Pegasystems is set to buyChordiant for roughly US$161.5 million, adding CRM (customer relationship management) and analytics capabilities to its BPM (business process management) stable of applications. The deal is expected to close in the second quarter.

Pegasystems' strength lies in automating business processes, while Chordiant's focus is on "the customer conversation," said Alan Trefler, CEO of Pegasystems, during a conference call. "How do you make sure the right thing is said to the customer? How do you make sure that the best product is offered to the customer? We envision having something that will look to prospective buyers like a well-integrated set of concepts."

The deal makes sense, as Chordiant has sold "process-focused" CRM products, said Altimeter Group analyst Ray Wang. Both companies also have a heavy focus on verticals such as health care and insurance.
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There is a natural marriage between BPM and CRM, according to Wang. "CRM isn't a staid, fixed process like financials. It's about adapting to customer needs," he said. "All of this is really about complex, rules-based processes, especially in insurance. 'If customer does X and goes over this limit, what do you do?'"

Chordiant and Pegasystems already have joint customers, such as Citibank, Trefler said. Chordiant is used by customer service representatives to receive calls and Pegasystems software manages the business processes used to resolve credit card charge disputes, he said.

Meanwhile, the deal also bolsters the footprint of Pegasystems, which is one of the last remaining independent BPM vendors. Progress Software (PRGS) recently purchased Pegasystems competitor Savvion, while IBM (IBM) scooped up Lombardi late last year.