The 2004 Service Leaders--Part I

Edited by David Myron

The powerful mix of economic pressures, customer expectations, and new technologies has made the customer service arena a hotbed of activity. To uncover the vendors leading this growing industry, we scrutinized companies in seven categories: computer telephony integration, interactive voice response, workforce management, workforce optimization, quality monitoring, Web self-service, and agent facing/universal desktop suite.


The results are based on a combination of weighted criteria, including revenue and revenue growth (last four completed quarters ended September 30, 2003), market share, customer wins, and reputation for
customer satisfaction.

Computer Telephony Integration
For years organizations have been challenged by the task of throwing technology at their call centers to cut costs, while having to improve customer service efforts. Computer telephony integration (CTI) technology has matured, however, to such a point that a new phenomenon is taking hold: Call centers are being turned into profit centers.

Here's how it works: CTI immediately identifies incoming calls by matching telephone numbers against a customer database. By recognizing which account the telephone number is associated with, the system can determine the priority level of the call and process it accordingly--either through a live agent, recorded voice, or touch-tone capabilities. If the call still needs to be escalated to a live agent after having gone through the touch-tone IVR or the automated customer service system, the CTI systems can forward the caller to the appropriate agent and populate that agent's computer screen with the customer's record--all before the agent says hello. With customer information at the ready, agents can use this information to not only provide customer support, but also to cross-sell and upsell to customers. As a result, CTI has never before been more important to call center managers and executives.

The idea of turning call centers into profit centers is slowly catching on--albeit more slowly than CTI vendors would like, as the leaders experienced negative revenue growth over the past year. However, analysts are hoping for an upswing. Frost & Sullivan expects the total CTI market to grow from $418.4 million in 2002 at a 6 percent annual compounded growth rate until 2007.

Furthering this effort will be this year's CTI market leader, Genesys Telecommunications Laboratories, a wholly owned subsidiary of Alcatel. Genesys has found favor in North America as the market share leader, mainly because its products are highly interoperable with disparate vendor products. "Genesys can integrate with everyone, so it gives Genesys more of an opportunity to get the business," says Elizabeth Ussher, a vice president at META Group.

Genesys does not make its revenue publicly available, but pundits say it has by far the lowest total revenue among the CTI leaders. Yet, this pup has a big bite--Frost & Sullivan cited Genesys as the CTI market-share leader in its March "2003 North American Contact Center Market" report.

The Genesys all-in-one IP Contact Center (IPCC) is a standards-based software solution providing Genesys's core Universal Queue and routing technology, reporting, and outbound campaign management for IP environments. Genesys IPCC extends complete multichannel interaction capabilities to converged voice and data networks, and offers an open software solution that provides a path to convergence in both hybrid and pure IP environments. The solution obviates the need to manage third-party automatic call distributors and CTI links. It also works independently of a PBX or with existing PBX equipment.

Second-place leader Avaya received 3.5 stars--only half a star below Genesys--for reputation for customer satisfaction, and has garnered the second largest CTI market share in North America, analysts say. Additionally, Frost & Sullivan ranks Avaya as the leader in several small but rapidly growing niche markets, including Australia, Indonesia, Japan, and Taiwan. Add to that Avaya's strong fiscal-year 2003 revenue of more than $4.3 billion, and it's clear this contact center powerhouse is deserving of the number-two spot among CTI leaders. According to InfoTech, Avaya also holds the leadership position in the U.S. IP telephony small- and midsize-business market (fewer than 100 stations), with 27 percent market share for the first quarter of 2003.

Last fall Avaya released its Customer Interaction Suite, extending Avaya's predictive routing technology to all multichannel communications, including email and the Web. The routing technology enables enterprises to predict an inbound customer's needs by evaluating service levels and past transactions, and then matching the individual with the most qualified agent. Previously this capability was only available when a customer called the contact center by telephone. For outbound sales calls the suite helps ensure that a contact center's predictive dialing capabilities are in compliance with updated state and national regulatory rules, including do-not-call registries. Additional enhancements to Avaya's predictive dialing capabilities help keep automated outbound sales calls compliant with call abandonment regulations, ensuring interactions between agents and customers in a timely manner and in accordance with regulations. The suite supports a multivendor, open standards--based infrastructure.

With its acquisition of GeoTel Communications for $2.1 billion in stock in 1999, Cisco made clear its intention to be a strong contender in the CTI market. Solidifying Cisco's position as the number-three CTI vendor are its overall revenue of $18.8 billion (the strongest in the sector); its commanding piece of the CTI market (Frost & Sullivan estimates it to be in the low double digits); and its indefatigable ability to weather an economic storm (it posted only a 0.2 percent drop in sales last year). Weighing on Cisco, however, is its low (2-star) rating for reputation for customer satisfaction, according to analysts CRM magazine polled.

Through a combination of multichannel contact management, intelligent routing, and network-to-desktop CTI, the Cisco ICM Enterprise Edition segments customers, monitors resource availability, and delivers each contact to appropriate resources in the enterprise. "Cisco's ICM is used in many environments," Ussher says. "Although it's a metarouter, it integrates with all leading [automatic call distributors] in network prerouting."
--David Myron

2004 CTI Leaders

	Company	Revenue	Revenue Growth	Customer Satisfaction
	Genesys	N/A	N/A	****
	Avaya	$4.3B	-12.5%	***1/2
	Cisco	$18.8B	-.2%	**

One to Watch: CTI
Nortel Networks
Nortel Networks has the second largest overall revenue of the leading CTI vendors with more than $10.5 billion. Yet, keeping it from making the top three is its presence and limited popularity. Nortel has the lowest CTI market share and the second lowest reputation for customer satisfaction with only 2.5 stars--a half-star above Cisco. Nortel Networks offers a number of CTI solutions. Meridian LINK Services, TAPI Service Provider, and CallSPONSOR are among the more popular CTI interfaces, while Symposium Agent is a fully integrated agent productivity tool.

Interactive Voice Response
Customers are demanding expanded service and support options, but IT budgets have been anemic over the past three years. To meet the challenge of providing more service for less money, enterprises are integrating lower-cost speech self-service into their customer care strategies. The primary enabler of this more-for-less strategy is IVR software, which automates much of the customer interaction by voice input and touch-tone keypad entries and can respond via voice, fax, callback, and email. Some uses of IVR technology include bank and stock account balances and transfers, surveys and polls, call center forwarding, order entry transactions, and information retrieval (e.g., movie and flight schedules).

The U.S. IVR market had its third down year in a row, losing more than 12 percent in U.S. port sales. According to research firm In-Stat/MDR, this market was down again primarily because of the slow growing economy, but should see gains in 2004 and beyond. New technologies like voice extensible markup language (VoiceXML) and speech application language tags (SALT) will help fuel the market by providing opportunities for new players and will provide new functionality that will cause new customers to implement IVR solutions.

Steering the IVR industry out of the doldrums is the CRM IVR market leader, Avaya. Gartner estimates that Avaya has more than 20 percent of the IVR market with its Avaya Interactive Response platform. In its climb to the top, the company has managed to establish a respectable reputation for customer satisfaction, averaging 3.75 stars from the analysts CRM magazine polled.

The company released its Avaya Interactive Response version 1.2 this past September. Avaya IR ships with Avaya IVR Designer, a graphical design tool for drag-and-drop self-service application development. Avaya IVR Designer has been enhanced to generate code that is compliant with VoiceXML 2.0. The enterprise Web-development staff can use third-party XML Web authoring tools or Avaya IVR Designer for maintaining self-service applications, enabling businesses to extend the value of existing Web applications and infrastructure investments. Both VoiceXML and script-based applications can run on the Avaya IR platform. This facilitates the migration of existing applications, while supporting deployment with new applications written in VoiceXML.

Although Nortel Networks took a financial beating last year--company-wide revenue dropped nearly 40 percent--it maintains the second highest IVR market share with nearly 15 percent of the market, says Bern Elliot, a research director at Gartner. Despite its tumultuous year, Nortel has still been able to please, building a favorable reputation for customer satisfaction with 3.25 stars. Taking the number two spot behind Avaya, Nortel is still a formidable force, with total revenue of more than $10.5 billion.

Nortel has been making some changes since it acquired Periphonics in 1999, including the rollout of its Media Processing Server (MPS) 100, 500, and 1,000 for small, midsize, and large enterprises, respectively. The IVR servers use an open, standards-compliant call processing architecture to facilitate connectivity to switches and application servers from any vendor. Nortel also launched its VoiceXML offering last year, extending the applications development capabilities of its self-service solutions by providing a dual application development environment on the MPS platform. It runs simultaneously with PeriProducer applications on the same Nortel Networks self-service platform, so customers can choose to create applications using the VoiceXML industry standard language or PeriProducer, or a combination of both.

Intervoice scored the best among analysts in the reputation for customer satisfaction category with an average rating of 4 stars. Despite its small overall revenue of $156 million in 2003, customers have rewarded Intervoice with more than 10 percent of the IVR market, Gartner's Elliot says. The company's OneVoice Media Gateway product supports VoiceXML 2.0 for the deployment of integrated voice and Web self-service applications. The OneVoice Media Gateway provides speech recognition and text-to-speech (TTS) capabilities. --D.M.

2004 IVR Leaders

	Company	Revenue	Revenue Growth	Customer Satisfaction
	Avaya	$4.3B	-12.5%	***3/4
	Nortel	$10.5B	-39.7%	***1/4
	Intervoice	$156M	-26.2%	****

One to Watch: IVR
Edify
Although Edify did not make the top three, it is a noteworthy contender in the IVR market. The company has more than 10 percent of the IVR market, Gartner's Elliot states, but its reputation for customer satisfaction is lacking. META Group's Ussher blames the company's managerial changes: "Edify needs to get its management act together. It keeps changing it and that affects product direction."

Ussher says that if Edify can maintain its focus it will be an important company to watch. Last fall Edify started shipping a voice- and speech-enhanced version of its multichannel platform Edify 8.5.

Workforce Management
There is no doubt that the contact center of today is a far cry from that of yesterday. Apart from staffing headaches, call center managers are under increasing pressure to turn their contact centers into profit centers, while retaining valued customers and providing top-notch service. Anticipating spikes and drops in volume and staffing appropriately is important to keeping a call center efficiently staffed at all times. Thus, the workforce management tools hitting the market to handle these needs are becoming more complex.

According to Gartner, personnel costs account for 71 percent of a typical contact center budget. "Contact center workforce management software can reduce payroll costs, increase service levels, and, in some cases, even motivate and retain quality agents and thereby boost customer satisfaction levels," says Wendy Close, CRM research director at Gartner. Vendors like Aspect Communications, Blue Pumpkin, and IEX are leaders in terms of helping organizations make the most of their call center agents.

Aspect Communications, the workforce management market leader, has been dedicated to providing contact center solutions since 1985. And with more than three million agents using Aspect solutions worldwide, it is clear why the company has been a leader in the market. In addition to its huge installed base, Aspect consistently ranks high in customer satisfaction surveys. According to Close, Aspect has the highest user-satisfaction rating in the market, scoring well above Blue Pumpkin and IEX in a recent Gartner study.

Although Aspect's revenues have dipped this past year, the company still holds top market share in the workforce management space, and remains the vendor to beat. But continued product innovation will help keep Aspect ahead of the pack. Aspect released version 6.2 of its flagship product last year, and introduced its scheduled callback solution to better match contact center resources with customers' needs. As Aspect makes its solutions available as Web-based products, it aims to retain its place at the top of the workforce management market.

Following Aspect is Blue Pumpkin, the one market leader to have positive revenue growth over the past four quarters. In addition, Blue Pumpkin ranked high in terms of customer satisfaction. Like many of the workforce management vendors it faces tough competition but has been able to reach the number-two position by specializing solely in workforce management and optimization tools.

"The challenge for Blue Pumpkin is growing the company into a $100 million business in a workforce management marketplace that is mature and 45 percent saturated in Western Europe and North America," Gartner's Close says. "Blue Pumpkin is positioned fairly well for this growth, having evolved its product line and services to a more comprehensive workforce-optimization solution during the past year."

Taking third place this year is IEX, a division of Tekelec that specializes solely in workforce management and optimization tools. Although nearly all of IEX's revenue is workforce related, declining revenues in recent quarters coupled with a lack of customer momentum place the firm behind Aspect and Blue Pumpkin. Customer satisfaction is somewhat strong, however, especially since IEX's products have been rated as some of the most scalable solutions in the space.

Frost & Sullivan recently ranked IEX the number one workforce management vendor in terms of market scope; however, its declining revenues, sometimes in double digit percentage points, hurt its Service Leader ranking. But the future may be bright for IEX: It announced partnerships in 2003 with Performix and AIM Technology, as well as released its SmartSync integration tool to help link IEX tools with other contact center solutions.
--Martin Schneider

2004 Workforce Management Leaders

	Company	Revenue	Revenue Growth	Customer Satisfaction
	Aspect	$365M	-8%	*****
	Blue Pumkin	N/A	11%	****
	IEX	$37M	-9%	****

One to Watch: Workforce Management
CenterForce Technologies
CenterForce Technologies, which is this year's Workforce Management One to Watch, is a company formed from the merger of CenterForce and RightForce in late 2002. Although the combined entity still only takes in around $5 million annually, it is gaining ground amid the tight competition in the space, and has a product family that many analysts say gives the company the potential for continued growth.

CenterForce also has a strong reputation for customer satisfaction: Its size and scope allow it to keep strong ties with clients using its agent scorecarding and inbound and outbound workforce management solutions. Although it is still a small company, CenterForce has proven itself a real player in the market and truly one to watch in 2004.

Workforce Optimization
Many of this year's Service Leaders in the workforce management category are also top vendors in the workforce optimization category. Although the two categories' terms seem similar, there are distinct differences separating them.

"Workforce management is basically an agent scheduling package," says META Group's Ussher. "Workforce optimization is a lot bigger, bringing in quality monitoring scores to allow managers to better utilize an agent's skills at the right time. Like in baseball, you're not simply watching the batter, but the outfield as well."

Since scheduling is a part of the optimization tool set, it makes sense that market leaders Blue Pumpkin and IEX found their way into this year's top three, along with Kanisa, whose workforce optimization offerings also make it a market leader.

Blue Pumpkin takes first place honors this year, leading the workforce optimization market with double-digit revenue growth and a strong product portfolio. According to Gartner research, Blue Pumpkin is poised for further growth, since it is aggressively courting the market with comprehensive workforce management and optimization solutions.

Specifically on the product front, in addition to its Workforce Optimization Suite, Blue Pumpkin stands to lure additional smaller businesses into its customer family after introducing its Advisor Express product to the market last September. The entry-level optimization package allows small contact centers to reap the benefits of workforce optimization tools at a lower price point. For a private company in a fiercely competitive landscape, Blue Pumpkin will be a force to be reckoned with in 2004.

Taking second place in the workforce optimization category is IEX, which like Blue Pumpkin is a major player in the workforce management space. Since optimization capabilities are linked to IEX's TotalView suite of products, the company has a large footprint in the optimization market. However, the company has seen revenue declines after discontinuing its TotalNet call routing product, though it's still supporting current users.

Even so, IEX may hold its own against competition in 2004, especially since it is more financially viable than many of the smaller upstarts and privately held firms entering the market. IEX is still profitable, has a happy customer base, and is backed by parent company Tekelec, which is also faring favorably in terms of revenue.

IEX's main threat in the coming year may be Kanisa, which rounds out this year's workforce optimization Service Leaders list. Kanisa is not a megaplayer in terms of revenue or market share, but it has amassed an impressive list of satisfied customers. These include big-name firms like Hewlett-Packard, Wachovia, Gateway, and Novell.

When it comes to products, Kanisa is banking on its latest release, Kanisa5, which is an integrated suite that uses knowledge management tools to get the right call to the right agent. The tool also includes deeper use of customer and data analytics, something that Gartner's Close says is the way of the future for the optimization market. "The number one trend is to leverage analytics to better mine the data collected from recordings to improve contact center performance," she says.

Like IEX, Kanisa has built its optimization tools into an integrated suite that covers both workforce management capabilities and workforce optimization tools. As vendor consolidation and growing customer concerns about the number of vendors they deal with mount, the separation of workforce management and workforce optimization as unique entities may cease to exist. Some analysts predict this will happen in the near future. For now, Blue Pumpkin, IEX, and Kanisa top the market. --M.S.

2004 Workforce Optimization Leaders

	Company	Revenue	Revenue Growth	Customer Satisfaction
	Blue Pumkin	N/A	11%	****
	IEX	$37M	-9%	****
	Kanisa	N/A	N/A	****1/2

One to Watch: Workforce Optimization
KANA
Although KANA Contact Center offers a suite of tools, workforce optimization functionalities comprise a large portion of its solution. The solution allows a contact center staff to access and contribute to a central knowledge base, to utilize multichannel contact points, and to message throughout the enterprise, all through one interface. The company has also infused optimization features into its KANA Response email-management solution.

Financially, KANA has higher revenue than some of the smaller, point-solution optimization vendors, but has seen revenue declines of more than 20 percent over the past few quarters. However, with decent customer satisfaction ratings from high-profile customers like American Airlines, Kodak, Sony, Verizon, and Williams-Sonoma, KANA should be an interesting player to watch over the next year, especially as the economy springs back to life.

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