Salesforce $31.5M acquisition to speed customer queries announced it acquired InStranet, a provider of call center knowledge management software, for $31.5 million, including the assumption of $4.2 million in cash. The deal took effect on August 4.

InStranet’s technology will be added to the platform by fiscal year 2010. CRM data housed on Salesforce will be integrated with InStranet’s Knowledge Base Dimensions technology in an effort to improve responses to service requests. Dimensions organizes a customer’s data so that, when a query is made online or through a call center, more relevant answers pop up more quickly.

“It organizes customer information, so when an agent or customer runs a search on this information, what is returned is a smaller amount of much more relevant information, and that really pays off,” said Bruce Francis, VP of corporate strategy at “It’s not about improving the search algorithm, it’s about setting up a knowledge base that can be searched accurately and quickly. The payoff is that the call is resolved on first contact — which is huge if you run a contact center — the resolution times are much faster, and if online customer portals are delivering good results, they are not calling in to begin with, and that is name of the game too.”

The acquisition is expected to make Salesforce more competitive with other CRM companies such as SAP and Oracle, which Francis chided for being “trapped in 1990s keyword search technology.”

“We feel that the incumbents in this market are not serving the market very well because they’re all mired in this greatest hits of the ’90s keyword search technology that gives poor results,” he elaborated. “That hurts the brand, it frustrates customers, it makes the call center inefficient, and companies cannot afford that these days.”

InStranet’s track record of getting customers up to speed quickly was cited as another reason for the acquisition. Timely implementation has been a longstanding priority for Salesforce.

No layoffs have been announced at either company, and Salesforce will continue to support all of InStranet’s customers, which include Orange and T-Mobile.

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