Radian6 gives Salesforce.com

Salesforce.com’s move to acquire Canadian social media monitoring vendor Radian6 illustrates how the customer relationship management (CRM) market is increasingly integrating social channels instead of treating them as a separate entity, said one analyst.

“What (CRM vendors) want is the listening capacity,” said Tim Hickernell, lead research analyst with London, Ont.-based Info-Tech Research Group Inc.While there are stories of failed social media strategies within enterprises, Hickernell said Salesforce.com’s approach to social media has always, from the beginning, been on the right track by wanting to integrate social media with other marketing service interaction channels.

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The choice to buy, as opposed to build, Fredericton, N.B.-based Radian6, a company founded in 2006, will speed up the journey towards getting a piece of the social enterprise. Hickernell expects Salesforce.com to not waste much time integrating Radian6 technology directly across its product portfolio.

This is not the first of Salesforce.com’s moves in the social space. It recently acquired vendors DimDim and Heroku.

Besides the obvious opportunity from integrating the two platforms, Hickernell expects an additional opportunity with smaller enterprises that may prefer a standalone social interaction platform rather than deploying an entire CRM system.

Hickernell thinks bundling a rudimentary CRM with Radian6’s social interaction technology could net Salesforce.com a very competitive product.

In a conference call on Wednesday, Salesforce.com’s chairman and CEO, Marc Benioff, described the injection of social media into CRM as the “critical next step” to creating a social enterprise.

Benioff said Radian6 is the “key link” to bridging public social networks with private ones in the enterprise. Users of Salesforce.com’s Chatter, the company’s internal collaboration tool, will be able to follow brands and keywords across the entire Web, as opposed to just specific customer accounts, he said.

Salesforce.com’s executive vice-president for CRM, Alex Dayon, will head Radian6, which will continue to operate out of Fredericton, N.B., along with its 300 employees and most of its key leaders.

Dayon noted the commonality in platform architecture and design between Salesforce.com and Radian6, as well as the “zero overlap with current offerings.” Salesforce.com will continue to develop and expand Radian6 technology because it allows broader reach to marketers and B2C customers.

Nigel Wallis, research director for application solutions group with Toronto-based IDC Canada Ltd., noted Salesforce.com gets “an instant leg up” on the competition with Radian6 because leading edge CRM adopters have already begun to consider merging social into traditional salesforce automation, marketing and customer service.

It will likely be the case that Salesforce.com will continue to offer Radian6 as a standalone offering in addition to integrating it in its portfolio, said Wallis. A standalone option, whether re-branded or not, will align with how customers approach social media monitoring, which is to “get their feet wet first,” he said.

As for Radian6, the benefit will be the exposure to hundreds of thousands of Salesforce.com customers from having its technology embedded across the portfolio, said Wallis.

And, much like the necessity for Salesforce.com to include social in its CRM, Wallis said Radian6 would have been relegated to a niche product if it had remained standalone. “But by being baked into the business technologies, then social gets a chance in theory,” said Wallis.

Overall, the acquisition is a great success story for the Canadian startup community outside of the recognized innovation centres of Waterloo and Ottawa, thinks Wallis. “It shows that you don’t have to come to the centre of the universe—Silicon Valley—in order to succeed,” he said. “If you have a compelling idea and you have the skills to build the technology, go do it.”

The transaction is expected to close in May. Salesforce.com will pay $276 million in cash and $50 million in stock.

Follow Kathleen Lau on Twitter: @KathleenLau

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