ISG Software Research Analyst Perspectives

It has been a busy year for relationships among vendors in the contact center market and despite tough economic times, it doesn’t look like things are slowing down. For example, early this year Salesforce.com acquired Radian6 to strengthen its position as a supplier for what it calls “the social enterprise.” This is not a term I particularly like, but there is no doubt CEOs are interested in understanding what customers are saying about them on social media, and so this looks like a smart move. Just how many companies fully understand social media and the implications for their business is another question, but social media is not going to go away so I expect more companies to develop plans for it in 2012.

In June inContact signed a major agreement with Siemens Enterprise Communications that seems to give inContact wider market presence and help Siemens move into a market it hasn’t been strong in. I see this as an indication on increasing recognition by some of the proprietary hardware vendors that the future lies in software, and especially in cloud-based systems. Siemens had a stand at the recent CCExpo event in the U.K., where it was demonstrating the inContact systems.  The small number of visitors to the stand shows that transitioning from hardware to software is not as easy as some might think and that marketing a contact center in the cloud is still a work in progress.

Verint has been an active acquirer, and last summer it acquired Vovici and even more recently acquired GMT. Verint made the Vovici acquisition primarily to strengthen its position in customer feedback management while the GMT acquisition strengthens it in enterprise-wide workforce management. NICE Systems is also known for its appetite to acquire other vendors; in September it acquired Fizzback. Like Verint’s acquisition of Vovici, this is about strengthening NICE’s position in customer feedback management.

Also in September 8*8, a relatively unknown company in the contact center space, acquired Contactual. 8*8’s main business has been providing telephony and unified communications, and Contactual’s contact center in the cloud supplements that. I’m not sure how this will impact existing Contactual customers, but as I find out more, I will let you know. In a move that confirms the rising importance of speech analytics, Avaya has acquired Aurix. This adds to Avaya’s contact center portfolio and perhaps signals a move further into software and away from its core of hardware-based networking products. It also gives Aurix a more direct route to market, although the deal is likely to impact its partners that use its product as their core speech analysis engine. 

In perhaps the most surprising news, Oracle has acquired RightNow, which provides customer service in the cloud. Not many companies have been more active than Oracle in acquisitions over the last few years, and on the surface, this one would seem to bring both another integration headache and even more functional overlap with Oracle’s existing products. It does take another competitor out of the market, but raises questions for the RightNow customers that chose it because they didn’t want to become an Oracle customer.

The two main reasons vendors acquire other companies are to gain market share or new capabilities. Ventana Research sees several specific reasons why technology vendors in general are expanding their portfolios now: They want to have more cloud-based applications, to support mobility for users via smartphones and tablets, to meet demand for analytics that help companies better understand their operations, and to exploit the use of social media. The contact center market is not immune to these demands, indeed in many ways it is at the forefront of them: Consumers want to interact through more channels of communications, including mobile devices; social media has become a significant factor in marketing, sales and customer service; and companies need to fill out “the voice of the customer” so they can plan customer-facing strategies, ways to improve the customer experience and ways to increase the value of customers. Several of the acquisitions I’ve mentioned point to some of the bigger players seeking ways to meet these demands.  The effect is that the market is becoming more dominated by suite vendors, which will constrain companies that like to shop around for best-of-breed products from independent suppliers.

I don’t see an end to this acquisition activity – the contact center is undergoing more change now than I have seen in 15 years. It looks like a busy time ahead; I will try to keep up and share with you the latest developments. To keep abreast, please collaborate with me on social media.

Regards

Richard Snow – VP & Research Director