• July 17, 2006
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

Verint Systems Acquires Mercom

Contact center solutions vendor Verint Systems today announced it had acquired Mercom, a provider of interaction recording and performance evaluation tools. Terms of the deal included $55 million in cash at closing and a possible $17.5 million over two years based on performance goals. The acquisition of the 60-person New Jersey firm gives Verint a fresh influx of workforce optimization technology, a credible addition of small and medium enterprise focus, and a global reseller network that reaches Japan, Korea, and the United Kingdom. According to Mariann McDonagh, vice president of global marketing for Verint, this move is intended to accelerate Verint's growth and capacity, both of which had already been steadily increasing through organic means. In addition, McDonagh says it affirms Verint's commitment to serve small and medium contact center customers. "Since its founding in 1991, Mercom has gained significant experience developing, packaging, and delivering solutions tailored to meet the specific requirements of the small-to-midsize enterprise contact center market," McDonagh says. "This acquisition will enhance our competitive edge and help us extend our actionable intelligence vision into new markets." Analysts say that the SMB call center is a tempting target, overlooked due to its not fitting the traditional image of giant phone farms. "This is a validation of the potential for the small to medium size contact center market," says Paul Stockford, chief analyst with Saddletree Research. "It's really huge--70 percent of the U.S. call center market has fewer than 250 seats." He adds that in Asia and Europe 90 percent of call centers would be considered small or midsize by American standards. Seema Lall, industry analyst with Frost & Sullivan, agrees. "The contact center midmarket has experienced rapid growth over the past several years," Lall said in a written statement. "Verint's acquisition of Mercom will significantly increase the company's presence in this dynamic market and give them a strong global platform for their QM and analytics solutions." The marriage of these two companies could bring about a shift in perception for the contact center industry where SMBs are concerned, according to Stockford. Previously, large centers were the preferred target because of the huge profit margins involved in selling to them. However, "If you design a product for that market [SMBs] with an appropriate margin, and that isn't dripping with bells and whistles, you can make a killing," he says. This applies to Verint's existing products as well. "If Verint can scale back its other offerings in analytics, quality monitoring, and workforce optimization to be attractive to SMBs, it now has a huge install base to sell to." Related articles: Speech Analytics Will Be Listening
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