Today, RingCentral announced its plans to acquire Dimelo. Last month Vonage acquired NewVoiceMedia. Other acquisitions over the past few years include:
- BroadSoft Acquired Transera (Cisco since acquired BroadSoft)
- NICE acquired inContact
- ShoreTel acquired Corvisa (Mitel since acquired ShoreTel)
- Genesys acquired Interactive Intelligence
- Mitel acquired PrairieFyre
The acquisitions are only part of the story. Twilio introduced Flex, Amazon entered the space, and a few new startups have crashed the party such as Sharpen and Zailab.
Pure play cloud providers that are hitting above their weight class include Five9 and Talkdesk.
What’s It All Mean?
The contact center space is huge, profitable, sticky, and ripe for disruption. For the past decade, the excitement has really been about 1) cloud and 2) omnichannel. Neither has fully played out (and it will take another decade). From a sales perspective both have lost their sizzle. Everything is cloud (DIY, public cloud, or private) so the cloud migration benefits all vendors. Cloud is not a thing to consider, it’s inevitable.
Nor is omnichannel really a means of competitive differentiation. Voice is no longer the preferred means of interaction in all situations. While the providers get that and support it, most contact centers have a limited understanding of this obvious fact.
What Does Matter?
The contact center market will continue to grow for several reasons. Quite simply, the barriers and costs are dropping and the need to effectively manage communications are increasing. There are now more ways to interact than ever before which is creating a need for more intelligent, broader contact centers. This brings us to the need to use customer data and business know-how to shape/ensure positive, efficient interactions. The contact center has historically been a standalone monolithic application. Like most applications, it’s becoming distributed and integrated across workflow processes.
Here’s What to Watch:
- Integrations: Contact Centers need better access to real-time data. The CRM is a logical integration, but the need is broader than customer data. There’s needs and opportunities to link to other business systems including logistics, inventory, service and other platforms and ecosystems (such as maps, social networks, weather forecasts, etc.).
A simple way around integration is to already have the data. This was the realization that caused Amazon to create a nearly brain-dead contact center that’s competitively significant. Expect any organization that has data to move toward contact center services and/or alliances (includes CRM and other providers of rich data).
- AI: AI is not artificial nor intelligent. It requires a bunch of manually sorted (tagged) data with ongoing processes to ensure learning. A cutely named chatbot or partnership with Google is not enough to add value. Successful implementation is going to require new skills – either from the vendor/provider, its channels, or the customer.
- IP: Just look at Vonage and RingCentral – these two competitors were selling the same inContact solution. It’s a triple-whammy – difficult to differentiate, low switching costs, and outsources a lucrative area to a third-party provider. Both companies want their own intellectual property, and have made acquisitions to accelerate time to market. Resellers are fine, but the real opportunity is owning the stack.
- Automation: These solutions are inherently complex and way too manual. Companies like Starfish and VOSS can automate MACs, simplify multi-platform management, and maintain sync with UC systems and IT systems (such as Active Directory). This is more important for customers with large implementations and/or multiple platforms.
- Mobile: We have talked about mobility and the Anys (anytime, anywhere, any device) in the UC context for years. In contact center context it has broader implications. Smartphones are pretty smart – they can do many things that regular lines cannot do. Yet, the contact center hasn’t really noticed yet. Factor in ubiquitous Wi-Fi, LTE and/or 5G and cue that shoe drop.
- Innovation: Being first or innovative favors building not buying. The good news is building has never been more accessible. We have seen several companies, Uber being the most commonly cited, that created a custom developed solution that offers several innovations in interaction.
What matters most is how providers are managing the R&D for the above. If you hear “cloud” or “omnichannel” as key components of a roadmap go to Yellow Alert.
There’s clearly some very interesting activity, for example:
- Avaya’s Mobile Experience has potential.
- Instead of adding APIs to an existing solution, Twilio and Vonage have literally turned things upside down by enabling enterprises to build a contact center from the API up.
- Like UC and UCaaS, initially the cloud was just a deployment issue, but built-for-the-cloud means things like microservices, APIs, and cloud infrastructure. CCaaS providers such as Five9 and Twilio (Flex) have some inherent architectural advantages that favor innovation and agility.
The vendors at the most risk are those that can’t move quickly or that are dependent on others for their technology. These limitations can stem from architecture, too many platforms to support, financial limitations, etc. A lack of meaningful improvements over the past year or so should be concerning as are big, major releases (cloud is all about incremental and continuous improvements — what version of Gmail do you use?).
Regarding RingCentral and Dimelo
Dimelo, like Mongo, is a pawn in the game of life. The important thing here is the acquisition puts RingCentral in the omnichannel business. Of course, it was already there, but now it has its own tech stack. The obvious question is how does this fit in with RC’s inContact offer? Dimelo will continue to be offered as a standalone service, but RC intends to evaluate “integration options.” Officially, RC says Dimelo is “complementary” to inContact. I’m not sure inContact would agree.
Very likely, RC will will use Dimelo as a starting point to build out its own CCaaS. The omnichannel aspects are a logical starting point considering
- RC has core skills in telephony.
- There really aren’t many affordable potential acquisitions left.
Plus, the acquisition adds some new and large names to RC’s customer list. As the deal does not add tangible revenue, it was likely cheap (financial terms were not disclosed).
RC, similar to Vonage, is moving toward building out more IP and few areas are more important now than customer engagement. RC owns its own telephony stack, acquired Glip (now part of RC Pulse), but relies on NICE/inContact for contact center and Zoom for video.
Also today, Zoom announced its own UCaaS – unrelated?