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Is Workforce Optimization Recession-Proof?
A new study finds WFO had a very good 2008, despite the economic downturn.
Posted Feb 16, 2009
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Despite the economic downturn and the software industry's sliding profits, the workforce optimization (WFO) market continued to grow by leaps and bounds in 2008, according to the new Quality Management/Liability Recording report from DMG Consulting.

The report indicates that the WFO market's rapid increase in revenue was particularly dramatic in the first half of the year: The contact center segment of the WFO market, for example, booked $507 million in first-half revenue, a 13.4 percent jump from the first half of 2007. Even more telling, the overall WFO market's $1.34 billion in first-half revenue was an 18.3 percent jump over the same period in 2007 ($1.23 billion). When the final numbers for 2008 roll in, despite an economic situation that worsened as the year progressed, the full-year revenue figure is expected to exceed $2.5 billion overall, according to projections by Donna Fluss, president of DMG Consulting.

Fluss stresses that she is not surprised that WFO continues to gain in popularity. She recalls the last major economic downturn in the early 2000s, in which WFO vendors still performed well compared to infrastructure providers -- largely because purchases of quality assurance recording applications were deemed required expenditures, despite budgetary restrictions. She says what made 2008 unique was the comparative absence of the mergers and acquisitions that had largely defined WFO in 2007 -- including Verint Systems acquiring Witness Systems and Nice Systems snatching Performix and IEX.

Now, Fluss says, vendor innovation is what's helping the WFO market succeed. “Companies are introducing new functionality that is customer-driven, particularly in the area of analytics this year, that is more exciting than any years in the past,” she says. Specifically, she says, 2008 saw increased sales in Internet Protocol recording, traditional quality assurance applications, and adoption of newer tools including speech analytics and surveying.

That’s not to say, though, that mergers in WFO won’t occur again. In fact, 2009 has already seen Aspect Software acquire AIM Technology to help bolster its performance management offering. “We absolutely expect to see more acquisitions this year,” Fluss declares. “In some cases, it will be one company buying another in the same market, and in others, a vendor will bring in incremental revenue like Autonomy’s purchase of Interwoven.”

A major theme in DMG's previous WFO report was that there was a potential goldmine in the burgeoning small-to-midsize business (SMB) segment -- and the opportunities for WFO vendors still exist, according to Fluss. “The need is actually growing,” she says. “Doing a good job with the SMBs is harder than you think: It’s the same cost to sell and implement, yet you must be geared toward putting together resources to implement effectively.”

Looking ahead, Fluss believes WFO vendors will continue innovating in analytics, albeit in two separate areas: customer experience and agent desktop. “Customer experience analytics solutions look at how the enterprise interacts with [consumers] through self-service, agents, and follow-up activity, while the desktop is internal-centric, trying to reduce average handle time and average talk time,” she says. “Expect vendors to try to get a handle on that and define it.”

[NOTE: Due to an editing error, earlier versions of this article were uploaded incorrectly. The editors regret the error.]

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