KANA Partners with IBM, Launches "Service Experience Management"

As the second quarter came to a close yesterday, KANA announced a major new release that includes IBM technology. But it's more than just a product announcement, it's a signal that the company is really committed to the future.

KANA caters to big enterprises in financial services, telecomm and retail. Of its 600 customers, 50 come from the Fortune 100. Big brands like Dell, Bank of America and JetBlue are customers -- think big complex multi-channel customer service operations that include the "whole nine yards" of CSS functionality: email, chat, knowledgebases, etc.

BTW, did you know some say "whole nine yards" comes from the clothing industry, because it take nine square yards to create a man's three-piece suite with everything included?

But I digress. To put this announcement in context, here's a quick refresher on KANA's history.

Rise, Fall and Comeback

Kana Communications was founded as an email management vendor way back in 1996. It went public in 1999, got a huge run up in its stock price during the dot-com bubble, acquired 3 companies, then merged with Silknet in 2000 in a transaction valued at $4.2 BILLION -- and no, that's not a typo.

A year later, Kana merged with Broadbase, another software company struggling after the stock market bubble burst. Kana's stock price dropped below $1 per share and lost nearly $1 Billion in 2001. (Again, no typo.) Somewhere along the way, Kana became KANA Software.

To make a long story short, KANA somehow survived this messy beginning and kept working on its products while rightsizing the company to stem the losses. In early 2006 I met with new CEO Mike Fields, who had a strong background (including a stint as president of Oracle U.S.A.) and said all the right things about getting the company back on track.

While impressed with Fields, I remember wondering if a turnaround was really possible. The SaaS market was growing fast with RightNow in particular moving up-market in the customer service space and telling me they were taking customers from KANA. Well, Fields somehow managed to eke out an operating profit in 2006, on just $54 million in revenue. The following two years KANA grew modestly, finishing up 2008 with $65 Million at the current crisis hit.

While it's still hard for me to see KANA becoming a high-growth software company, this is quite a remarkable comeback from the brink of extinction. Fields and his team have done an amazing job to stabilize the company while continuing to build for a brighter future.

Service Experience Management

That future is now evident in KANA 10, an impressive new release some three years in the making. It incorporates IBM's SOA technology and middleware. WaveMaker's visual development platform is also embedded, as part of another OEM deal.

Earlier this year KANA's chief customer officer Charlie Isaacs told me that business users were "fed up with IT" taking weeks, months, and sometimes years to get anything done. The root of the problem was a platform that required IT professionals to make even minor changes to workflow and screen layouts.

KANA is betting on IBM and WaveMaker to make it easier to model a customer experience, then create a kind of composite application that includes functionality from KANA and other enterprise applications. Keith Goldberg, VP of Product Marketing, says the goal is to enable business users to design the end-to-end experience without any IT involvement, while balancing sometimes conflicting cost, revenue, compliance and customer satisfaction objectives.

Here's a screen shot of the new KANA modeler.

Source: KANA

The visual designer is great, but what really makes this complicated job feasible is IBM's technology under the hood to enable easy connections to other "SOA-aware" applications. If IBM doesn't have a pre-built connector, then a one-time set up is required by the IT staff.

My take is that this announcement will help solidify KANA's position within its customer base and become a kind of "glue" application around its core CSS functionality. KANA 10 should also appeal to large to very large enterprises seeking an installed platform that can be tightly integrated into a complex operation. Maybe this will help KANA stimulate more growth in new license revenue.

Now that the big platform release is out the door, I'd like to see KANA do more in the social media realm. They have a partnership with Jive, but otherwise seem to standing on the sidelines while the rest of the industry is moving forward more aggressively towards a CrowdService future.

Further reading:
* KANA Introduces New Era of Customer Service with KANA 10
* CrowdService: A Clear and Present ROI for Social CRM