The 2004 Service Leaders--Part II

(continued from Part I)

Edited by David Myron
Quality Monitoring
One area of the call center solutions market that has proven to be a true hot spot is quality monitoring. As the notion of the customer-centric enterprise takes hold, managers are being held accountable for the quality of every call taken in their centers. Since quality monitoring solutions help weed through the hours of recorded calls for the precise moment a customer becomes dissatisfied, the technology is enjoying great popularity. "Used effectively, a quality monitoring solution can provide the basis for ongoing performance improvements at the agent level, which can result in better operational efficiencies and measurable gains in customer service quality," says Christopher Fletcher, a former Aberdeen analyst.

And research shows there is no slowdown in sight for the near future. Frost & Sullivan projects a 26 percent compounded annual growth rate for quality monitoring software through the year 2008. The leaders in this year's search for the outstanding quality monitoring vendors--NICE Systems, Witness Systems, and Verint--are all seeing the kind of success the sector is experiencing as a whole. And our one to watch, Dictaphone, is right on the heels of the market leaders.

NICE Systems takes the number one spot in this year's rankings. The company has been seeing double-digit revenue growth quarter after quarter. In fact, by the third quarter of 2003 NICE surpassed its total revenues for all of 2002. In addition, NICE is consistently ranked as the number one market share leader in research from Datamonitor, Forrester Research, and Gartner. In some cases NICE is cited as having an almost 7 percent higher share than the closest competitor in the space.

Aside from strong revenue growth and a commanding share of the market, NICE takes pride in its expansive customer base. The fact that NICE's solutions are deployed in more than 30,000 sites around the globe is just one testament to the fact that customers are satisfied with NICE's family of products. Analysts gave high marks to NICE in terms of its reputation for customer satisfaction, and recent, high-profile customer wins, including Grupo Santander (Spain's largest bank), and New Jersey Transit (the nation's largest statewide public-transportation system), prove NICE will be the company to beat in the quality monitoring space for quite some time.

Following NICE is Verint, which came in very close in the number-two spot. While NICE saw growth rates of up to 40 percent in some recent quarters, Verint held its own in the marketplace with double-digit growth spurts as well. Over the past four quarters, the company has seen record sales numbers totaling more than $180 million. Those numbers have accounted for Verint's consistently high market-share rankings, usually hovering around 15 percent to 16 percent.

On the customer side of things Verint has had an active year, recruiting such customers as Home Depot and the Internal Revenue Service. After releasing version 9 of its ULTRA monitoring solution in February 2003, Verint signed approximately 60 new customers, leading to those record revenue numbers. Verint also ranked in the top percentile in terms of customer satisfaction. And with so much good news coming from the company, Verint may give NICE a run for its money in the coming year.

Coming in third is Witness Systems, which had a very busy 2003. Foremost for the company was its March acquisition of Eyretel, a U.K.--based call center solutions firm, which nearly doubled the size of the company. With revenues now estimated to be in the $130 million range, Witness has a market share in the quality monitoring space that rivals Verint. According to Datamonitor's "Recording Industry Quarterly, October 2003 (Q2 2003)," Witness has a market leading 22.9 percent market share in "quality assurance and training" and a 14 percent share of the overall recording industry.

In 2003 Witness went after new customer segments, including paying more attention to small and midsize organizations. Its ContactStore Express solution allows smaller companies to reap the benefits of a monitoring solution at a lower price point. Attracting a larger customer base, as well as having a strong reputation for customer satisfaction, could help springboard Witness higher in the rankings over the next four quarters. --M.S.

2004 Quality Monitoring Leaders

	Company	Revenue	Revenue Growth	Customer Satisfaction
	NICE Systems	$218M	40%	****
	Verint	$182M	23%	****
	Witness Systems	$138M*	48%	****1/2

*Estimated revenues

One to Watch: Quality Monitoring
Dictaphone
While NICE, Verint, and Witness have been commanding the spotlight in the quality monitoring space, Dictaphone has quietly been eating up market share and gaining a solid customer base. With more than 18,000 customers using its Freedom monitoring solution, which was upgraded in early 2003, the company breaks double digits on most market share rankings. Also, with solid reviews from customers, Dictaphone should be able to hold its own in the space over the next year, even as the competition heats up in a growing market.

Web Self-Service
Web self-help is on the rise. According to a study from The Service & Support Professionals Association (SSPA), Web self-service transactions have grown 116.8 percent from 2002, and now account for three quarters of all support transactions. While many vendors offer Web self-service, the key players include KANA, Primus, and RightNow Technologies.

Web Self-Service Leader KANA is a firm believer in the importance of a modular architecture in CRM applications to help address a variety of contact center pain points, including email management, Web self-service, and multichannel request management.

In fact, KANA is built of more than a dozen companies it has acquired since 1998. Over the past year the buying spree slowed, but in January the company bought Hipbone, a chat developer that marries chat with cobrowsing and file sharing. The deal, valued at nearly $1 million, is expected to help KANA expand. Hipbone had numerous OEM contracts in place, including a plum deal with Genesys. Over the past year the $62.7 million company has made some bold moves. In early 2003 KANA began to outsource the development of its software to its global systems integrators. By outsourcing product development KANA has been able to bring its CRM applications to market in a much quicker and more cost-effective manner. By the end of 2003 KANA had released three updated versions of products developed as a result of the outsourcing, including KANA Contact Center 8, KANA IQ 8, and KANA Response 8--all integral components of the KANA iCARE Suite.

KANA had more than 200 customer wins in the past 12 months, including Hutchison Whampoa's third generation mobile operation "3."

Following closely behind KANA is Primus Knowledge Solutions. The SSPA named Primus the Support Technology Vendor of the Year in 2003. The company also reported its first profitable quarter, while continuing to grow its customer base and expand its product suite.

Primus made some key acquisitions, including Broad Daylight, a developer of Web self-service technologies, and Amacis Group, which develops electronic communications technologies for the European market.

In addition, Primus enjoys high customer satisfaction ratings. Ninety-six percent of Primus customers surveyed said they were satisfied with how their issues were resolved by Primus support engineers. Average service providers report rates of 89 percent.

The company had 200 customer wins over the last four completed quarters. Primus's customers include 3Com, The Boeing Company, EMC, Enterasys, Ericsson, Fujitsu Limited, IBM, Motorola, Novell, T-Mobile, and VeriSign.

RightNow Technologies placed third in the Web self-service category. The company has had an impressive string of 19 straight quarters of revenue growth--even during these tough economic times.

The privately held company, which has more than 1,000 total customers, also had more than 216 customer wins over the past 12 months, including the University of Michigan, Prometric, AT&T e-Sales & Service, Cabela's, and McKesson.

RightNow has become the second-largest ASP by revenue, behind Salesforce.com, and ranked an impressive second in perceived customer satisfaction.

To support growing demands for its solutions, RightNow announced plans to double its North American and European field sales organizations. In March 2003 Gartner named RightNow the sole "Challenger" to Siebel Systems in its Magic Quadrant analysis of the e-service market. In addition, in the past year RightNow won Frost & Sullivan's Competitive Strategy Award, Nucleus Research's Technology ROI Award, and an eGov 2003 award. RightNow CEO Greg Gianforte was awarded Entrepreneur of the Year by Ernst & Young for the Pacific Northwest division.

With the introduction of RightNow Service 6.0 in September 2003, the company delivers support for multichannel customer service. RightNow has architected a customer service solution that applies common incident management and a common knowledge base across all channels. With the introduction of a new module, RightNow Outbound, the company is also promoting the concept and practice of truly proactive customer service. This enables customer service organizations to preempt customer queries by proactively communicating with customers about emerging service issues, such as changes in policies or product defects. The company claims that this is far less expensive than handling incoming queries individually and demonstrates a higher level of commitment to customer satisfaction. --Lisa Picarille

2004 Web Self-Service Leaders

	Company	Revenue	Revenue Growth	Customer Satisfaction
	KANA	$62.65M	2%	****
	Primus Knowledge Solutions	$20.9M	5%	***
	RightNow Technologies	N/A	N/A	****

One to Watch
Kanisa
Privately held Kanisa has recently experienced an upsurge in business. The Web Self-Service One to Watch has succeeded in garnering 18 new customers over the past 12 months. Market leaders, including Gateway, Novell, and Wachovia, recently chose Kanisa to deliver a universal Knowledge Management and Service Resolution platform. The company has sold more than 66,000 seats to date.

One of Kanisa's greatest accomplishments in the past year was the launch of the Kanisa5 software suite, which featured Kanisa Support Center for automated problem resolution in contact centers. The Support Center is a universal knowledge management hub that integrates critical customer service knowledge from across the enterprise. Context-sensitive workflow drives the resolution process based on case information from the CRM system.

Agent Facing/Universal Desktop Suite
When contact center agents sit at their stations and begin taking calls, it's likely that they're using Siebel Systems software to service their customers. Although Siebel was not immune to the economic downturn, it remains the clear leader in the agent facing/universal desktop suite category.

Over the past 12 months Siebel was lauded for its service excellence by a variety of market research firms. Gartner, for example, listed Siebel in its Magic Quadrant for Customer Service and Support Suites.

This past year Siebel launched new products and services for easier integration, rapid deployment, and reduced total cost of ownership. In September the CRM giant announced the availability of the Siebel Contact Center Performance Solution, designed to measure and improve the effectiveness of contact center organizations. Siebel Systems' performance solutions aim to help companies evaluate cost structures and organizational competence, communicate organizational business goals, provide training to minimize employee churn, and measure employee performance to reward successes.

Siebel Systems is also helping companies address the changes occurring as a result of do-not-call legislation. Siebel is attempting to enable organizations to stay compliant by suppressing do-not-call numbers in campaign planning and perform real-time blocking via predictive dialer integration.

"Siebel remains the dominant force in CRM and is likely to stay on top for the foreseeable future," says Denis Pombriant, managing principal of Beagle Research Group. "The company has a huge amount of resources to address nearly every concern users might have."

Oracle ranked second among the agent facing/universal desktop suite leaders. Although the company declined to provide specific figures for service revenue for publication, it did note that overall revenue for the past four completed quarters was $9.5 billion. Applications revenue was $2.47 billion of the total. New applications revenue for the past four completed quarters was $630 million. Oracle officials say that over the past year it had more than 125 field service deals, more than 50 call center deals, and 100 service deals. The company also experienced service revenue growth of nearly 11 percent and its reputation for customer satisfaction was at its highest levels.

Over the past year the company delivered version 5.9 of its Oracle E-Business Suite 11i. The new version sported enhancements to Oracle Service, Sales, and Marketing Solutions. Call center--specific enhancements focused on improved ability for customers to fulfill service requests online: Oracle iSupport, a self-service, Web-based application, now offers enhanced configuration and branding capabilities, allowing organizations to more seamlessly integrate Web self-service capabilities into existing Web sites.

Oracle officials claim the company has differentiated itself and its customers by focusing on contact center and service operations as an organizational opportunity for profit. Oracle executives say that too many organizations have defined contact center success by customer satisfaction increases; this is a limited view and ultimately the goal of any business is to increase revenue. Oracle sees customer satisfaction as a leading indicator of increased revenue, but not a goal in and of itself.

PeopleSoft and SAP tied for the third spot among universal desktop/agent facing applications. PeopleSoft scored well in customer satisfaction, customer wins, and market share; SAP also fared well in customer satisfaction and market share.

"SAP and PeopleSoft always provide great customer service, and each has good products, but both have experienced tough times recently--PeopleSoft with Oracle's takeover bid and SAP with less than expected earnings," Pombriant says.

PeopleSoft has been especially busy over the past year, thwarting the hostile takeover attempt by rival Oracle, completing the acquisition of J.D. Edwards, and battling the economic downturn. Still, PeopleSoft remained strong in the service area.

In September PeopleSoft delivered enhancements to its CRM product suite, including new functionality to increase business productivity and help its customers adhere to do-not-call legislation. PeopleSoft CRM also included enhanced functionality across marketing, sales, and service to address these recent requirements. The new functionality includes a customer preference-tracking feature designed to make it easier for marketing departments to comply with do-not-call legislation. Also, a "quick customer create" feature allows agents to create a new customer record when opening an email inquiry, and a new bulk-ordering capability enables sales departments to capture bulk orders as a single order entry and track each component of a bulk order individually through order fulfillment.

SAP is the third largest software developer in the world, with CRM revenue accounting for nearly 25 percent of overall sales. The service portion of the company's mySAP CRM suite is designed to allow users to perform real-time availability checks, contract management, billing management, fulfillment visibility, and order tracking.
MySAP CRM also aims to allow businesses to offer ongoing customer care across all channels--with a customer interaction center, Web-based customer self-service capabilities, service and claims management, field service and dispatch, and installed-base management.

Over the past year SAP has also posted some notable customer wins, including the Brookshire Grocery Company, Medtronics Inc., and The Washington Post. --L.P.

2004 Agent Facing/Universal Desktop Suite Leaders

	Company	Revenue	Revenue Growth	Customer Satisfaction
	Siebel Systems	$1.38B	3%	***
	Oracle	$9.5B	8%	*****
	PeopleSoft	$2.1B	1%	****
	SAP AG	$2.15B	-6%	****