The 2006 Service Leader Awards, Part 1
Customer satisfaction, depth of functionality, and company direction are based on a 5-point scale, with 5 being the highest rating. (Click image for full-sized chart)
Categories and Criteria
CRM magazine's third annual Service Awards names one winner and two leaders (listed alphabetically) in each category, using a proprietary selection formula. The award rating is based on a composite score of CRM revenues; year-over-year revenue growth; and analyst ratings for customer satisfaction, depth of functionality, and company direction. We also cite companies worth watching in each category for their potential to appear on their respective market's leaderboard next year.
Computer Telephony Integration
The phone call remains the most direct means for remote customers to get service, but there is considerable movement on the corporate end about how that call is taken and processed. Computer telephony integration (CTI) has been the standard for decades, but this middleware-based telephone network technology is being successfully challenged. Session Initiation Protocol (SIP) and Voice over IP (VoIP) are two competing technologies that do away with the hardware requirements of CTI systems, making them easier to afford, manage, and troubleshoot. "CTI is a dying category," says Sheila McGee-Smith, president and principal analyst of McGee-Smith Analytics, largely due to SIP and VoIP doing the job entirely through software. Beyond those two, McGee-Smith adds, "Service-oriented architecture (SOA) is another reason, as it accomplishes the same goals and uses similar standards.
SOA's ability to unify business processes could also make SIP and VoIP superfluous."
Forrester Research Vice President Elizabeth Herrell agrees, but says that change is more likely than death. "We're moving to SIP from CTI, but that's intelligence taking the place of physical middleware." The underlying technology may change, Herrell suggests, but the name could remain the same. "The new CTI spin is that workflow engines based on business rules can perform routing and linkage to the back office." The leading CTI vendors are exploring their options for a post-middleware world, experimenting with SIP and VoIP delivery. "Do you still need an automated call distributor [ACD]? Customers don't know," says Ian Jacobs, strategic analyst at Frost & Sullivan. "CRM vendors and CTI vendors alike will have to worry about IP technology--when all contact routing can be tied into a ticketing system, for example, eventually any systems integrator can be a competitor."
Avaya received a mediocre rating from our panel of analysts last year in terms of company direction, but came back much stronger for the criticism. Its rating soared to 4.1--more than a full point--for this year's awards, thanks largely to increased presence across channels. "Avaya did a good job with increasing its market share over the past two years," Jacobs says. The financials back this up, as Avaya posted year-over-year growth of better than 17.5 percent. Herrell adds that the company is "a very good multichannel player, very robust." Jacobs and Herrell agree on Avaya's functional depth as well, just not necessarily in traditional CTI: "Avaya Interaction Center is a real up-and-comer," Jacobs says, and Herrell adds, "They've made a lot of strides with SIP." Avaya has led the charge in outbound communications and regulatory compliance for the contact center, an area in which leadership is necessary.
A watched pot may never boil, but Cisco Systems, last year's One to Watch, appears to have done well enough under increased scrutiny to displace a former leader. As with Avaya, Cisco improved its weakest area, building its reputation for customer satisfaction half a point. However, the company's best overall performance was in direction, which our analysts rated just shy of 4, on average. "They've got some interesting plans [that started] in March 2006," McGee-Smith says. Jacobs says that the company is "still building out the product they bought from Geotel," but is "doing good work tying into CRM systems." McGee-Smith says Cisco is showing "true market leadership." Cisco has pushed to bring CTI and related technologies to SMBs--it's a segment that has been overlooked by some vendors in the past.
Three World Series wins in a row make a team a dynasty. Our CTI winner this year, Genesys Telecommunications Laboratories, takes threepeat top honors, handily beating the competition in two major ratings criteria. The Alcatel subsidiary beat its nearest contender in company direction and functional depth, outscoring Avaya by half a point and seven tenths of a point, respectively. A tight partnership with Microsoft for developing an integrated communications and collaboration platform shows initiative and an eye on the future. "Genesys is stacked with smart people, and they have Alcatel's stability behind them," Jacobs says. "Genesys is far and away the market leader, with the most successful multivendor solution," McGee-Smith says. This interoperability, however, is also a source of weakness for the company. Smith says: "Sixty percent of Genesys users in the United States are operating on top of an Avaya ACD, and there's a similar situation with Nortel. More than half of Genesys customers are also customers of its top competitors." Add to this a mediocre (though improving) reputation for customer satisfaction, and we see that Genesys may be in for a challenge next year.
One to Watch
Nortel Networks was a category leader last year, but weak ratings in company direction and customer satisfaction have lowered its status to a still-respectable One to Watch. Nortel has endured a long period of rolling layoffs, and October 2005 saw CEO Bill Owens try to cede his office to Mike Zafirovsky, an executive noted for his willingness to make cuts and changes, after just 18 months on the job. Zafirovsky's former employer Motorola moved to block the appointment on grounds that it broke a noncompete agreement; small wonder that Nortel gets dinged for company direction this year. One analyst said Nortel had "an aggressive development plan, but one that's hard to deliver," and concluded that customer satisfaction was "hard to judge because of few new implementations." Whether it rises again to leader status or drops from contention altogether, Nortel is an instantly recognized name in communications technology and deserves to be watched.
Interactive Voice Response
IVR and speech solutions have traditionally aimed to take the burden of basic customer inquiries off agents' shoulders and cut call center costs. Their purpose has not changed, but the technologies designed to accomplish these goals have. One of the important focal points for IVR vendors over the past year has been standards-based technologies that ease integration woes, such as VoiceXML, Media Resource Control Protocol (MRCP), and Session Initiation Protocol (SIP). VoiceXML, when combined with voice recognition solutions, enables customers to access information, such as the local weather or store locations, on the Web through a telephone or a voice-driven browser. MRCP helps to integrate speech recognition engines into an IVR solution; SIP is used for initiating an interactive user session that involves multimedia elements, such as voice. Traditional IVR developers (like Nortel, Avaya, and Intervoice) are trying to migrate their customers to these technologies, but are losing ground to companies like Genesys, which is beginning to move ahead of the pack. Our final scores, though extremely close, prove this.
Avaya, which tied with Intervoice as the winner last year, continues to be one of the strongest vendors in the IVR market, and is also one of the most financially sound, posting an impressive 20 percent sales growth last year. In 2005 the company released the latest version of its Interactive Response and announced the launch of Avaya Voice Portal, an IP-based platform that supports SIP, a smart move given the shift the contact center industry is making toward IP-based infrastructures. This played a big part in Avaya's 4.0 rating in company direction, the highest among all leaders.
Conversely, some analysts were disappointed about the timing of the announcement. "The [Voice Portal announcement] was perhaps a little later than their competitors," McGee-Smith says. "All in all, the announcement was a step in the right direction, and shows they're serious about IVR."
Nortel Networks offers a range of voice-response solutions that address a variety of markets and are easily scalable. Overall, the company offers a robust platform with the Nortel Applications Center, which it has ambitious plans for. These include further development of its Web-Centric Self-Service solution, a Web application for developing and operating Web self-services, and the release of a media server platform offering a migration path to VoIP. Nortel also added support for SIP and VoiceXML to its Media Processing Server product line. Nortel posted strong numbers in two of the three categories, but it received a 3.3 in customer satisfaction, the lowest among all the leaders. Offering an explanation for its low score, McGee-Smith says, "They were late with VoiceXML compared to some other guys."
Twelve months ago Genesys Telecommunications Laboratories was well known for its CTI capabilities and was considered a strong up-and-comer in the IVR space by most industry pundits. This year, Genesys completed the most impressive leap from last year's One to Watch to the top spot, knocking out our 2005 category cowinners Avaya and Intervoice. 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. Though its products can be pricey, Genesys Voice Platform is an established solution that Genesys is now developing to support open telephony by adding support for SIP and MRCP. The company's focus on VoiceXML and IVR and its ability to deliver them in a robust suite solution is what helped Genesys win the IVR category. "Genesys is putting speech-enabled IVR front and center in a lot of their strategies, which is good," says Bern Elliot, research vice president at Gartner. "The company's VoiceXML design and Genesys' overall middleware approach has enabled it to exploit the shift toward a Web-oriented self-service architecture."
One to Watch
While Intervoice acquired Edify, gaining its Voice Interaction Platform, analysts dinged last year's category cowinner for not offering a suite platform that can support other technology needed for IVR, such as VoiceXML. "There is not a lot of room in this market for standalone IVR providers. The Edify acquisition adds some nice technology, but Intervoice hasn't put enough muscle behind talking to their customers and migrating them to their Omvia platform, [at least] not like some of the other vendors in this market. That will be key for them," one analyst says. --Colin Beasty
Online support services are growing increasingly prevalent in most industries, but consumers still do not value them as much as they do phone communication. "Self-service still fails to live up to customer expectations, largely because companies are not investing in the right technology," says Zachary McGeary, associate analyst at Jupiter Research. "Search is not effective.... That failure is pushing customers right back to the call center. There needs to be a focus on optimizing inquiry resolution online."
Vendors that focus on relevancy in problem resolution will be most successful. "The biggest trend is, less is more," says Ladd Bodem, principal at ServiceXRG. "It's not so much what you can do, but what you should do. Give the customer what he wants, not everything we have on the subject." The leaders in this market help organizations understand their customers' needs, enabling customers to meet and surpass their expectations.
Knova Software, created by the February 2005 merger of ServiceWare Technologies and Kanisa, surpassed all other vendors in depth of functionality with a 4.2; its score for company direction slightly led the way with a 4.0.
Compared with its competitors Knova has the broadest self-service and KM capabilities, plus strong architecture that should become even more robust with additional releases later this year, according to Allen Bonde, senior vice president of strategy at consultancy eVergance Partners. Knova's applications have been highlighted in several analyst reports, based mostly on its reputation for brand, delivery, and technology. "Knowledge management has made a comeback. That plays well for Knova," Bonde says.
Analysts say Knova's level of service is most consistent of all of the leaders and its vision of solving a business problem is clear. The next step is to continue to build out sales and support channels to sustain the current momentum. "Knova has really set the tone for the industry in this space of Web-support services," Bodem says. "They need only to execute what they already put into motion, and they will be fantastic."
Talisma jumped onto the leaderboard this year, aided by its March 2005 acquisition of KnowledgeBase.net, giving Talisma solutions that analysts peg as robust and easy to use. Talisma, which focuses on chat, email, and knowledge-based self-service, launched KnowledgeBase.net 5.0 in May 2005. The application includes KB Ad Manager, for companies to track and report on product offers; KB Remote Search, to search for information in disparate databases; and the KB Offline Portal, which lets field workers synchronize knowledge bases on their PDAs or laptops.
Because Talisma is a private company, it does not release revenue numbers, but it reported an annual growth of 80 percent in 2005, compared to 2004. It also reported 467 new customers, including those acquired from KnowledgeBase.net, and an impressive 95 percent customer retention rate. Analysts agree the company has a good vision and is making strides toward success.
RightNow Technologies, which was victorious in 2005's Web self-service category, recaptures its throne in our rebranded Web-support services category, with impressive revenue growth and company direction. Total revenue for 2005 was $87.1 million, a 41 percent increase from $61.8 million in 2004. Total bookings grew 40 percent over 2004 and exceeded $100 million for the first time. The company reported 312 customer wins and a customer retention rate of more than 90 percent. It is continuing growth in the midsize and enterprise markets, with two-thirds of its revenue coming from organizations with at least $1 billion in revenue, including large government agencies and higher education.
The only warning offered by analysts is that maintaining its reputation for stellar customer service is getting increasingly difficult as RightNow expands. Nonetheless, Bonde applauds the company's business direction: "RightNow has had a great corporate strategy. They've been innovative and excelled in terms of execution."
One to Watch
ATG enjoyed a 31 percent revenue growth in 2005 (from $69.2 million to $90.6 million), reported 91 customer wins, and a 92 percent customer retention rate. The company acquired Primus's KM, Web self-service, email response, and natural language tools in August 2004. Analysts question whether ATG has succeeded in appeasing Primus customers, but applaud the progress. Since the acquisition, it launched its ATG Wisdom strategy and self-service suite, which is available as a hosted or as on-premise package or individual applications. --Alexandra DeFelice
Workforce optimization (WFO) comprises workforce management, quality monitoring (QM), performance management, and e-learning, according to Paul Stockford, chief analyst at Saddletree Research. We concur, and recognize that there is a correlation between proper staffing, quality assurance, agent performance, and coaching. That's why we've rebranded the category from last year's workforce management and optimization, to WFO.
QM is a major component of this space, so it's no surprise that two QM players also make appearances. However, only two vendors offer all four pieces: Witness Systems and Envision Telephony. Due to the limited number of vendors offering all four components, we've opened up the category to those that offer at least two of the four WFO elements. Many vendors satisfy this requirement, but only the top three appear on the leaderboard. And, as a result of our rebranded category, performance management specialist and the 2005 workforce management and optimization One to Watch, Merced Systems, does not appear on this year's list.
Although primarily known within the industry for its strengths in quality monitoring and analytics, Verint Systems, thanks largely to its acquisition of Opus Group, makes its first entry into the WFO category. Verint announced the latest Opus Performance Analytics solution just a few weeks after the deal in September, combining process optimization techniques with performance analytics to help enterprises enhance operational performance across their customer-facing and back-office operations. "[Opus is] often overlooked by everyone except the buyers," Stockford says. "The company is acutely aware of what it takes to be successful in the contact center industry, and they are using this reputation for excellence in the contact center as a springboard to the rest of the enterprise."
The acquisition helped Verint earn solid marks across the board. Holding it back, however, was its inability to surpass its counterparts in any of our criteria, perhaps a partial reflection of its still-evolving workforce management functionality.
Witness Systems joins this year's WFO leaderboard, due in large part to its acquisition of workforce management company Blue Pumpkin Software. The acquisition adds to Witness's direction and functionality scores, making it a formidable opponent. Witness tied Aspect and Verint (Opus) for the lowest functionality score, according to analysts polled, but its vision helped the company tie with IEX for the highest company direction score.
Nine months after acquiring Blue Pumpkin, Witness launched Impact 360, the company's WFO solution that allows organizations to capture a broader view of performance by drilling to recordings during adherence review; to examine quality scores to ensure consistent service delivery across shifts; to send training requests to the scheduler, and to assign learning materials based on evaluation scores. There is still work to be done, says Jim Davies, principal analyst at Gartner. "By 2007 Witness's Impact 360 offering will have a very strong value proposition, but at the moment there is still some integration work to do."
Two other quality management players are noticeably absent from this year's list: Envision and NICE Systems. Davies describes Envision as "the only vendor that offers all four on a single platform." Despite the distinction noted by Davies, Envision's lackluster WFO functionality average foiled its chances of cracking into the category. And while NICE also delivers coaching and performance management, some analysts were not impressed with its WFO functionality.
IEX, last year's workforce management and optimization winner, tops this year's rebranded category, backed by its muscle in the workforce management space. In 2005 the Tekelec company continued to develop its TotalView workforce management system, unveiling version 3.9 equipped with skill block scheduling, time off management, and schedule preference capabilities. Additional rollouts included TotalView Outsource Manager, which is designed to ease the headaches associated with exchanging information and managing resources between in-house and outsourced operations, and the TotalView Outbound Solution, which features capabilities like forecasting, scheduling, adherence, and change management functionality. The year also brought a partnership for IEX with Symmetrics Business Intelligence Solutions, extending the reporting and analysis capabilities of the IEX TotalView Workforce Management system. IEX furthered its partnership with Merced Systems to offer Merced's TotalView Insight Performance Manager.
The company steered clear of the mergers and acquisitions route, bolstering its capabilities via partnership and its own research and development. But IEX does lack critical components needed to have a more complete WFO offering: QM and e-learning. That, however, didn't stop the company from receiving the highest tally for functionality (4.5) and or from tying for the highest company direction score (4.6).
One to Watch
Aspect Software, the offspring of the $1 billion merger of 2005 workforce management and optimization leader Aspect Communications and 2005 Service Excellence recipient Concerto Software, is our WFO One to Watch. As separate entities, each focused on deepening product breadth with functionality upgrades in 2005. The acquisition, however, enables Aspect to come to the table with both inbound and outbound WFO.
Analysts took note, awarding the company with a solid functionality score of 4. But its direction score (3.8) and customer satisfaction mark (3.1), both the lowest among category contenders, are indicative of the product streamlining that must take place. "They face issues regarding product line rationalization over the next year, but that should not dampen their marketing spirit or trust among their customers," says Paul Stockford, chief analyst at Saddletree Research. As Aspect continues to work on its rationalization efforts, look for the company to have a strong chance of securing a spot in the leader's circle. --Coreen Bailor
The QM market remains at a crossroads, as a growing number of vendors that deliver such tools broaden their suites to include additional elements like e-learning and performance management through internal development and acquisition.
Some QM players are also looking to speech analytics as a competitive differentiator, and are developing applications themselves or partnering with companies like CallMiner, Nexidia, and Utopy to leverage such functionality. "I'm a big proponent of analytics this year," says Saddletree Research's Stockford. "Speech analytics is going to really impact quality monitoring. It's going to bring monitoring out of the realm of 'Big Brother is watching you,' to 'there's really valuable information in here and we need to mine [it].'" According to DMG Consulting's "2005 Quality Management/Liability Recording Mid-Year Market Share Update," speech analytics and coaching are expected to experience a 100 percent growth rate in 2006.
As the market continues to evolve, however, our calculations are indicative of just how close the competition is between top-tier leaders in this market--NICE Systems, Verint Systems, and Witness Systems. The category winner claimed the top spot by a mere two tenths of a point, while the two category leaders tied for the second-highest total score.
NICE Systems retains its position as the overall category leader for depth of functionality with a score of 4.4, surpassing its last year's category-leading score by roughly four tenths of a point. The company's NICE Perform technology, which captures and analyzes customer interactions by using word spotting, emotion detection, and talk analysis, is fully integrated with Microsoft .NET client-server technology.
NICE also secured the category's highest point average, 4.6, for company direction, indicative of its most memorable mark in 2005, the $38.5 million acquisition of Dictaphone's Communication Recording Systems business. "The Dictaphone acquisition was very strategic, a really smart move," Gartner's Davies says. "It gave them a broader customer base, it gave them a larger market share, and...it gave them a much needed boost to their global support infrastructure."
What ultimately kept NICE from recapturing its winner status (achieved in our 2004 awards), though, was its low tally of 3.1 in customer satisfaction, the lowest of all companies that placed in the category, and a roughly half-point plunge from its 2005 score.
Witness Systems's scores reflect across-the-board consistency of solid marks. As a result of the year's extremely close averages, however, the company's failure to garner the highest score in analyst-polled criteria resulted in its slip from its 2005 standing as category winner.
Even so, analysts continue to praise Witness's vision, tacking the company with the second highest average score, 4.4, for company direction. "Witness is respected among vendors of QM as a successful company that can quickly recognize and respond to a market opportunity, and is a forward-thinking and formidable competitor in all aspects of call logging and monitoring," Stockford says.
The company, which appointed a chief customer officer and a chief learning officer, and created a North American Customer Advisory Committee in 2005, reported a 96 percent renewal rate for the year. Witness also launched Impact 360, its workforce optimization solution. Impact 360's architectural framework supports local and enterprise time-division multiplexing and IP solutions.
Pushing ahead with its WFO vision, Witness has to juggle its R&D budget to both enhance the core applications and develop the unified Impact 360 suite, Davies says. "That said, they launched a new QM platform and enhanced the WFM solution in 2005. Some prospects seeking pure QM were put off by the WFO proposition, but equally WFO suite sales picked up towards the end of the year--2006 will be...big for Witness."
QM's leaders have been playing leapfrog in our rankings. NICE took the top spot in our 2004 category, while Witness earned that distinction in 2005. This year, however, brings a new winner, Verint Systems, the third category champion in as many years. Its best point showing, perhaps unsurprisingly, came from its company direction, a strong indication of both its efforts to structure unstructured information and its $12 million Opus Group acquisition. "Verint's acquisition of Opus and the extension of its own performance management analytics to include data mining insights are both positive and somewhat unique developments in a QM market where differentiation is becoming exceedingly difficult," Davies says.
Although some analysts contend that Verint's QM division gets marginalized by its security solutions, the company received a sound functionality score of 4.2. And the company tied with our One to Watch for the category's highest customer satisfaction score (3.7). Considering the close competition in this market, however, 2006 is shaping up to be an interesting year for the QM space.
One to Watch
Envision's annual revenue barely approaches those of our category leaders. However, its strong reputation for customer satisfaction (which tied with Verint for the top average) helped the company keep its One to Watch status out of the hands of etalk (which entered into a definitive agreement with Autonomy in April 2005 to be acquired), but wasn't enough to break into the top-three spots.
The company grew its customer base by securing 34 wins, 15 of those coming from new German customers that selected its Click2Coach platform. "This is a company that knows how to squeeze the maximum benefit from the quality monitoring process," Stockford says. "They have an excellent reputation for customer care and genuine concern for customer satisfaction." --Coreen Bailor
Please click The 2006 Service Leader Awards, Part 2 to continue reading.