On 12 January 2010, sales performance management software vendor Callidus Software completed its acquisition of ActekSoft, an agent management and incentive compensation management (ICM) vendor focused on the health insurance market. While terms were not disclosed, Gartner estimates the value of the deal to be between $7 million and $9 million based on ActekSoft's estimated 2009 annual revenue of $4 million $6 million. Callidus Software will retain ActekSoft’s organization of about 40 employees, with cofounder Farley Lavett reporting directly to Callidus Software’s President and CEO Leslie Stretch. Callidus intends to continue supporting and marketing ActekSoft's ACom3 suite as a stand-alone offering.

Overall, the consolidation of Callidus Software and ActekSoft is a positive move for both companies. Callidus Software extends its strong position in insurance by gaining ActekSoft’s client base, product line and services expertise in healthcare commission processing issues. The move benefits ActekSoft by giving its customers more opportunities to add on-boarding and other Callidus offerings adjacent to incentive compensation. Further, the acquisition could result in more marketing and research and development resources for ActekSoft’s ACom3 product line, reassuring existing clients of the viability of their installations

ActekSoft has a strong reputation for customer service, problem-solving capabilities and domain experience with U.S. healthcare insurers. These factors enabled it to gain a measure of success in a segment that is difficult (characterized by long sales cycles and demanding evaluations) but often lucrative (due to good deal sizes, enduring commercial relationships and follow-on business).

To ensure the ultimate success of the acquisition, however, Callidus Software must ensure that it maintains the positive customer experience and servicing that insurers consistently attribute to the ActekSoft organization. While the stated intention is to have the organization operate independently, the acquisition could prove disruptive to ActekSoft's delivery process. It may also create confusion for prospects until Callidus clarifies its market positioning of ACom3 and preference for producer management and analytic capabilities.

• Current ActekSoft customers should remain with ACom3 for now as the offering is earmarked for continuing support and investment. But customers should confront any changes in staffing or service levels that impact service delivery, available expertise and enhancements; and escalate to senior management if necessary.
• Midsize healthcare insurance firms competing in the U.S. market should still consider ACom3 and supporting professional staff for domain expertise and agility in supporting evolving healthcare requirements. But they should also confirm Callidus' commitment and demand well-defined road maps for supporting and enhancing the offering, as well as retaining key ActekSoft staff.

• "MarketScope for Insurance Incentive Compensation Management Applications"— Interest in incentive compensation applications has remained strong among life, property and casualty, and healthcare insurers in North America and, to a lesser degree, around the world. By Steven Leigh
• "Health, Life and P&C Insurers Must Measure Vendor Risk Within the Context of Their Industries and According to Vendor Life Stage"— North American insurers must use industry-specific criteria and vendor life cycle maturity as filters to successfully assess organizational, financial, support and strategic risks. By Steven Leigh and Maureen O'Neil

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