Ventana Research Analyst Perspectives

Alcatel-Lucent Future Depends on Software

Posted by Ventana Research on Feb 16, 2011 5:10:09 PM

Recently I wrote that Genesys is transforming itself from a near-pure-play CTI/call routing vendor into an agent performance and customer experience management vendor. If you look at its parent company, Alcatel-Lucent, you can begin to understand why. Alcatel-Lucent has three basic businesses – voice networks, data networks and Genesys. Its 2010 results show that voice represents 48 percent of the business, data 21 percent and Genesys 31 percent; growth came from its data networks and Genesys units. Indeed, Genesys saved the day for the 2010 results with “a major turnaround” in the fourth quarter;  otherwise one suspects 2010 would have been flat at best. Genesys’ success came not from its traditional communications businesses but from its newer intelligent workload distribution (iWD), workforce management optimization (WFO) and analytics services.

This shows how much the whole communications industry has changed. When I used to build call centers, companies had rooms and rooms of gray boxes that drove their voice and data networks. That has changed; today almost everything is about software, especially VoIP, unified communications and even the dreaded interactive voice response (IVR) box. This changes the dynamics of communications and, for example, allows vendors such as Interactive Intelligence to move some or all of a company’s communications into the cloud and NewVoiceMedia to move contact centers into the cloud. Alcatel-Lucent seems to have recognized this as it sees one constraint on future growth being companies’ propensity to move to “OPEX-based offerings.” On top of this, those of us who have been around a long time know how hard it is to transform a hardware-driven company into a software-driven company, let alone one that needs that software to be available “in the cloud.”

What does this mean for Alcatel-Lucent’s future? One can’t help but believe that its data networks unit will go the same way as its voice networks, that is, growth will slow and it will become a smaller and smaller part of the overall company’s business. The company will definitely become more dependent on software, and that means Genesys will make up the lion’s share of the business. This should benefit current and future Genesys clients because it will get more attention and become better integrated into the bigger business. It will also receive a bigger slice of any investments, which should enable it to provide better support around the world. To continue its transformation  and provide a bigger slice of overall revenues,  Genesys will need to continue to diversify its product portfolio and to stay competitive with other vendors that put their communications and contact centers in the cloud space.

Are you thinking of moving your communications or contact center to the cloud? Let me know and we can discuss the best practices and technologies that can help you be successful.

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Richard Snow – VP & Research Director

Topics: Customer Experience, Lucent, Operational Performance, Cloud Computing, Call Center, Contact Center, Contact Center Analytics, CRM

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