Nortel buys customer relationship firm for $2.1 billion

SAN JOSE - Nortel last week ponied up another couple of billion dollars in its effort to bolster integration between telephony call centers and Web-based electronic commerce.

The vendor bought Clarify, the No. 2 maker of customer relationship management (CRM) software. Clarify produces software that call center and help-desk agents, mobile salespeople and logistics managers use to consult and update customer records and assist in sales.

Clarify recently bundled its software into a suite called eFrontOffice, which attempts to provide consistent sales-history information on a customer-by-customer basis to agents handling both e-commerce and telephony transactions.

The $2.1 billion purchase follows Nortel's August announcement that it would acquire Periphonics, an interactive voice response vendor that also has moved into the arena of Web call center integration. The Clarify deal follows last week's purchase of No. 3 CRM vendor Vantive by enterprise software vendor PeopleSoft.

The CRM market leader, Siebel Systems, remains independent, but not without a partner - its software is resold by Lucent, Nortel's neckand-neck competitor for call center telephony switches. Bill Conner, executive vice president at Nortel, says Nortel is seeking tighter integration between telephony and Web technologies than the company thought was possible through a reseller agreement.

Nortel's move comes at a huge price - almost five times as much as PeopleSoft paid for Vantive, and 10 times Clarify's expected revenue for this year. Susan King, Nortel's vice president for customer care solutions, justified the price by pointing to Clarify's "solid workflow architecture" - integration with back-office systems is considered key to CRM installations - and work in both telephony and e-commerce environments.

Clarify also brings Nortel a goldplated customer list, including Best Buy, British Telecom, Compaq, First USA, General Electric, Gillette and Prudential.

Clarify will become a wholly owned Nortel subsidiary with headquarters in San Jose.