As we reach the end of 2016 it has been another interesting year with more consolidation of some major players in the enterprise voice market. The announcement by Genesys that they will acquire Interactive Intelligence (ININ) will have a major impact on the overall market, both in Contact Centres as well as in the more general Unified Communications (UC).
Over the last two years ININ has focused on moving from a CAPEX premises model to a cloud model. However whilst they have been relatively successful and the growth in cloud has significant long term value through ongoing annuity revenue, the short term impact has not been so beneficial. The Genesys acquisition broadens their opportunities to smaller contact centres as well as across UC rather than just their traditional top end contact centre users. It also combines channels to market increasing reach to end users and opportunities.
This has raised some questions in the market about how Microsoft will react to this merger. In 2014 Microsoft was openly positioning ININ as the Contact Centre solution for Skype for Business (then Lync) adopters. In 2014, after ININ announced Pure Cloud that included a UC capability that is competitive with SfB, the relationship seemed to change. In fact, at Ignite in 2015 and Enterprise Connect in 2016, Microsoft had shifted their focus to Genesys as the mentioned Contact Centre vendor. How will Microsoft react to Genesys now owning and selling a competitive cloud UC solution to SfB? Will this cause Microsoft to reconsider its long held position that the Contact Centre is an ecosystem capability that is built on top of the SfB platform and is open to any participant?
Next is what this means to Avaya and the potential sale of Avaya assets. Avaya has publicly stated that the company is actively in the process of investigating the sale of assets. The view in the financial industry has been that the Avaya Large Contact Centre business is the crown jewel. However, Genesys was considered to be the leading candidate from within the industry to potentially buy the Avaya Contact Centre business. By buying ININ, there is a high probability that Genesys is no longer in a position to consider an Avaya acquisition. The result is that the Avaya path forward becomes a bit murkier. Will Microsoft consider an Avaya Contact Centre purchase, something that was generally deemed unlikely before the Genesys/ININ move? Will Microsoft consider one of the smaller dedicated cloud players?
For the Avaya Contact Centre, the consolidation in Genesys of ININ may spur Oracle to consider the Avaya Contact Centre as an acquisition option. For Oracle, the opportunity to move the Avaya base from the generally proprietary CRM that is in most large corporate Contact Centres to the Oracle CRM and other products could be a major opportunity. However, Oracle is clearly focused on managing their customers’ transition to the cloud, so the premises nature of the Avaya Contact Centre base may be a negative.
Another option for Avaya is Mitel. They have a public strategy of consolidation and the ability to raise cash was shown by trying, unsuccessfully, to acquire Polycom this year. Does this open the door for Mitel to acquire assets of Avaya that would aid its growth through installed base acquisition? While Mitel has arguably not been a primary contender in the large dedicated Contact Centres, the options may be interesting, or the UC segment of Avaya may have higher interest.
The UC and Contact Centre markets have been ripe for consolidation. Where there were previously barriers based on geography, the emergence of VoIP and cloud delivery is rapidly removing those barriers. With the relatively new competition from players like Cisco and Microsoft it is creating a market where size is critical, size engenders market muscle, but also synergistic cost reductions, from development and supply chain through marketing, sales, and operations. For all of these reasons, the ability of smaller vendors to compete and succeed may be increasingly challenging.
The Genesys acquisition of ININ has effectively taken one more player out of the mix. This will drive other changes and competitive response. This may mean a number of reactions and other mergers and acquisitions during 2017 as the industry positions for the coming battles in the cloud.