The Outlook for WFO: Optimal
Workforce optimization (WFO) remains a stellar performer in the contact center market; it's an IT sector that performs well in good economic times and outperforms most contact center segments in sluggish times. The reason: Most WFO applications have proven value and, when implemented properly, yield significant and quantifiable results for companies. This underscores one of the sector’s challenges, though: getting organizations to properly apply and use the applications that make up WFO suites.
Last year was yet another good one for the WFO market; total company GAAP revenue for the WFO market reached a new all-time high of $3.7 billion, an increase of 12.5 percent from $3.3 billion in fiscal 2013. A large percentage of this growth, though, can be directly attributed to Verint Systems’ acquisition of KANA, a CRM and email response management vendor, in February 2014, at the beginning of its fiscal year. This acquisition contributed approximately $150 million to the top-line revenue of the WFO market—none of it directly attributable to WFO activities. The KANA acquisition ended up being the only notable purchase for WFO vendors during the year. NICE Systems did not respond with a similar acquisition, although there were other mergers and acquisitions, such as inContact's purchase of stand-alone WFO vendor Uptivity in May 2014, and Mitel's purchase of OAISYS.
Organic growth in the WFO market in 2014, then, was relatively small. NICE and Verint both did reflect organic growth in their numbers. Since NICE made no acquisitions during the year, 100 percent of its growth between 2013 and 2014, $62.3 million, was organic. In Verint's case, about $71.1 million of its growth was organic (derived by subtracting the $150 million estimated to have come from the KANA acquisition from its increase in annual revenue during the year). Organic growth is valuable because it is typically sustainable from year to year; acquisitions are one-time events.
WHAT'S IN STORE FOR THE WFO MARKET
The WFO market has reached middle age—growth in its two core and very established sectors, contact center recording and quality assurance/quality management (QA/QM), has slowed. But WFO vendors are not sitting back and accepting the typical fate of maturity. Instead, these vendors are investing in their core solutions, both to improve them and deliver innovation to the market. With recording solutions, this means vastly enhanced recording capabilities with a significantly lower total cost of ownership and increased dependability. With QA/QM, it means the introduction of analytics-enabled QA solutions, which have the potential to revolutionize the world of QA if the vendors can convince companies to take the plunge and move away from their well-established and proven QA methods and systems.
For the WFO market, investments in recording and QA/QM are just the beginning. The vendors continue to spend on new features and functionality to enhance the customer experience and overall customer journey. There are also growing investments to address the needs of back-office and branch operations. The opportunities are huge for vendors that can convince end users that investing in these areas is critical.
OUTSTANDING CUSTOMER EXPERIENCE REMAINS THE TOP GOAL
In a January 2015 worldwide benchmark study by DMG, enterprise executives and managers identified their top goal: the delivery of an outstanding customer experience. The question is whether companies will invest in their service organizations to achieve this goal, or if it's just talk. Based on the first-quarter results from WFO and other contact center vendors, it appears as if executives are ready to make investments in service-related products and services—as long as they believe they'll see a positive return on their investment. The challenge now for WFO and other contact center vendors is to do more than simply implement their solutions—they are under great pressure to implement quickly and cleanly while also helping customers prove the value and benefits of the solution to the rest of the enterprise. If the vendors and companies succeed, it will be a great win for the market, as enterprises will deliver better service and support, making their customers happier, which will in turn convince companies to make even greater investments.
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