Toward real-time customer service?

Balisoft and ServiceSoft are joining forces in what ServiceSoft president Dave Tarrant called a "merger of equals." Terms of the deal haven't been disclosed, but the two privately held firms expect about $20 million in 1999 revenues. They currently have 110 employees.

"The Internet customer service category is forming out of a lot of fragmented products," Tarrant said in an interview. "We think we're the first company setting the pace for what customer service can consist of."

In November, a report from Jupiter Communications criticized online merchants for poor customer service systems, arguing they need to be improved if e-commerce is to go mainstream. Better online support systems could benefit companies too--Forrester Research estimates that using the Internet can cut service costs by 43 percent.

The combined firm, to be called ServiceSoft Technologies, will offer a suite of four products: Customer self-service software for Web-based, email response software, live interactions combining telephone and Internet connections, and software for managing a database of information that customers can access.

"These really represent a continuum of customer contact on the Internet," Tarrant said. The self-service and email products come from Balisoft, while ServiceSoft developed the voice and data management software.

Myriad competitors exist in each product segment, including firms like Kana, Mustang Software, and eGain for handling email. WebLine, SiteBridge, and eShare have integrated voice and Internet offerings. Acuity, formerly ichat, is pulling together a suite of offerings relying on partnerships, not acquisitions--so far.

Tarrant thinks the merger will accelerate consolidation in the Internet customer service market, which Yankee Group forecasts growing from $150 million this year to $1 billion by 2003.

"They will recognize that we are establishing a playing field where an integrated solution is the way to go," he predicted.