The 2005 CRM Service Leaders--Part I

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The editors recognize the top-three leaders in CTI, IVR, quality monitoring, Web self-service, workforce management and optimization, contact-center outsourcing services, and agent-facing universal desktop applications. The Service Leaders rankings are derived from a weighted formula that includes financial performance as well as analyst ratings for depth of functionality, reputation for customer satisfaction, and corporate and management direction.

Edited By David Myron

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Computer Telephony Integration
The Market
The telephone is still the most common way for customers to contact a company, but far be it from a call center manager to discourage people from using a less expensive means of contact like the Web or email. Traditional computer telephony integration (CTI) methods are enabled through a complex-but-functional public switched telephone network, but more contact center managers are considering Voice over IP (VoIP), which provides a single corporate data network for all customer communication needs.

VoIP cuts telephone costs by transmitting voice signals in packets over private or public networks via the Internet Protocol, obviating the need for separate telephone circuits. This provides three primary benefits to customer companies: lower cost, less complexity, and the ability to create a virtual call center where agents can work from home. While all of the leaders in the CTI space have traditional circuit-switched solutions, they all have robust VoIP offerings, as well.

The Leaders
A moderate score of 3 from analysts surveyed in the company direction category weighed on Avaya's ability to claim the top spot. Regarding interoperability with other vendor products, Bernard Elliot, research area leader for contact centers at Gartner, says, "There's limit with what you can do with them--Avaya does Avaya." Still, if you're in the Avaya environment, odds are you're quite happy. No other CTI vendor came close to Avaya's customer satisfaction score of 4.2, according to analysts polled.

Avaya's CTI offering comes as part of its Customer Interaction Suite, which extends its predictive routing technology to email and the Web, available in both circuit-switched and IP-based environments. Solutions in this suite scale from the Avaya IP Office, suitable for small call centers, to its S8700 platform for high-volume centers.

Nortel Networks edged out Cisco Systems on the list of CTI leaders this year, but is still going through some difficulties largely due to its financial woes. "Nortel seems to be slowly fading from the market as their financial difficulties overwhelm their product offerings. The low-end portfolio, Business Communications Manager (BCM), with its focus on IP telephony, has made it easier for call centers to deploy CTI--the same cannot be said of the higher end Succession products," says David Peterson, president of PowerHouse Consulting.

Nortel tied Avaya for the lowest score of 3 in company direction, and tied Cisco for the lowest score of 3 in depth of functionality, according to analysts polled. Keeping it among the leaders, however, is its score of 3.3 in customer satisfaction, besting Cisco's low score of 2.8.

Nortel offers circuit-switched, IP-enabled, and IP-based products for small-and-medium business with its Symposium Express and BCM, and for larger businesses with its Symposium Call Center product line.

The Winner
Genesys Telecommunications Laboratories, a wholly owned subsidiary of Alcatel, tops the CTI list for the second year in a row. Last year, Genesys received high marks for its integration capabilities--and this year is no different. Customers can purchase preintegrated plug-ins for smoother integration into other call center applications from vendors like Oracle, PeopleSoft, SAP, and Siebel.

Not surprisingly, its scores in both company direction and depth of functionality topped the charts with a 4.5 in each, according to analysts polled. "They're the only one who really sells the stuff," Elliot says, adding that competitors are selling CTI solutions as a hook to sell other call center products.

Genesys has expanded its Customer Interaction Management Platform to increase support for multivendor networking VoIP, and standards like Session Initiation Protocol. The platform enables interactions via traditional voice, VoIP, email, and Web chat. --David Myron

CTI One to Watch
Although Cisco is the clear winner in the TCP/IP infrastructure market, the company still lags behind CTI competitors in depth of functionality. What ultimately bumped Cisco off the leader list was its low score of 2.8 in customer satisfaction, according to analysts polled. Cisco received the second highest score (behind Genesys) among analysts for company direction, with a 3.2, but industry pundits want to see more depth to its product line. "Cisco has a long tradition of including CTI functionality in the skin of their call center portfolio. The weak link in the Cisco delivery chain is the inconsistent performance of their [value added reseller] network," says David Peterson, president of PowerHouse Consulting --D.M.

Interactive Voice Response
The Market
Speech solutions can act as a way to help alter the paradigm that contact center managers are never-endingly faced with: migrating customers who call in to contact centers with basic customer inquiries like checking account balances to more cost-effective channels like an interactive voice response (IVR) system. Although these solutions can drastically slash costs, companies have been locked in to vendors. Open standards like VoiceXML and Speech Application Language Tags (SALT) are freeing end users and allowing newer players like BeVocal, TuVox, and VoiceGenie Technologies to throw their hats into the ring. These newer kids on the block are not the biggest dots on the radar screen, but they are turning heads. For now, though, we turn our attention to some of the more ripe vendors. Competition is tight: In a first for CRM magazine's Service awards, two companies tied as winners in a category.

The Leader
It's been a bumpy cycle financially for Nortel Networks: The company is continuing to work on the restatement of its financial results for prior quarters. Still, even Nortel's estimated unaudited revenues for just the second half of 2004 of approximately $5.1 billion are more than double the revenue of its closest competitor within the space for the entire year. Clearly a dominant presence, the company offers a wide-ranging product portfolio of self-service solutions. Its Nortel Self-Service Platforms (formerly Periphonics Self-Service Platforms) includes its Media Processing Server (MPS) 100, MPS 500, MPS 1000, and Voice Processing Series/Information Server, with MPS 500 and MPS 1000, including VoiceXML. "Periphonics had lots of market penetration when Nortel bought them," Peterson says. "They moved very quickly into the IP space, [but] Nortel may be dragging them down with all their financial problems."

The company launched its Web-Centric Self-Service solution in 2004, which also uses open industry standards. But not all analysts are impressed. "They were late with VoiceXML compared to some of the other guys," says Sheila McGee-Smith, president and principal analyst of McGee-Smith Analytics, and "[they] have a muddled story with MPS and Web-Centric Self-Service." Even so, Nortel Networks' reach is still felt. Gartner placed the company as a leader in its Magic Quadrant for IVR and Enterprise Voice Portals for 2004.

The Winners
Call them the New England Patriots of the IVR playing field. Last year's category champion, Avaya, reeling in $4.1 billion in revenues for fiscal year 2004, compared to 2003's $3.8 billion, has reclaimed its throne for the second year in a row. After gaining momentum in the IVR space with its Conversant software and now with its Avaya Interactive Response solution, Avaya managed to record solid marks from our analyst poll in both company direction and reputation for customer satisfaction, despite the headaches that some customers may have experienced migrating from a Conversant platform to an IR platform. "They lost customers because they didn't really manage the process well," McGee-Smith says, but, "they've got a nice full product portfolio in contact center [solutions], and the IVR [ties] into that well." The company's ammunition includes Avaya Contact Center Express, a multimedia contact center solution designed specifically for midsize companies, and the Avaya Speech Applications Builder, allowing developers to design speech automation services using open standards (including VoiceXML). Avaya and IBM announced that they will deliver speech-enabled self-service solutions, combining the former's IP-based contact center software for self-service with the latter's WebSphere infrastructure software. And the company's billion-dollar decision? Acquiring Tenovis GmbH & Co. KG, a provider of enterprise communications systems and services, in a deal that will require Avaya to pay about $370 million in cash and take on about $265 million in debt. When fully integrated, though, Avaya expects the acquisition to add approximately $1 billion to its annual revenues.

Avaya shares the spotlight with last year's second runner-up, Intervoice. Although its revenue barely compares with that of its much larger competitors (for the four quarters completed November 30, 2004, Intervoice amassed $178.1 million, compared to its previous four quarter earnings of $160 million), the company managed to outscore both Avaya and Nortel for its reputation of customer satisfaction and its functionality. It was just a few tenths of a point away from perfect scores in both categories. "The fact that you can host it or buy the application yourself works out well for a lot of clients, because they may--particularly for speech applications--want to start out with a hosted application and then bring it in-house," says Elizabeth Ussher, a vice president at META Group. Intervoice's Omvia Voice Framework, which the company claims is the most open voice solution product on the market, supports a traditional, VoiceXML, or SALT environment. Both the Omvia Voice Framework and its Voice Express packaged applications support Microsoft Speech Server 2004. --Coreen Bailor

IVR One to Watch
Well known for its CTI capabilities, Genesys Telecommunications Laboratories is not a usual suspect in the IVR world. Still, in 2002 Genesys purchased Telera, a VoiceXML solutions provider, an acquisition analyst Sheila McGee-Smith describes as "a leap-frog move" for the Alcatel subsidiary. And in 2004 the company unveiled its Genesys Voice Platform: Developer Edition, a development system for building VoiceXML 2.0-based applications. It also announced a partnership with IBM to deliver enterprisewide speech-enabled self-service solutions via a suite of WebSphere speech capabilities integrated with Genesys Voice Platform. "They are working on things that are road mapped for 2005, but as we stand here right now, they're not there yet," McGee-Smith says. But, "they're on the right path." --C.B.

Quality Monitoring
The Market
The quality monitoring (QM) market is at a pivotal point in its evolution. QM tools record customer interactions to ensure that quality levels are being met, and can help managers keep track of agents' performances, while spotting problem areas that can be improved with e-learning solutions. Vendors in the space, however, looking to further their reach and break away from the pack, are moving into the enterprise with either product enhancements or acquisition moves. "The successful vendors, going forward, will be those that realize that quality monitoring is just one point on the map," says Ken Landoline, vice president and principal analyst at Saddletree Research. "They really need to expand into the full breadth of a suite of products that is going to optimize overall business performance in the enterprise." In the QM and workforce management markets that are, according to Jim Davies, principal analyst at Gartner Research, at least 60 percent penetrated, this year's QM leaders took steps to keep up with this trend and their competition.

The Leaders
With its solid 13 percent revenue growth NICE Systems maintains its position as a leader in the QM arena, despite its slightly below-average (but still solid) score for reputation for customer satisfaction. Still, analysts were most impressed with NICE's platform, awarding the company higher marks for functionality than any other vendor in the space. The 2004 category champion's release of NICE Perform illustrates the company's ability to extend beyond the contact center market and move into the enterprise as a whole. "They've realized the call center QM market is starting to become a bit saturated," Davies says. "Looking at their strategy, they're trying to get into other customer-facing departments within the organization by leveraging the relationship they already have with the call center. They are trying to drive their recording, evaluation, and analytical software into these other departments to positively impact the performance of the enterprise as a whole."

The company, by reaching into the security market and capitalizing on its channel partnerships, is hoping to extend its reach. "What NICE has done well is twofold...having a diverse portfolio of products--security, logging, and quality monitoring--and...benefiting from being in the right business at the right time," says Carole Macpherson, senior program director at META Group. "NICE has also leveraged a strong partnership channel (e.g., Avaya) and has secured deals based on these significant brands." If NICE continues to move more into the enterprise via product development or maybe even an acquisition, look for the $252.6 million company to have a strong chance at reclaiming its crown.

Our previous year's runner-up, Verint, is steadily nipping at the heels of its competition, even while receiving the category's lowest marks for company direction. In fact, according to some industry insiders, the company has gotten much less aggressive in its strategy. "The company is more focused on the call center and looks to differentiate itself through superior analytical insight," Davies says. "However, their analytical focus for the security and BI markets does tend to mask their QM product line. I have not really seen them do much from an integration [or] mergers/acquisitions standpoint," he says. Even so, Verint's strong numbers for both its functionality reputation and reputation for customer satisfaction, and its impressive 27.7 percent sales growth over the past four completed quarters, helped to maintain its in-the-top-three status.

The Winner
Making the category's biggest leap from last year's rankings, due largely to its progressive vision, is last year's third-place finisher, Witness Systems. Despite its third-place ranking for its reputation for depth of functionality, Witness outperformed all category contenders in reputations for both customer satisfaction and company direction. In fact, the company added more than 200 customer wins to its client base, while boasting a customer retention rating greater than 95 percent for 2004, which may help account for its $141.3 million in total revenue, an impressive 30.8 percent increase over 2003's tally. And, according to Paul Stockford, chief analyst of Saddletree Research, the company's acquisition of workforce management vendor Blue Pumpkin positions the combined company as the market leader in developing an integrated workforce optimization solution.

Macpherson agrees: "Witness leaves behind a fragmented and specialized market with over 25 vendors that offer one or two pieces of a [production value management] suite and enters into a new arena with fewer competitors." Aside from the acquisition, Witness enhanced its solution capabilities, including extending its eQuality software to improve the productivity of back-office functions like order fulfillment and billing, with eQuality Office.
eQuality Office allows companies to capture employee desktop activities, evaluate recorded transactions, place sample recordings in contact folders for specific business functions, and identify best practices, allowing users to edit recorded transactions to create e-learning solutions. The burning issue, however, is how well Witness can integrate with Blue Pumpkin. That still remains to be seen, which will surely make 2005 a memorable year for Witness. --Coreen Bailor

Quality Monitoring One to Watch
Although Envision is a substantially smaller company than our larger category leaders, the company added 50 new customers to its roster, including Canon, IKEA, and ShopNBC, and retained 99 percent of its existing customers, making it our One to Watch. In keeping with the trend of evolving to workforce optimization, Davies says that Envision already offers a QM and WFM solution from a single platform, "but there is a long way to go before any vendor offers a complete unified solution viable for large, complex organizations." Because it's a small, aggressive vendor, Carol Macpherson, META Group analyst, says, "They will tend to be flexible on pricing and extremely responsive on servicing customers." If it continues to build its brand loyalty, upcoming years may include a new addition to the leaderboard. --C.B.

Web Self-Service
The Market
For a decade companies have struggled to make their Web presence act as more than brochureware. Creating intelligent, informative, and accessible portals for customer service has long been a primary goal of many organizations, and it is only now that fully integrated content development, database storage, and search-and-retrieval systems are starting to come into alignment to deliver a self-service experience that is a meaningful alternative for a significant portion of Internet users--an ever-growing population. The leaders in this space have, whether by aggressive acquisition or grass roots growth, established themselves as serious practitioners and providers of low-cost, high-efficiency service solutions for digital consumers and business buyers.

The Leaders
ATG (including recent acquisition Primus) has broad experience providing solutions to a range of problems businesses need their online presence to solve. The commerce-focused ATG got an instant boost by picking up Primus's highly regarded knowledge base and customer-facing capabilities. That's the good news. The bad news is that the year ahead will be a challenging one for ATG, as it must rationalize Primus, itself the product of multiple acquisitions, and bring a coherent self-service product to market. "The one thing I would ding them on now is that they have five different [self-service] platforms...a couple of things ATG was working on, and Primus has at least three different platforms," says Allen Bonde, president of research firm ABG.

The pairing has failed to improve on Primus's middling reputation for customer satisfaction, which hurt the company's ranking last year and, left unchecked, could push ATG off our leaderboard entirely. Web self-service is still an emerging market with a number of different styles and approaches, and no single provider has yet proven itself to be indispensable.

KANA has stayed the course of its latest reinvention to become a knowledge and service specialist. Last year's category winner does not appear to have made any major missteps and continues to integrate and build out its self-service offerings. "Their technology has been around a while...but they're proven as a self-service company," Bonde says. One of KANA's biggest accomplishments in the self-service space was securing the services of former Primus CTO Charles Isaacs after the ATG acquisition. In the same role at KANA, the knowledge management veteran should drive KANA's technology vision for some time. Watch for KANA to further improve its prebuilt integration with other enterprise software systems.

The Winner
RightNow Technologies was just an up-and-comer last year, but a solid 12 months of growth, a successful public offering, and high marks from clients make it this year's category winner. RightNow's key to success? "They sell well because they solve problems for people," Bonde says. The on-demand knowledge bases the company provides have proven intuitive to set up and maintain for strapped support organizations, and have been received well enough by customers to make the subscription model ring up happy returns for RightNow.

What RightNow is not is the most powerful and feature-filled self-service solution on the market--but quite often, technical dominance and market success are two very different things. "We've dinged them on the technology, but they have been brilliant in terms of execution and reputation," Bonde says. "Greg [Gianforte, RightNow CEO] would disagree, but we think they could add more search capability and more management capability."

For RightNow to remain a category leader, it will have to evolve with a growing number of interested clients. "Their FAQ approach to the world is [best] in the high-volume CPG industry, which is where they do well...but they have only one look-and-feel, and you know immediately when you are on a RightNow site because they all look alike," says Forrester Vice President John Ragsdale. --Jason Compton

Web Self-Service One to Watch
Although the busy self-service space has a number of promising contenders, including the merged Kanisa/ServiceWare and popular search specialist iPhrase, Siebel's late-2004 purchase of edocs invokes the old 800-pound gorilla rule--if it's moving, one had best take heed. Edocs has built a reputation for high-volume, highly complex engagements that may seem more like bitter medicine than a joy for all involved, but more important, the company was generally credited with getting the job done. Siebel gets an instant boost to its self-help offering, and may not be done building its capabilities. "I'm convinced Siebel has at least one more acquisition to do in this space," says ABG's Allen Bonde. --J.C.

Click here to read The 2005 Service Leaders--Part II.

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