R "Ray" Wang
R "Ray" WangNews Analysis: Lithium's Acquisition of Scout Labs Ups The Ante in Social CRM
Social Media Monitoring Addition Adds Social Customer Insight To Lithium's Community and Social CRM Offerings
Lithium, a social CRM (SCRM) and community platform vendor announced today it had acquired Scout Labs, a social media monitoring (SMM) provider. According to a variety of sources, the estimated purchase price for the deal ranged between 20 and 25 million. Conversations with Emeryville, CA, based Lithium over the past week highlight the importance of two themes:
- Actionable insight as a foundation for SCRM. As Scout Labs CEO, Jennifer Zesut, mentioned in her blog post, this acquisition is about having the right level of data for organizations to make decisions. Social media monitoring enables Lithium to engage customers beyond the community platform and into other conversations happening in social communities. A community platform and Social CRM offering brings life and relevance to Scout Labs' technologies.
Point of View (POV): Scout Labs adds both a strong analytical platform and easy to use visualization tools to Lithium's extensive SCRM offerings. Lithium now has the capability to tie SMM to its customer community apps and SCRM suite which enables the foundation of social CRM -- social customer insights or F1. Should the post-merger integration be successful, Lithium's customers can integrate Scout Labs SMM tools to monitor, map, and measure online channels to bring social conversations and interactions back into the community platform.
- Acquisition synergies beyond technology fit. Lithium intends to not only integrate Scout Labs into the platform, but also leave ScoutLabs as a stand-alone solution. With over 500 customers in the mix, Lithium brings organizations such as AT&T, Barnes and Noble, Best Buy, Lenovo, PayPal, RIM, Sony, and Univision to the mix. Scout Labs brings CocaCola, Disney, McDonald’s and Motorola. Both vendors delivered SaaS based solutions.
POV: The acquisition provides both a technology and a significant customer acquisition play. Lithium now has the opportunity to cross-sell its solutions into the Scout Labs customer base. However, the more likely scenario will be up-selling Scout Labs back into the Lithium base. Features such as BuzzTracking, Conversation Digest, Persistent Searches, and Rants and Rave often top the list of favorites among customers and prospects. More importantly, the Scout Labs sales force and sales management will add a relationship based approach to the sales culture.
The Bottom Line For Buyers - Lithium's Investing In SCRM
Lithium's acquisition shows its seriousness to compete in the SCRM space. The market now expects all SCRM solutions to provide deep social analytics. In fact, success in SCRM requires organization to start with the 5M's (i.e. monitoring, mapping, management, middleware, and measurement). As customers expand into other SCRM use cases, expect Lithium to continue to make investments to support emerging requirements whether they include technology, geographic, and vertical specific. As with all mergers and acquisitions, customers should stay vigilant about retaining key service and support staff, providing input into product direction, and maintaining favorable software licensing and contract terms. Lithium customers should take the time to compare SMM solutions and place Scout Labs on the short list. Conversely, Scout Labs customers looking at community platforms and SCRM solutions, should take the time to place Lithium on their short lists.
The Bottom Line For Vendors – Expect More M&A Activity In The Race To A SCRM Suite
Expect SCRM acquisitions to accelerate as SCRM vendors compete for key assets such as social media monitoring platforms, natural language processing and sentiment analysis engines, community platforms, and business process platforms. Attensity’s recent acquisition of Biz360, Jive’s acquisition of FiltrBox, and RightNow's acquisition of HiveLive, show how the market convergence to SCRM suites has already begun. Social media monitoring forms the foundation of all SCRM initiatives. Through this social customer insight, successful Social CRM and CRM solutions can then deliver tighter integration with existing CRM processes and systems and also provide a strong analytical and master data management foundation. This social media metadata forms the heart of all future activities.
Anticipate that vendors such as Alterian, BuzzGain, Cymfony, Radian6, Viralheat, Visible Technologies, and others will continue to form key partnerships or be acquired by other providers in the SCRM ecosystem in the next 12 to 18 months. Accuracy of the natural language processing (NLP) and sentiment engines will prove to be the lynch pin for success in the next 24 months with vendors such as Clarabridge playing a critical role. Don't be surprised if the community platform vendors get acquired by traditional CRM vendors and other related entities looking to jump in!
Your POV.
Are you a Scout Labs customer? How do you feel about the acquisition? As a Lithium customer does this acquisition encourage you to expand your footprint with Scout Labs? Will you still by Scout Labs as an independent solution? Are you in the market for social CRM solutions and have a question? You can post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity or better yet, join the community!
Please let us know if you need help with your Social CRM efforts. Here’s how we can help:
- Assessing social CRM readiness
- Developing your social CRM strategy
- Vendor selection
- Implementation partner selection
- Connecting with other pioneers
- Sharing best practices
Related resources and links
- 20100511 CRM Intelligence & Strategy - Esteban Kolsky "Lithium Acquires Scout Labs, Dips Toes on E2.0 Waters"
- 20100511 Web Strategist - Jeremiah Owyang "Trends: Social CRM Consolidation"
- 20100507 New York Times Anthony Ha - "Lithium Snaps Up Scout Labs"
- 20100506 TechCrunch - Michael Arrington "Lithium Technologies Picks Up Scout Labs For 20+ Million"
Disclosure
Although we work closely with many SCRM vendors, we want you to trust us more. Lithium is currently a client of Altimeter Group. Scout Labs is not a client of Altimeter Group or Insider Associates, LLC. For the disclosure policy please refer here.
Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.