Microsoft has acquired Parature, a customer service SaaS provider, for $100 million, according to sources close to the deal. The Parature acquisition gives Microsoft Dynamics, its CRM platform, a world-class self-service knowledge base to connect with customers, such as gamers, across multiple channels, including email, the web, chat or social media.

Parature’s roots date back to 2000 out of a dorm room at Cornell University. As students, Co-Founder Duke Chung and his classmates built a chat app for online help called Cyracle. In 2003,  the company changed its name from Cyracle to Parature, which is a portmanteau of “Paradigm of the Future,” and moved its offices to Reston, Virginia. Since then the company has received $30.2 million in funding from Valhalla Partners and Sierra Ventures as well as Accel Partners. Parature now has 70 million end users compared to 35 million in 2011.

The acquisition fills a gap for Microsoft, which has lacked a complete way to make the customer experience one that fits the modern customer who looks to solve their own problems more so than calling a toll-free customer service number. The company has all the “process” capabilities to route information in a complex call center workflow, but Parature helps widen its capability and to compete better against Salesforce.com, the market leader, said Bill Patterson, senior director strategy and planning for Microsoft Dynamics CRM.

Parature has made a name for itself with its “customer experience” technology. It has clients such as Playfirst, a gaming company that depends on the ability to keep gamers in their games without disrupting them. It does this with a portal developed that has a knowledge base that can help a customer answer any potential question they might have.

It’s the knowledge base that sets Parature apart, said Ray Wang, the founder of Constellation Research in a Skype interview yesterday. Parature re-architected its knowledge base and now has the most modern one in the market. Parature competes with companies such as Moxie Software and Kana. In the overall market, a lot of the knowledge base technology was built 10 to 15 years ago, Wang said. Parature developed a modern knowledge base that integrates context, search, prediction and learning. It ties in the social data and processes so the right information gets to the right people.

Microsoft has Parature integrated into the Dynamics platform. The company will also continue to run independently, at least for the time being. Salesforce has its own knowledge centered support environment. Salesforce also has a partnership with companies such as MindTouch that provides a knowledge engine for surfacing the right information for people.

Microsoft Dynamics core strength has been with its tight integration into Office under the leadership of Corporate Vice President, Bob Stutz, who was one of the key people to develop Siebel CRM and SAP CRM.

Last year Microsoft acquired Marketing Pilot to fill out its marketing automation capabilities. With Parature, it helps but does not complete the offering from Microsoft Dynamic, Wang said. It still needs to fill out its commerce capabilities, something that IBM, for example, does very well with its Websphere offerings.

(Feature image via Flickr)

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