Concerto Software's $1 billion acquisition of Aspect Communications in September (creating Aspect Software) marks the contact center industry's largest consolidation move in 2005. The deal signals that the market is moving toward a smaller number of big players that can sell the full suite of applications, letting them and their customers benefit from centralized support for multiple product lines, according to analysts.
Competition and eroding margins have brought the market to a state where it's now tougher for existing companies to sell new systems profitably, says Drew Kraus, research director for contact center and converged communications applications at Gartner.
The acquisition should help the newly formed company be more competitive, bolstering its technology presence in contact centers. The two companies have competed directly in the automatic call-distribution market, but each brings other strengths to the table. Concerto's focus areas include unified contact center software and outbound dialing; Aspect has concentrations in workforce management and performance analytics.
"Over time...Aspect should be able to compete more effectively for larger contact center--specific deals, that is, being the largest best-of-breed contact center provider should get them on more short lists," says Joe Outlaw, principal analyst for contact center solutions at Current Analysis.
One of Aspect's biggest challenges for now will be rationalizing multiple product overlap. "They've got the [former] Concerto EnsemblePro, Uniphi, the old Aspect Call Center, [and] Rockwell products. Only one of those is going forward, so there's work to do," Outlaw says. "They've got issues around migrating their customers to their new solutions...but also to move them onto IP solutions over time. They [also] have to position themselves simultaneously to win new deals. It's not going to be good enough just to hang onto their customer base."
Aspect's early response to this is product line restructuring and branding. The company chose the Aspect name because of its stronger brand recognition and rebranded both companies' offerings by segmenting them into three product lines: Signature, Unified, and Optimization.
Rivals are using the product line restructuring effort as a competitive advantage. "It may be costly for Aspect to merge and rationalize their product lines," says Diane Shariff, director of marketing for applications at Avaya. "This may affect their ability to deliver new features in the next few years."
The acquisition will undoubtedly raise eyebrows from some large competitors. The newly formed company "could be a kick in the pants" for companies like Cisco Systems, Nortel, and Siemens, says Paul Stockford, chief analyst at Saddletree Research. The company must also contend with workforce optimization companies such as IEX and Witness Systems. "Everybody's got a stake in it," Kraus says. Mike Sheridan, Aspect's--and formerly Concerto's--vice president of strategy and marketing, says, "When it's all said and done, there's only going to be a few vendors in this space and we want to be one of them."