combined firm’s board of directors), repositioned Kadient from its role as a business that was not unlike Sant’s (and, in fact, competed with it) to a new station in the software-as-a-service (SaaS) world. Sant and Pragmatech each offered products that automated, to the extent possible, the sales-proposal process and managed relevant documents and components of documents.
Beginning a couple of years ago, Zanghi began taking Pragmatech on a journey that would rebrand the company and change its focus — from on-premises software to SaaS and from proposals to dynamic interaction with sales teams through the use of “playbooks.”
Zanghi’s vision (which I have written about before) was essentially correct: Playbooks are an invention that applies analytics to deal information captured throughout the normal course of doing business. With analytics, managers and salespeople can discover which presentations, proposals, or tactics work best in a variety of situations and use this knowledge for future deals. The idea makes sense and you can see it replicated in Salesforce.com and Oracle sales automation tools.
Kadient had some tough sledding — changing its model, facing the recession — but the company has been gaining traction in a market for sales enablement products that can be notoriously difficult. Salespeople hate having their cheese moved as the long adoption curve for sales force automation amply describes. Sales enablement is another sensible idea that nevertheless has legions of doubters. I don’t know if adoption was an issue for Kadient as much as the tendency for salespeople to hunker down during recessions.
At any rate, Sant and Kadient are now together and I think one of the attractions of the merger for Sant was how far Kadient has come — a distance that Sant also had to travel prior to the merger. Sant will now have to quickly figure out the SaaS model — I look forward to better understanding its strategy for the balance of its product set.
Finally, this merger highlights the reality that the market for initial public offerings remains moribund and the path to a liquidity event these days does not go through Wall Street. In some ways, that makes doing a deal easier — but it also significantly reduces the value of a company.
Denis Pombriant, founder and managing principal of CRM market research firm and consultancy Beagle Research Group, has been writing about CRM since January 2000, and was the first analyst to specialize in on-demand computing. His 2004 white paper, “The New Garage,” laid out the blueprint for cloud computing. A CRM magazine columnist, he often guest-blogs with us at destinationCRMblog.com, but his own blog — where this post first appeared — can be found here. (His Reality Check column on Marc Benioff appears in CRM’s November 2009 special issue on Salesforce.com.) He can be reached at email@example.com, or on Twitter (@denispombriant).