M&A Mania: Leading Customer Experience Companies Expand via Acquisition


M&A Mania: Leading Customer Experience Companies Expand via Acquisition

By Paula Bernier, Executive Editor, TMC  |  December 13, 2013

It’s holiday shopping time. And consumers aren’t the only ones opening up their pocketbooks this season. Companies in the customer experience space have also been in on the buying action so they are well stocked with a variety of cloud-based, inbound, outbound, and multichannel solutions as businesses do some shopping of their own.

For example, Five9 in late October announced plans to buy SoCoCare, a social engagement and mobile customer care solution.

"Social media and mobile devices have fundamentally changed customer engagement; consumers are increasingly using social channels and mobile devices to connect with companies for their support needs. With SoCoCare, we've extended our product leadership position by adding best-in-class social and mobile care," Mike Burkland, president and CEO at Five9.

Genesys announced plans to buy Echopass Corp. for an undisclosed sum. The deal expands the acquirer’s position in cloud-based contact centers, as Echopass is the market leader in this space and brings to the table 1,250 new customers, including some blue chip enterprises and federal and state governments. These customers are already on the Genesys multi-channel platform, which Echopass has been using since 2000.   

Aspect (News - Alert), Avaya, and Genesys have all made acquisitions this year to bolster their cloud contact center offers.

Genesys in February purchased Angel. Aspect followed suit a few months later, buying IVR outfit Voxeo, Omer Minkara, senior research analyst–contact center for Aberdeen, noted in a recent blog. And just last month Avaya bought a collaborative cloud and content center outfit called ITNavigator, a privately held business out of Israel that Minkara said is a pioneer in cloud, social media, reporting, and management solutions.

Cloud-based customer experience solutions are where the industry is going, Blair Pleasant (News - Alert), an analyst with COMMfusion LLC & UCStrategies.com, told CUSTOMER magazine in the wake of the Genesys-Echopass news.

“It's clear that customers are moving toward the cloud for communication services, including for contact center capabilities,” she said. “Cloud solutions make a lot of sense for contact centers – it's easier to add staff and resources for seasonal and cyclical needs, makes it easier to enable at-home or remote workers, etc. Genesys knows that customers are looking for more cloud options, as do all of the other vendors. The question most vendors are dealing with now is how to increase and enhance their cloud offerings.”

Dave Rennyson, executive vice president of Genesys Cloud and former CEO of Angel, who is in charge of the company’s cloud initiative, told CUSTOMER magazine that Echopass will enable Genesys to better serve the mid and high-end markets. Prior to the Echopass deal, which is expected to close this month, Genesys already played in the high-end cloud space. Genesys had less than 3 percent of the cloud contact center market in North America before the Echopass deal, and following its close will own more than 10 percent of that market, making it the leader in that space.

In addition to Echopass and Angel, Genesys in the past 12 months has acquired SoundBite, which is known for its outbound solutions. Angel, meanwhile, was a leading inbound provider targeting medium and large enterprise customers with inbound IVR solutions and offering mid-market contact center solutions. Genesys is the inbound leader with the pending acquisition of Echopass and No. 2 in outbound with the acquisition of SoundBite.

“We’ve built a rich fabric of industry leaders in these areas,” says Rennyson.

Yet another cloud-based customer service acquisition announced in October was Nuance’s move to buy Varolli. This union also marries an outbound solutions provider, in this case Varolli, with an inbound one.

Nuance also boasts impressive reach, delivering customer service solutions (including inbound hosted IVR, and virtual assistant solutions for mobile and web applications) to more than 6,500 organizations, including major brands AT&T (News - Alert), Barclay’s Wealth & Investment Management, FedEx, Geico, Telstra, T-Mobile, and USAA.

The Varolii platform is used by many of the world's largest companies to manage outbound customer service communications via automated phone, e-mail and text messages. The companies said an estimated one out of every five American adults each year is touched by the Varolii platform.

“The combination of Nuance and Varolii not only represents the best of inbound customer service with the best in outbound customer communications, but the opportunity to deliver automated yet natural conversations with customers that are more compelling and effective,” said Robert Weideman, executive vice president and general manager of the enterprise division at Nuance.

Forrester (News - Alert) Research surveys indicate that 25 percent of enterprises are considering proactive outbound as a key contact center investment in the next year and that proactive outbound will enjoy excellent growth rates as more and more enterprises adopt it.

The third quarter also saw Oracle buy both BigMachines and Compendium.

BigMachines offers cloud-based solutions that enable sales people to more easily generate quotes and pricing for their customers.

“The fundamental goals of smarter selling are to provide sales teams with the information, access, and insights they need to maximize revenue opportunities and execute on all phases of the sales cycle,” said Thomas Kurian, executive vice president of Oracle Development. “By adding BigMachines’ CPQ Cloud to the Oracle Cloud, companies will be able to drive more revenue and increase customer satisfaction with a seamlessly integrated process across marketing and sales, pricing and quoting, and fulfillment and service.”

Compendium offers cloud-based capabilities that enable companies to more easily create, monitor and promote their mobile and other online content. The tools and individuals from Compendium will be combined with the assets Oracle got through its recent acquisition of Eloqua, another cloud-based marketing automation outfit.

"As customers increasingly access information through online and mobile channels, the buying process is shifting from sales-driven to marketing-driven. Now, more than ever, marketers are challenged to deliver relevant and engaging content across multiple channels and throughout the customer lifecycle," said Kurian. "By adding Compendium's content marketing platform to Oracle Eloqua Marketing Cloud, customers will be able to capture more prospects, improve the customer experience and drive top line revenue."

The 103,000 mid and large sized businesses in the U.S. spend $1.3 million annually collectively on content creation, according to Toby Murdock, CEO of Kapost, which sells a content marketing software and content platform. That means if just 3 percent of that goes to content marketing software, the market opportunity exceeds $4 billion annually.

“When Oracle, the world’s No. 3 software provider, makes an acquisition in a segment, it is a clear sign that the need is clear and growing for that segment,” said Murdock.

Lori Wizdo (News - Alert), principal analyst at Forrester Research, told CUSTOMER magazine that marketing automation – as this space is generally known – is a broad category, but it has to do with managing the pipeline to revenue, which starts with attracting the right kind of traffic, engaging that traffic and converting it to sales. She added that CRM and marketing automation are very closely related. CRM addresses the back end, and front end had not been automated, but now that’s starting to change, she says. So it’s no surprise that Oracle bought Eloqua or that Salesforce bought ExactTarget, which had purchased Pardot a couple months earlier.

“There will be more consolidation,” she says.

In other related M&A action, BPM and CRM company Pegasystems Inc. in October announced plans to buy Antenna Software, a leader in the Gartner 2013 Magic Quadrant for Mobile Applications Development Platforms.

“Traditional mobile technology can lead to separate channel-specific applications which hamper customer service and efficient operations,” said Alan Trefler, founder and CEO of Pegasystems. “Pega’s distinctive customer-centric approach to mobility enables business users and IT to create optimal customer experiences across channels and devices. We believe that mobile devices should seamlessly operate with processes and cases to drive work to done. Pega and Antenna coming together offers our collective clients state-of-the-art mobile development, responsive UIs, device management and cloud-based Backend-as-a-Service.” 

Edited by Stefania Viscusi
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