Here's an interesting article from yesterday's GLOBES Arena:
“This market isn’t big enough"
Zvika Paz
21.11.2000 15:41
One of the fastest growing markets today is undoubtedly the Customer Relations Management (CRM) market.
As customers, we frequently encounter service organizations using telephone support systems. These centers use mainly humans who often find it difficult to meet our immediate needs. The current trend is therefore to move from telephone-only support systems to multi-media centers (contact centers) which combine various communications applications such as Internet and e-commerce with telephone calls, and later will also use online telephony.
The move to providing services through contact centers is expected to intensify the demand for Customer Experience Management (CEM) solutions. Prominent players in this field include Israeli companies NICE Systems, Comverse Infosys and US company Witness Systems. CEM solutions are based on business platforms that enable contact center customers to document, evaluate, analyze and improve their capabilities, using a wide range of communications tools.
The technology is important because the traditional methods of differentiation (product, price, location and sales promotion) are now being replaced by values such as Quality of Service (QOS), understanding changing customer needs and company brand names.
The title for CEM seniority is disputed by NICE and Comverse Infosys, which are competing head to head for the niche. Last June, NICE hosted a major event as part of the launch of its CEM division.
Comverse Infosys CEO Dan Bodner told “Globes” in response to NICE’s declaration, “The CEM concept NICE presented is a version of the Customer Experience Suite (CES) strategy we unveiled in February. We ledthe market in the concept of total customer support, and NICE simply developed a product based on our technology. We did not trumpet CES like NICE did, so people think that they are the first in the field.”
Gartner Group CRM field director Michael Maoz is unimpressed by the dispute between NICE and Comverse Infosys. “The CEM niche is so small that the one who started it is irrelevant. To the best of my recollection, NICE first broke into the global CEM market, but it is unimportant because neither NICE nor the market really understand what CEM is. CEM is not a clear concept like CRM, and this confuses customers. The process is only just beginning and it will take time before we know how things will develop."
“Globes”: Can you give me an example where I, as a customer, would seek the help of a contact center?
Maoz : “I personally have been a victim of inefficient company customer services. When filled out the application forms for VisaCard at a Bank Leumi branch in Ra’anana, I thought that the credit card would be sent to my overseas address. Later, I remembered that I was in Israel and understood that the bank would almost certainly send the credit card to Ra’anana, although I reside overseas and was flying out the next day. I remembered that I had a private bank clerk, who naturally was unavailable when I called.
“When I called Bank Leumi’s call center – and please note that this was already the third communications means I used to contact the bank – and asked them to change the details, the operator told me that she could accept the information regarding my request only in the evening, and the request would be handled the next day. Which of course, was a big help considering that I left the next day.
“Every customer encounters similar problems when there are five communications channels that can provide information. My expectations from a call center are therefore changing. Companies like NICE and Comverse Infosys are only part of the solution, and not even the main part. The use of consultancy companies like PricewaterhouseCooper today is the most efficient, because they provide comprehensive solutions for a company, solutions comprising of five or six solutions by different companies.”
What is the biggest effect of the move to contact centers?
“Unquestionably, the integration of the Internet in call centers is making the difference, but we aren’t there yet. NICE is operating at a more basic level. Its systems can collate information, but to what end? The customer expects immediate help, with the operator recognizing his background, remembering all the operations carried out by fax, mail or telephone, and knowing his valued to the company.
“NICE, Comverse Infosys and Witness Systems are not solving the problem of Internet penetration to the call centers, so it hard to call them contact centers. Only in another four years will we see a company that provides all the necessary components for a fully operating contact center.”
If no company can provide an effective solution for the contact center market, what are they worth?
“Most are not worth much. I recently heard an evaluation that 70% of the companies in the market will disappear within three-four years. I remembered that at the conference I read out a list of 65 companies that were in the CRM field two and half years ago, of which 40 are already gone due to their financial situation and size.
“NICE and Comverse Infosys are also trying to penetrate other fields like CEM because they provide a solution for too small a niche. They will be forced to acquire additional companies because while they don’t have the time to develop their own solutions, they do have money. The small companies in the field lack money and customers; they need larger and more solid investors such as NICE, before their shareholders realize that they don’t have a chance.”
NICE and Comverse Infosys are contesting leadrship for the CEM field, and now you are saying that the platform is no big deal.
“Both of their solutions combined are less than 10% of the comprehensive customer solution, because the call centers have 20 parts and they offer solutions for only one of them. Even if they both enter new fields, they will still have to operate in quite restricted niches and will certainly not have a decisive influence on the CRM market.”
What is the contact center market size?
“The market grew 40% in the past year, but it hard to estimate its size because most of the investment is in hardware and infrastructure systems. Software comprises only 17% of the system, including services, sales and recording systems such as NICE’s. In the end, the portion in which NICE, Comverse Infosys and Witness Systems operates comprises only 3% of the total call center market, which in turn is only a part of the CRM market.”
What about consolidation? Will merged companies have a greater chance to appeal to larger markets?
“I think that there is already a need to merge. This market isn’t big enough for NICE, Comverse Infosys and Witness Systems; one of them will be swallowed up or disappear. It is a game of musical chairs. But I can calm the Israeli employees by saying I think it will actually be the foreigner – Witness Systems – who won’t find an available chair.”
Is a merger between NICE and Comverse Infosys possible?
“Yes. There are companies that are building their futures so as to be bought. NICE was not built to be sold, but size is important. Solutions have a particular time-frame, and the company with more comprehensive solutions will win out. The only chance for NICE and Comverse Infosys to succeed is unity, selling the company or breaking into new fields, with the last option the least realistic. It should be remembered that communications providers aren’t interested in working with more that six companies to provide them with a comprehensive solution. The acquisition trend will therefore continue.”
So why unite? Maybe it would be worthwhile for NICE or Comverse Infosys to be swallowed by Nortel for example?
“A good question. Avaya or Nortel or Cisco are likely to swallow NICE or Comverse Infosys because they are still looking for IP-based solutions. I wouldn’t fall off my chair if that happens. To the contrary, I would be astonished if one of them is not acquired by one of the giants. Cisco and Nortel have a lot of money which they have to invest in acquisitions, in accordance with shareholders’ demands. There is nothing to prevent them from swallowing one of the CEM companies.”
Published by Israel's Business Arena on 21 November 2000 |
