In The Other Corner, A New Workforce Optimization Giant Takes Shape
April 28, 2006
By Tracey E. Schelmetic, TMCnet Contributor
The birth of the workforce optimization market has been interesting to witness (no pun intended). It never really made sense to me that call recording and monitoring and workforce management existed as separate entities, from separate vendors, as the two functions are so intimately intertwined.
Add to that point solutions from performance management solutions providers, point solutions from e-learning providers and point solutions from analytics companies, and what you had was a big messy pile of solutions that had such potential to complement one another, yet essentially operated in separate realms.
The purchase of Blue Pumpkin and its workforce management solution by quality monitoring company Witness Systems for $75 million in late 2004 put in motion the business trend of workforce optimization on a large scale. At the time, true workforce optimization was really attainable by only the largest of companies, with the SMB market relatively untouched.
Smaller companies had spotty recording capabilities and still figured out their scheduling using Excel spreadsheets and Erlang-C and Poisson probability equations, which could only be figured out by that one person in the company who actually passed quantitative analysis in college with better than a C-minus. (Apologies to my own college QA teacher, but your class gave me splenetic anxiety attacks.)
Since Witness' acquisition of Blue Pumpkin, which offered workforce management to companies under 150 agents, workforce optimization has found a growth niche among smaller companies, which has greatly energized the market in the same way the SBM market has been largely responsible for the (largely) successful second wave of CRM (also known as The Return of CRM, or The CRM Strikes Back).
Further energizing the market will be today's announced acquisition by Israel-based call recording company NICE Systems (News - Alert) of two entities: Texas-based IEX Corporation, which provides a nifty workforce management solution I've always rather admired, and Performix Technologies, a company with offices in Massachusetts; the UK and Ireland and a provider of performance management solutions.
Under the terms of the agreement, NICE will acquire the shares of IEX, which is a wholly owned subsidiary of Tekelec (News - Alert), for approximately $200 million in cash. The asking price for Performix is $13.2 million in cash, though NICE's release noted that the Performix purchase price may be increased by up to an additional $6.15 million based on certain performance criteria.
According to NICE, the combined solution that will result from the combination of NICE Perform and the product offerings of IEX and Performix constitutes "a paradigm shift in how contact center management and enterprise executives make decisions, monitor and improve performance, by:
* Offering the first truly holistic view of contact center operation, addressing contact center and enterprise stakeholders at all levels – agents, customers, supervisors, management, and decision makers in the enterprise;
* Providing the broadest offering of contact center business performance and analytics solutions available today, including: interactions capture, quality monitoring, interaction analytics, coaching, forecasting, strategic planning, and performance management; and
* Facilitating accurate and fast decisions based on critical business information generated by different contact center sources and the definition and monitoring of key performance indicators."
Tekelec explained the sale of IEX by stating that though profitable, the company isn't part of the Tekelec's move-ahead strategy.
Frank Plastina, President and CEO of Tekelec said, “We are very pleased with this transaction because it converts a non-telecom business unit into cash at an attractive valuation and under favorable terms. IEX has been an important contributor to our financial performance for the last several years, but it was not a component of our long-term telecom systems growth strategy. This deal will significantly strengthen our balance sheet and enhance our ability to consider complementary strategic opportunities in our core business."
Once combined, the NICE/IEX/Performix product should be an extremely strong contender in the workforce optimization market place.
And what does the other contender think?
Said Nancy Treaster, senior vice president of global marketing for Witness Systems, "Workforce optimization is the most significant business trend in our market. As vendors band together legacy point systems to create a WFO offering, we're seeing exorbitant acquisition prices and high integration risk. It's important to consider that not all solutions are created equally, so organizations should question technology integration and platforms, as well as investigate service delivery capabilities. Our customers are already in production with our full WFO capability and are benefiting from our 18-month lead in building a fully unified solution."
The next few months should be interesting indeed.
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