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Microsoft's Parature Acquisition Focuses on Customer Experience

Microsoft Parature Acquisition is all about Customer ExperienceMicrosoft officially announced its acquisition of Parature, a social and customer engagement tool that could provide the Dynamics CRM ecosystem with added capabilities like a customer portal and self-service knowledgebase.

Dynamics CRM is clearly an important piece of Microsoft's strategy, and the Parature buy is its largest acquisition yet, R "Ray" Wang, a Constellation Research analyst told CMSWire.

Great Customer Care Leads to Loyalty + Trust

"Dynamics CRM customers gain the knowledge base functionality in Parature, which is the crown jewel," Wang said. "This knowledgebase was recently re-architected and is one of the most modern in the industry."

Microsoft Dynamics CRM already has customer care tools like case management, universal queuing and routing, and light scheduling and field service, Wang added, but the Parature buy shows how serious Microsoft is about customer experiences.

Seamlessly handling interactions across many channels is how company's build loyalty and trust, Bob Stutz, corporate vice president of Microsoft Dynamics CRM, wrote in a blog post about the deal. He called the Parature social and self service capabilities the "perfect complement" to Dynamics CRM.

The deal is reportedly in the $100 million range. If that's accurate, it's the sixth largest acquisition in the customer care segment since 2002, according to data from 451 Research. Since 2002, acquirers have purchased 57 companies in the customer service automation segment for a total of more than $3.6 billion in announced or estimated spending.

The biggest deal was the Oracle/RighNow buy in 2011 at $1.5 billion. Microsoft has the second largest buy: its acquisition of TellMe Networks in 2007 for $750 million. For a bit of symmetry, the third largest buy happened just a day before this deal when Verint Systems shelled out $514 million for Kana Software.

Another 70M End Users

Not only does the Dynamics CRM team pick up the Parature technology. It potentially gains around 70 million end users from companies like Ask.com, the US Environmental Protection Agency, IBM, Saba Software, Tagged and Threadless.

"Parature has built a strong foothold in key industries such as education, gaming, high-tech, non-profit associations, online media, public sector, and travel," Wang said.

Additionally, Parature has doubled its end user count from 35 million since 2011, Wang added. Microsoft will need to retain key Parature talent to keep that momentum going, he said.

"It will also need to maintain the same level of marketing and sales support if it hopes to maintain the same growth trajectory. This may prove to be challenging given the current One Microsoft reorganization in progress."

Nevertheless, Dynamics CRM is giving Salesforce some real competition in head to head deals, Wang said, and Parature accelerates Microsoft’s efforts in customer care by 24 months. Microsoft will continue to offer Parature and support new and existing customers as the two companies integrate. Product integration plans and timelines will also be shared at a Parature conference called Parafest 2014 on Feb. 24 and 25 in Las Vegas.

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