KANA Announces Significant Customer Momentum and Product Highlights from 2003.

Business Editors/High-Tech Writers

MENLO PARK, Calif.--(BUSINESS WIRE)--Jan. 22, 2004

KANA(R) (NASDAQ: KANA), a leading provider of knowledge-powered customer service applications, today announced a series of financial, technical and business highlights occurring in the year 2003. Over the past year, global organizations in a range of key vertical markets selected and expanded on their use of KANA's CRM applications. KANA's strategic systems integrators and aggressive outsourcing model played a key role in the Company's success, and KANA's vision for innovative technology resulted in key product enhancements to KANA's award-winning iCARE Suite(TM) of CRM applications. In addition, the Company announced an agreement to acquire Hipbone(R), Inc., a leading provider of on-line customer interaction solutions.

Through strong customer and partner relationships, as well as the implementation of a successful outsourcing strategy, KANA ended 2003 with tremendous momentum.

Strategic Corporate Initiatives

In 2003, KANA continued to demonstrate its role as an industry leader through its strategic corporate initiatives.

-- Through KANA's strategic outsourced development strategy, KANA

was able to bring enhanced versions of its entire KANA iCARE

suite to market quickly. As a result, the suite is now

available on both J2EE and Microsoft .Net.

-- In the fourth quarter of 2003, KANA strengthened its balance

sheet by raising approximately $13.1 million through a public

offering of common shares. This helped to bring KANA's cash

position to $33 million at the end of the fourth quarter of

2003.

-- KANA continued to work closely with its strategic systems

integration partners, including Accenture, BearingPoint,

BusinessEdge and IBM Global Services, to sell and deploy

KANA's applications.

-- KANA announced an agreement to acquire Hipbone, adding

Hipbone's on-line assisted service channel to the KANA iCARE

suite. Now KANA will provide agent-to-agent collaboration

within the contact center in addition to multi-channel

customer support. Hipbone's vertical focus allows KANA into

key markets by responding to customer requests for standalone 

Web-collaboration solutions.

-- KANA announced it signed a national marketing agreement with

the Blue Cross and Blue Shield Association (BCBSA), the

association for the nation's 41 independent Blue Cross and

Blue Shield health insurance Plans, which collectively insure

more than 88 million Americans.

"In the past year, KANA successfully implemented a strategic outsourcing strategy which resulted in the introduction of three industry-leading applications optimized to meet the needs of specific vertical industries. The ability to rapidly bring these products to market enabled us to provide exceptional and innovative products to our customers," said Chuck Bay, CEO of KANA. "Our aggressive strategy enables KANA to enter 2004 financially stable, with unmatched commitment to product development, and in a position to continue to provide superior products and service for our customers."

Global Customer Growth

Global organizations across all of KANA's key verticals continued to turn to KANA's knowledge-powered CRM applications for building a multi-channel contact center. These industry-leading companies include Blue Cross and Blue Shield of Minnesota, Highmark, Inc., Hutchinson Whampoa's third generation mobile operation '3', Kaiser Permanente, mmO2 plc, SBC Communications Inc., and Staples, Inc. among others.

Product Initiatives

Through its strategic partnerships and outsourcing agreements with Accenture India and HCL Information Systems, the Company became the first CRM provider to offer a complete suite on both J2EE and Microsoft .Net. The enhanced KANA iCARE suite includes:

-- KANA Contact Center 8 which helps contact centers deliver

personalized, consistent service across all channels. In

addition, the application provides the critical link between

internal systems and customer interactions, empowering every

customer service agent to respond quickly and consistently

through a universal view of all relevant information.

-- KANA IQ 8, the industry-leading application for enterprise

service resolution management and service optimization. KANA

IQ 8 powers customer service by providing faster and more

accurate request resolution, resulting in reduced service

costs and improved customer satisfaction.

-- KANA Response 8, the industry's leading e-mail response

management application. It supports secure and efficient

customer service in key vertical industries including

telecommunications, healthcare and financial services, while

reducing costs in the contact center.

Industry Honors

Since its inception, KANA has regularly been honored by industry publications and organizations and this string of awards continued in 2003.

-- KANA was honored with Customer Inter@ction Solutions CRM

Excellence Awards, Customer Inter@ction Solutions Product of

the Year Award, and the IBM Beacon Award, all for product

excellence and vision.

-- KANA was named to the Software 500 by Software Magazine and

the Deloitte and Touche Fast 500.

-- KANA's customer implementations were recognized with the

Computerworld Premier IT Leaders award as well as the RealWare

Awards.

"These industry honors recognize the technical excellence of our products as well as innovation within our customer base," said Tom Doyle, president of KANA. "In 2004, we will continue to work closely with our customers and partners to further enhance our position as the leading provider of knowledge-powered CRM applications."

KANA's CRM solutions address the needs of Global 2000 organizations in healthcare, telecommunications, financial services, high technology and other markets, giving businesses a competitive advantage and increasing their ability to service, market to, and understand their customers. Companies around the world benefit from KANA's knowledge-powered approach to managing customer relationships, which combines sophisticated analytics with thin-client Web architecture to deliver extraordinary customer interactions that decrease costs and drive revenue.

KANA released its fourth quarter and year-end 2003 earnings announcement on January 22, 2004. The Company's press release can be found by visiting www.kana.com.

About KANA

KANA (NASDAQ: KANA) provides knowledge-powered customer service applications enabling organizations to better service, market to, and understand their customers and partners. Optimized for specific vertical industries, KANA's iCARE applications are in use at more than half of the world's largest 100 companies. An award-winning, modular suite of eCRM applications available on J2EE and .Net, KANA iCARE applications enable customers to do business when, where and how they want, improving customer experiences while decreasing costs in contact centers and marketing departments. KANA's partner-centric business model includes strategic relationships with the largest systems integrators in the world to support and sell KANA iCARE. For more information visit www.kana.com.

Cautionary Note Regarding Forward-looking Statements Under the Private Securities Litigation Reform Act of 1995:

Information in this release regarding KANA's forecasts, projections, expectations, beliefs, and intentions are forward-looking statements that involve risks and uncertainties. These statements include statements about KANA's pending acquisition of Hipbone, long-term prospects, new business and market position. All forward-looking statements included

in this release are based upon information available to KANA as of the date of this release, which may likely change, and we assume no obligation to update any such forward-looking statement. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include, but are not limited to, competition in our marketplace, including introductions of new products or services, or reductions in prices, by competitors; risks associated with lack of market acceptance of KANA's products or services; inability to enhance and develop our products and services within budget and on schedule; inability to attract and retain qualified employees, to manage cash and expenditures or to expand sales; inability to manage our business in light of recent personnel reductions; inability to obtain the anticipated benefits of the pending Hipbone acquisition and of KANA's ongoing arrangement to outsource development activities; KANA's history of losses; the effect of potential terrorist activities; and uncertain economic conditions, particularly as they affect spending by our prospective customers on eCRM and similar enterprise software products. These and other factors are risks associated with our business that may affect our operating results and are discussed in KANA's filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q.

NOTE: KANA is a registered trademark, and KANA Software, KANA iCARE, KANA Knowledge, KANA IQ, KANA ResponseIQ, KANA Response, KANA Marketing, KANA iCARE Analytics and the KANA logo are trademarks of KANA Software, Inc. All other company and product names may be trademarks of their respective owners.