A new study concludes vendors must tap into the midmarket to prevent a potential stagnation in market growth.
Posted Feb 13, 2008
Despite a turbulent economy, a new study suggests that the market for contact center applications remains alive and well, a sign that companies recognize the importance of leveraging those solutions to ensure ongoing customer satisfaction and retention.
According to results from the study, "North American Contact Center Applications Markets," from Frost & Sullivan, the space saw 6.9 percent growth in 2006 to notch revenue totaling $2.49 billion -- and the overall market is estimated to reach $3.67 billion by 2013. According to the report, inbound contact routing (ICR) is the dominant component of the applications market. However, look out for interactive voice response (IVR) and multimedia systems: According to the study, these two markets will reach the pinnacle of their respective market growth in the next two to three years.
And yet Kunal Kakodkar, Frost & Sullivan research analyst, says that expansion will come from other sectors as well, with the overall market enjoying a good run over the next several years. "The North American contact center applications are poised for significant growth in the next few years and growth rates expect to peak between 2008 and 2010," he writes. "Growth in contact center applications will primarily be driven by two factors: an increasing trend amongst customers to move to [Internet Protocol]-based technology and the replacement sales of systems sold around Y2K."
The report notes three vendors who have made great strides in accumulating massive market share and revenues, including:
It comes as no surprise that the contact center giants continue to pace the market in overall revenue and market share. According to the study, Avaya's dominance in the ICR market, combined with the company's play in outbound dialing (OBD) and IVR markets, generate revenues exceeding the total of its next four closest competitors.
NICE and Oracle also get favorable nods from Frost & Sullivan thanks to merger and acquisition activity. Keith Dawson, senior analyst at Frost & Sullivan, says consolidation is "dramatically changing the market landscape," particularly in the workforce optimization market. The study concludes that NICE and Oracle, two "relatively niche participants, were able to snare noteworthy shares of the market because of acquisitions." NICE Systems' mid-2006 acquisition of IEX gave the Rutherford, N.J.-based company a "healthy" 4.2 percent overall share, all of which fell within the agent performance optimization (APO) space. Oracle's ongoing integration of its Siebel Systems and PeopleSoft acquisitions continues to strengthen the company's play in the North American CRM market, giving it what the study deems "a lion's share of the multimedia systems."
- NICE Systems; and
While vendors are getting larger, the study stresses it is essential to remember the small-to-midsize-business (SMB) space -- without which growth of the contact center applications market could come to a standstill. "There will be tremendous potential for growth in the small- to mid-enterprise sector," Kakodkar explains. "The industry may experience a slowdown 'til the still-nascent SMB strategies of the large enterprise vendors come to fruition." Bearing this in mind, the study suggests that vendors large and small should adapt their marketing strategies to best fit the needs of the growing SMB market.
The study maintains that growth is still in contact center application markets' future, but only through adaptation and flexibility in regard to servicing SMBs. "Large enterprise vendors should remain agile as they move from targeting the larger deployments to identifying and catering to the needs of the small- to mid-sized customer," the report advises. "As the industry peaks and the large enterprise segment attains saturation, continued sustainable growth is only possible through adaptability."
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