Genesys Snags Interactive Intelligence
I have mixed feelings on this acquisition. I generally like it when a founder sells a company, but I didn’t have the impression Don Brown wanted to sell. I’m sure he did quite well and even if he’s not happy about it I’m sure he will feel better after visiting the bank. I don’t think he had to sell, so I should be happy for him. The problem is I liked what Don and ININ were up to. I think PureCloud had an impressive vision and the company was successfully re-inventing itself. The experts say reinvention is necessary during disruptive times (or be acquired…thus my confusion).
Genesys did well. I don’t follow Genesys that closely because it’s an extremely boring company in an extremely boring sector. But that’s not necessarily their fault. The modern contact center is a technical marvel but I’d prefer it if the leading vendors used their powers for good instead of evil. That’s because despite all the hype about customer engagement the modern contact center is really designed to prevent interaction. The vast majority of contact center innovation is new and better ways to eliminate or reduce conversation. The only thing that can make the sector more boring is premises-based technology largely designed at least at least 15 years ago.
The word “genesis” isn’t exactly associated with new technology. “On the eighth day the lord created the contact center and commanded thou shall not change the technology.” Genesys 1:800.
Other than being on the current release, the modern contact center is not so modern. The customization is so intense that it’s very hard to untangle, re-evaluate, or completely replace these beasts. Perhaps I am not being fair. My experience is probably more jaded from my experience as a caller than as telecoms analyst. Have you called Comcast, United, or DISH recently? I recently signed up for a NY Times free trial, though to cancel you have to call. That’s got to be an effective way to build subscriptions. I think most frequent flyers value their benefit of a members-only service number more than their free miles. What isn’t clear yet is if Genesys will become interesting or not.
Most contact center companies are not interesting. Avaya and ININ are interesting because they have broad portfolios.
ININ was on course to re-invent itself and the industry. It was doing just crazy things and following a powerful pyramid vision for the enterprise. It had contact center pros on top using PureCloud Engage, a middle filled with knowledge workers using PureCloud Communicate for UCaaS, and a broad base of employees using workstream messaging called PureCloud Collaborate. ININ was using workstream messaging (like Slack) as its way of uniting enterprise communications, and using its expertise in contact center as the lure. Cloud, messaging, video, browser, WebRTC – you could win Buzzword Bingo after a short PureCloud conversation. Also, ININ was practically privately funded even though there were public. Brown was setting a path that followed some of the most interesting companies in the world by following the path outlined in best seller Exponential Organizations.
They seemed to be on track, but it was taking probably longer than expected. PureCloud wins were still in double digits, and the functional gap between PureCloud and its CIC solution was still significant. ININ was focusing more resources on PureCloud and narrowing its vision to Engage (mostly ignoring Communicate and Collaborate). I’ve heard from customers (big ones) that their CaaS business was falling-down. Anyone that could competently fog a mirror was reassigned to PureCloud. The ININ ship was springing leaks. However, none of that concerned me because I know radical change can be painful. that a founder is the best captain, and it that they seemed to be taking more steps forward than backward.
I was surprised when they announced their willingness to look at a sale. I suspect Genesys had already knocked. That was the shocker, so I was already kind of numb to the acquisition announcement.
Shrewd Move for Genesys
Genesys gets quite a bit in this deal starting with PureCloud – that’s the big prize. It is state of the art, cloud-first gold. It’s far from done, but name a cloud service that is. Large contact centers have clung to their premises-based systems, but that will change. Companies like 8×8 are are emerging as new contact center leaders because of their cloud savviness. There’s still a functional gap, but Genesys just went from laggard to leader. In addition to PureCloud, Genesys is also getting some very valuable expertise in nextgen skills including AWS and WebRTC. They also get a base of customers on CaaS and CIC. Not to mention they also have one less competitor. They got it all later this year at a reasonable price.
The acquisition is great for Genesys, probably good for ININ, but not so good for Avaya.
Rumor had it that Genesys was looking hard at Avaya’s Contact Center business which is likely for sale. That means Genesys probably obtained a ton of competitive information about Avaya’s contact center business. Of course it’s protected under various NDAs and agreements, but you can’t unlearn that stuff. You know where Avaya is in development cycles, margins, and forecasts. It’s a normal part of the sales process, and it’s very valuable.
It’s bad news for Avaya for several reasons. The obvious reason is one less qualified suitor. It is unlikely Genesys will attempt to acquire both companies at the same time, but I suppose still possible. At a minimum it probably means a lower price to the remaining bidders (which I’m sure exist). Even worse though is any bidder now has to contend with the fact that two of Avaya’s competitors have combined. It might push Avaya toward spinning the contact center business out with its own IPO. That could be really interesting.
ININ is likely a better buy for Genesys than Avaya’s contact center business for two major reasons: 1) the size is easier to digest and 2) PureCloud offers a more complementary addition to its portfolio and roadmap.
The ININ team probably will do fine, but there’s still risk here. Presumably Don will be leaving so new leadership could make or break everything.
The transaction also represents a shift from being public to private. That means no more quarterly updates on PureCloud.