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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.

Let me know your thoughts or come and collaborate with me on Facebook, LinkedIn and Twitter.


Richard Snow – VP & Research Director

NICE Systems has announced its financial results for 2010, and they make impressive reading in what many consider a difficult market, for contact center systems. I’m not prone to quoting financial figures, but with revenues up to US$695 million (from US$589 million) and non-GAAP profit and margin up to US$451.9 million and 65%, respectively (from US$371.1 million and 63.1%), it certainly seems NICE’s customers are in safe hands. The company also is generating lots of cash, so potential competitors and acquisition targets should beware; this is where the surprise mentioned in my title comes in.

Alongside the financial results, NICE also announced the acquisition of CyberTech International. On the surface this doesn’t look like a strategic acquisition because NICE Systems is already strong in the call-recording space, and the CyberTech product would seem to overlap considerably with what it already has. NICE CEO Zeevi Bregman admitted that there is some overlap, but the key to the acquisition is that the CyberTech product is aimed at small and midsize companies rather than large enterprises. It therefore signals a move by NICE into what my research shows is the biggest segment for contact centers: those with less than 100 seats. As well, being based in the Netherlands, CyberTech brings with it European customers and presence, which should help NICE Systems penetrate more of that market. Along with the announcement came the usual reassurances about protecting existing customer investments, but the reality is that customers will have to wait and see what impact the acquisition has on them.

Against this background, I detect NICE Systems transitioning away from its roots in call recording, quality monitoring and workforce management. These are the core components of the NICE’s contact center product line which serves the enterprise business sector and is by far the biggest of its three lines. My research into the use of contact center technologies shows that these markets are reaching very high levels of penetration and thus becoming harder to maintain and expand. A few months back NICE Systems announced the acquisition of eglue which provides the heart of its new real-time process optimization product, which in plain terms is about using a smart agent desktop to optimize the way agents handle customer interactions. This fits into what I call the customer experience management (CEM) space, which features proactive management of customer interactions as they are occurring. NICE also is placing a heavier emphasis on analytics, with products to support operational, desktop, speech and cross-channel analytics. Although the CyberTech acquisition might seem to go against this current, I see NICE Systems focusing more on value-added applications that support CEM and contact center performance management in its widest form.

Not content with all this, NICE Systems is venturing into the back office, adding another component to its enterprise business. These have to run alongside its Security and Actimize fraud prevention businesses. Some would question how all these bits jell into a cohesive business and wonder whether NICE systems is taking on too much. But the latest financial results say otherwise. Personally I applaud the move into CEM as I think the customers of NICE’s customers (that’s a complex way of saying you and me) would like every company to significantly improve customer service and give us better experiences. Understanding what we think is key to improving these processes, and the old eglue product could deliver those improvements while we are actually on the phone.

So where will NICE go next? A radical move would be to integrate Actimize more closely with real-time optimization. I see other vendors putting more intelligence behind how agents respond to our requests, and an adaptation of the products behind Actimize could be the way for NICE Systems to respond to these developments. Are you finding your customers more demanding? Are you looking for more intelligent systems to help meet those demands?

Let me know your thoughts or come and collaborate with me on Facebook, LinkedIn and Twitter.


Richard Snow – VP & Research Director

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