THE 2007 Service Leaders, Part 1

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Computer Telephony Integration

The Market
"Basic computer telephony integration is the screen pop when an agent gets an incoming call; enterprise CTI includes more advanced functions," says Ian Jacobs, strategic analyst for Frost & Sullivan, and it used to take an expensive package of hardware and middleware to make anything happen. Today, Session Initiation Protocol (SIP), Voice over IP, and SOA can do all the work more easily and for less money by making it a software and data issue. The top vendors continue to provide traditional products like automatic call distributors, but are wisely branching out into newer technologies. Forrester Research Vice President Elizabeth Herrell says the CTI category will not disappear, but will need to be redefined. "We're moving to SIP from CTI, but that's intelligence taking the place of physical middleware," Herrell says, adding that while the underlying technology may change, "the name could remain the same."

The Leaders
Last year we saw Cisco Systems claw its way into the rankings on the strength of its company direction and improved customer satisfaction. Its performance seems to have leveled off, with ratings similar to those received in 2006. "Cisco is making progress, but lags the leaders," Herrell says. Cisco has continued to improve its company direction, achieving an average score of 4.1 from our analysts. "Cisco has made some acquisitions that are very smart, notably Audium and Metreos," says Sheila McGee-Smith, president and principal analyst of McGee-Smith Analytics. "They're a force that's been shaking up the routing market," Jacobs says. However, he adds, "Cisco gets dinged on customer satisfaction because they don't tend to help customers while they're busy innovating." One analyst also notes Cisco's "disturbing tendency to OEM capabilities instead of building them."

Last year, we called Genesys Telecommunications Laboratories a dynasty in the CTI market because of its three Service Award victories in a row. Though the streak has ended, Genesys didn't go down meekly; its overall score was just barely edged out by Avaya, and its company direction score of 4.3 is the highest on our chart. "Genesys is the current best of breed for enterprise solutions," Herrell says. "Genesys is an interesting case study for how the market is changing," Jacobs says. "It used to be all CTI, but is now moving into voice as well--a unified approach to provide everything the contact center needs. Genesys is willing to think well ahead." He says, though, that a lot of the company's advances have been outside the area of CTI, making it hard to rate its depth of functionality and reputation for satisfaction.

The Winner
Avaya has continued its ascent in the esteem of analysts, and this year narrowly edged out perennial favorite Genesys. "I'm particularly impressed with the concerted effort over the past two years to embrace unified communications," McGee-Smith says. Though Avaya's overall score is a tenth of a point lower than last year (despite what Herrell calls "continued improvement with their product suite"), its reputation for customer satisfaction increased to 3.9, the highest of all rated companies. "From a traditional routing standpoint, Avaya is still the largest vendor in North America, and is doing well with companies that have existing hardware and software to create unified routing," Jacobs says. "The only real issue is the speed at which they get customers where they need to go. Many think they're moving too slowly, but larger customers are happy with the pace. So they have a good direction for large enterprises, not so much for SMBs--it's a mixed message." --Marshall Lager

One to Watch
Nortel Networks remains our One to Watch after slipping from leader status last year. The company maintains a solid reputation for customer satisfaction despite any other troubles it might have. "Their customers love them, more than anybody else in the market," says Ian Jacobs, strategic analyst for Frost & Sullivan. "They're also in the all-in-one suite camp, but not at the cutting edge." Forrester Research Vice President Elizabeth Herrell states that Nortel has a good offering, "but future plans with Microsoft leave questions on the direction they will take." Sheila McGee-Smith, president and principal analyst of McGee-Smith Analytics, says that the Nortel-Microsoft Innovative Communications Alliance (ICA) "raises lots of questions around company direction, and how
married the two companies are." --M.L.

Interactive Voice Response

The Market
Telephone-based self-service applications remain the primary drivers for enterprise investment in IVR, as these solutions enable customers to perform tasks via the telephone without the need of a CSR. Vendors are developing a list of standards-based technologies to make these solutions more flexible. Topping that list are VoiceXML and speech recognition solutions. Speech recognition provides a better user interface that can support a wider range of applications, while VoiceXML, when used in conjunction with speech recognition, is an Internet-standard protocol that allows customers to access company information on the Web through a telephone or a voice-driven browser.

Over the past year the adoption of these new technologies has "really taken off," says Sheila McGee-Smith, president and principal analyst of McGee-Smith Analytics. "In 2006 we saw much more rapid adoption of VoiceXML than we expected." As a result, successful vendors are focusing on reducing the complexity of app development and integration, which will include support for technologies like Session Initiation Protocol (SIP), as they assist their customers in making the transition to the next generation of technology.

The Leaders
Avaya continues to be a steadfast vendor in the IVR market: This year marks the company's fourth straight year on the leaderboard. Avaya offers two IVR platforms: Interactive Response, which allows customers to develop VoiceXML-based IVR applications, and Avaya Voice Portal, the company's next-generation voice-portal platform that supports SIP.

Voice Portal's next-generation capabilities, combined with Avaya's use of the same VoiceXML engine on its platforms (making upgrades to newer technology easier), led to Avaya receiving a 4.2 in company direction, highest among the leaders. "Think of Voice Portal as a beachhead into connecting communications and processes with other Web services and enterprise applications," McGee-Smith says. "It's a jumping off point."

Avaya also updated Dialog Designer (DD)--the company's speech app development tool--in 2006, and plans to extend DD to enable communications apps to be developed, including live-agent functions.

Intervoice joins the leaderboard after a one-year hiatus, earning solid marks across all categories. Analysts did ding the company for its limited focus on IVR and speech, which has hindered Intervoice's scope to leverage a broader set of contact center capabilities to gain market share. Intervoice's acquisition of Nuasis this past September will help address those needs. The acquisition allows Intervoice to extend its IVR and speech offerings via Nuasis's NuContact Center (its IP contact center platform), and to "broaden the vendor's contact center offerings," says Bern Elliot, research vice president at Gartner.

Intervoice's Media Exchange platform is an updated and rebranded version of Omvia Media Exchange and is certified on VoiceXML 2.0. The Edify platform was updated in Q4 '06, and will be integrated with Media Exchange this year. Intervoice is also a partner for Microsoft Speech Server and offers apps solutions on this platform.

The Winner
Genesys Telecommunications Laboratories continues its impressive showing in the IVR category following its leap from being a One to Watch in 2005 to the winner's circle last year. Genesys received the highest scores in customer satisfaction and depth of product functionality of all the leaders, posting a 4.0 and 4.3, respectively. These scores, combined with the strong financial backing of parent company Alcatel-Lucent (the company posted a 20 percent increase in net income), make Genesys the winner for the second year in a row.

The Genesys Voice Platform (GVP) is an established IVR solution that supports both VoiceXML and SIP, allowing it to exploit the shift toward Web-oriented self-service architecture, according to Elliot. GVP also provides features like multitenancy and integration between self-service applications, and live-agent management of caller interactions. The vendor's VoiceXML capabilities were further enhanced in April 2006 when it announced the acquisition of VoiceGenie Technologies, a voice self-service solutions provider with a software platform based on VoiceXML. "The acquisition solidified their VoiceXML and platform expertise," says Daniel Hong, senior voice business analyst at Datamonitor. --Colin Beasty

One to Watch
After spending three consecutive years as a leader, Nortel Networks dropped to this year's still-respectable One to Watch slot. Weaker ratings in customer satisfaction and company direction were the culprits, though analysts still gave the company solid scores across all categories. Nortel announced a partnership with Microsoft in July 2006 to deliver unified communications, but the joint rollout won't take place until later this year. "While the Microsoft relationship has lots of positives, it adds uncertainty to the mix," says Sheila McGee-Smith, president and principal analyst of McGee-Smith Analytics. --C.B.

Web-Support Services

The Market
There is a lot more to Web-support services today than lists of top 10 FAQs. With more consumers moving online to research products and make purchases, the need for excellent support on the Web is more important than ever. "Customers are actually contacting customer service more frequently and across a wider array of channels," says Zachary McGeary, an associate analyst at Jupiter Research. "The problem is that companies are not handling contacts with consistency across all touch points."

To remedy service setbacks Web-support vendors are looking to fresh functionality, such as microsites, forum capabilities, and intelligent search, and are forging partnerships and making acquisitions to widen the breadth of their offerings. Offerings are expanding to the extent that Chip Gliedman, a vice president at Forrester Research, says, "It's almost getting to the point where the vendors are interchangeable." The high marks and close scores found in this category reflect this development, and the vendors listed are those that have found a way to keep their heads above the market's sea of choice.

The Leaders
KANA did not receive a Service Award last year. This year, thanks to the company's renewed focus on e-service, a new CEO, and an improved product line, the vendor was a few hairs away from winning the Web-support services category. Esteban Kolsky, a research director at Gartner, says that as a result of KANA's "remarkable turnaround story," the vendor now offers a "retooled solution [that] is very powerful, has most of the tried and tested KANA technologies, and builds on top of their great architecture." Unrolling on-demand versions of its Web-support solutions shows KANA's forward thinking. With strong technology, great marks in customer satisfaction (the highest in the category), and accelerated growth, it seems certain that 2007 will prove to be a stellar year for this comeback kid.

Talisma proved itself worthy of the leaderboard for the second year in a row with ramped up revenue growth and customer acquisitions in 2006. In the first three quarters of the past year Talisma exceeded the company's combined totals for customer growth over the previous three years. This expansion was sparked in part by the releases of CIM 7.0 and Talisma Professional Edition in late winter of 2006, which helped propel the vendor farther into the SMB space by offering both hosted and on-demand versions, and a low price point for the market. But Talisma will still have to work hard to be taken seriously in the midmarket. "Given their rapid growth, one of the challenges moving forward will be maintaining that," McGeary says.

The Winner
RightNow Technologies, a perennial Web-support services favorite, nabs the top spot for the third year in a row. Despite a shift in focus toward the larger world of CRM, RightNow has reestablished itself in the e-service market where the company originally found its heritage. With the release of RightNow 8 in 2006, RightNow improved its Web self-service offerings as part of its advanced suite of enterprise services. "The new client architecture introduced toward the end of last year makes a difference for them and their clients and makes them more competitive," Kolsky says. RightNow's strong history and broad customer base have helped the company remain at the head of the market in terms of revenue. However, though revenue has continued to grow, RightNow must continue to sharpen its product offerings to keep pace with smaller, but quickly growing, vendors in the market. --Jessica Sebor

One to Watch
Although sometimes overlooked in e-service, eGain Communications shouldered out both Knova Software and ATG this year, establishing itself as the One to Watch for 2007. What the company lacks in revenue it makes up for in innovation and customer satisfaction. With the release of eGain Service 7.6 in October 2006, the vendor revamped its customer interaction hub technology, while offering a more fully integrated solution. Mitch Kramer, an analyst for the Patricia Seybold Group, says that eGain's tradition of a gradual, piece-by-piece release cycle has thus far hindered its acceptance in the market. "Bigger customers want a regular release cycle," he says. However, Esteban Kolsky, a research director at Gartner, says, "If it was not for their reputation in the market, they would have taken KANA's place as the golden child." --J.S.

Workforce Optimization

The Market
Although the workforce optimization (WFO) market, which includes quality monitoring (QM), workforce management (WFM), performance management (PM), and e-learning, may still be in its relative infancy, its competitive landscape is vigorously developing, perhaps most clearly demonstrated by heightened M&A activity. Additionally, some vendors within this space are devoting more attention to speech analytics and PM apps. Speech analytics tools help companies analyze recorded calls and uncover valuable information, while PM solutions help streamline the contact center reporting process.

Along with these developments, however, we also note just how tight competition is. Envision Telephony is the only vendor with a completely unified solution with all four WFO components, but it again failed to make the top four (albeit by less than two tenths of a point), thanks in large part to its small revenue compared with the vendors that did place in the category.

The Leaders
Verint Systems, with its category-leading satisfaction score of 4.2, maintains its status as a WFO leader, despite missing a WFO staple: WFM. (We didn't consider Verint's plan to acquire Witness Systems in this evaluation because these awards are a reflection of the 2006 market. The acquisition will eradicate Verint's missing WFO functionality in our 2008 awards.) The core of the company's enterprise and contact center portfolio continues to be its compelling monitoring/recording and analytics offerings. Over the past year Verint bolstered both strong suits: It nabbed Mercom Systems, a known provider of SMB-focused recording and performance evaluation solutions, and continued to capitalize on the performance analytics functionality it gained from its 2005 Opus Group acquisition.

Witness Systems has a WFO strategy that spans the front and back office. Its interest in the enterprise was most clearly illustrated in 2006 by its acquisitions of Demos Solutions Consulting Group and Exametric, two WFM vendors targeting the financial services industry. Analysts were most impressed with the company's vision, bestowing Witness with a direction score of 4.4, the highest among the category's leaders. "You think of WFM and call centers, but why not back-office activities, why not front-office activities, why not production lines, for that matter?" asks Dick Bucci, an associate consultant at The Pelorus Group. "The theory behind it could be applied very broadly and Witness understands that."

Its WFO contact center presence, however, is still the foundation of its functionality. Witness announced an upgraded version of its Impact 360 WFO solution and picked up Amae Software, which adds customer feedback/survey capabilities. Still, while the company isn't shy about voicing its commitment to delivering a seamlessly integrated WFO package, there is still more integration that must take place.

The Winner
Last year, several analysts were hesitant to hang NICE Systems with an above-mediocre overall composite score, which muddied its chances of placing on the leaderboard. But with two smart acquisitions (WFM player IEX, last year's category winner, and PM vendor Performix), coupled with its own depth in QM, analytics, and e-learning, the company's first entry on the WFO leader list is as the category winner.

NICE's strategy so far has been to operate IEX and Performix as business units. "The acquisition of IEX and Performix puts NICE squarely in the middle of the fight for WFO market leadership," says Paul Stockford, chief analyst at Saddletree Research, while Bucci says that NICE has "a pretty good position" in every space it competes in. "They recognize the importance of analytics, and maybe even making the next step to business intelligence. I would say that NICE and Verint Systems are probably ahead of the curve on that," Bucci says.

NICE's technology footprint is clear--its functionality score (4.4) topped all of the category's leaders. But one analyst noted the company as having "limited integration." Keep an eye on NICE to see if it maintains its winner status against Verint/Witness, as both camps deal with integration. --Coreen Bailor

One to Watch
Aspect Software, garnering the lowest averages for company direction (3.4) and reputation for functionality (3.2), maintains its status as our One to Watch. One analyst lauded Aspect's strong WFM, but says, "The rest of the WFO suite needs enhancing." Look for Aspect to continue developing its WFO components internally, and through partnerships and M&A efforts, while continuing its integration initiatives with companies it acquired like QM vendor SophistiCom Technologies. In the meantime, Aspect's WFO might is still undeniable. "Aspect continues to move aggressively in workforce optimization while balancing their other interests in outbound and agent desktop," says Paul Stockford, chief analyst at Saddletree Research. "They will continue to be a major force in the WFO industry." --C.B.

Click The 2007 Service Leaders, Part 2 for more.

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