Peregrine swoops in to buy Remedy

SAN DIEGO - For the 10,000 small and midsize businesses that use Remedy software, the company's acquisition by enterprise infrastructure-management vendor Peregrine Systems could mean greater functionality and scalability for Remedy applications - as long as Peregrine keeps its promise to not force migration to its own platform.

The companies - which both compete in the help desk software market - have said they will continue development of Remedy's Action Request (AR) System. Designed for coordinating workflow, AR System is the framework on which Remedy's IT service management and customer relationship management applications are built, either as prepackaged software or software customized by users.

Observers say the flexibility of AR System is one reason Peregrine picked up Remedy in the cash and stock deal, which was worth about $1.08 billion when it was announced last week. The opportunity to gain small and midsize users was also a factor for Peregrine, whose 46,000 customers are primarily large companies. Peregrine offers a broad portfolio of management tools, including asset management, help desk and Electronic Data Interchange products.

Besides targeting different-sized customers, the two companies have very different development environments. Remedy's software is easily customized without having to write a lot of code, says John Mann, senior analyst/consultant at Patricia Seybold Group. Conversely, Peregrine's products are hard-coded to function a certain way and couldn't be adapted to different functions, he says.

The companies have pledged to integrate AR System with Peregrine's enterprise offering and accelerate development of AR System 5.0, due out in the fourth quarter and slated to include better Web integration. However, given the difficulty of reconciling different architectures, as well as the overlap between Peregrine's and Remedy's help desk application suites, Remedy users should consider the implications if that integration doesn't happen.

Peregrine has a history of acquiring help desk vendors and forcing customers to migrate, says Erin Kinikin, a vice president for Giga Information Group. She cites as an example Peregrine's December 2000 acquisition of service desk products from Tivoli Systems, a deal that left Tivoli Service Desk users without an upgrade path when Peregrine said it would not develop new releases of the product.

If Peregrine reneges on its integration plans, Remedy customers risk an expensive migration to Peregrine, Kinikin says. "While the two companies promise to work on a converged product [and support Remedy as a mid-market alternative], Remedy customers are at risk - and need to look at their contracts and carefully evaluate their options."

Help desk powerhouse
Peregrine nets one of the largest independent help desk vendors with the purchase of Remedy.
Company	Peregrine Systems	Remedy
Q1 revenue:	$171 million	$64.8 million
Q1 pro forma earnings:	$24.8 million	$1.9 million loss
Employees:	3,000	1,300
Customers:	46,000 large companies	10,000 small and midsize businesses
Products:	Infrastructure management products	Help desk, customer service, salesforce automation software

One user eager to see support for AR System continue is Kevin Forsyth, lead Remedy administrator/developer at VoiceStream. Forsyth depends on the flexibility of AR System to customize the applications used in VoiceStream's help desk and 10 customer care centers.

Forsyth is cautiously optimistic about the pending acquisition. "If what the press release says is going to happen happens, then yes, I would consider myself excited," Forsyth says.