Unified Communications

A New Aspect

By Paula Bernier, Executive Editor, TMC  |  December 10, 2012

This article originally appeared in the Dec. 2012 issue of INTERNET TELEPHONY.

Aspect (News - Alert) is a global provider of customer contact and workforce optimization solutions, and many of its customers have been with the company for decades. Over time, the company has grown a fair amount and also has moved from a hardware-focused to a software-centric posture.

And now, under new management, Aspect plans to make more investments, and significantly increase its research and development spending, in an effort to accelerate its next-generation product releases and innovation.

That’s the word from Aspect Software’s new CEO, Stewart Bloom.

“There’s a new Aspect that’s in the market,” Bloom told INTERNET TELEPHONY in a late September interview. “It’s Aspect 2.0 that’s very forward leading, and it is accelerating the business.”

New Leadership

Bloom in the past has served as CEO for GERS Retail Systems; vice president at Capgemini; senior vice president for strategy consultancy at Mainspring, which is now part of IBM (News - Alert); and a partner with Ernst & Young Management Consulting. Just before joining Aspect, Bloom ran former Aspect sister company Escalate Retail, which provides multichannel software for retail and direct sales. Escalate was bought by RedPrairie Corp. in February 2011.

Aspect, meanwhile, remains part of the Golden Gate Capital portfolio.

In addition to Bloom, Aspect in the past few months has hired on several new executives. That includes Jim Freeze, Aspect’s new chief marketing officer; Chris Koziol, president and general manager of the interaction management division; Bob Krakaur, chief financial officer; Spence Mallder, senior vice president, general manager of the workforce optimization division, and chief technology officer; and Mihir Shah, vice president of corporate development.

Aspect announced the addition of Freeze, Koziol, Mallder and Shah in September. Freeze is both senior vice president and CMO at Aspect, which says this is a newly-created role. He previously served as CMO and vice president of corporate development at Crossbeam Systems. Freeze has also headed up marketing initiatives at 3Com (News - Alert), CompuServe and Genuity.

As for Shah, he previously was responsible for mergers and acquisitions, and business development for IBM’s information management software division. Koziol has been chief operating officer for enterprise business software provider JDA Software, and was president and COO at systems integrator and distributor MicroAge. Mallder was previously CTO for an Internet startup in social commerce and online gifting.

Like Bloom, he also worked at Escalate Retail, where he was the senior vice president of product development.

And Krakauer has been around since late July. He came to Aspect from Permira Capital, where he had been interim CFO at Alcatel-Lucent spinoff Genesys (News - Alert).

Product Focus

Aspect is consolidating some of its product development teams to focus more on interaction management and workforce optimization, as well as another effort that remains under wraps.

As workforce optimization moves into a closer integration with interaction management and unified communications, Aspect leadership explained, greater organizational alignment was needed with the product teams to provide solutions that uniquely address this trend. Koziol and Mallder will be pivotal in that effort, said Bloom, noting Koziol’s experience operating a large call center, with core interaction management, and with customer-centric sales and services, and Mallder’s knowledge of multichannel communications.

The company already dominates in workforce management, Bloom said, but that it will be an even larger part of its business in the future. Today, 75 percent of Aspect’s business comes from interaction management, while workforce management is the rest, but in the future workforce management will be one of the company’s highest gross areas.

In fact, Aspect recently created a group specifically to focus on the workforce management aspect of Microsoft Lync, noted Bloom, adding that Microsoft is a key partner of Aspect.

Multichannel is another area in which Aspect is keenly interested and is an area in which Bloom expects the company to continue to invest. Tiger Shark already addresses a lot of that today, he said, and Aspect expects to expand on that through potential acquisitions.

Tiger Shark is the codename for Aspect’s Unified IP 7.1 platform extension, which became generally availability in August. The Unified IP 7 family, as Aspect explains it, “helps effectively manage and deliver a differentiated customer experience in the light of consumer demand for expanded choices in communication channels such as social.”

New with Aspect Unified IP 7.1 are expanded compliance capabilities; “aggressive” quality and performance improvements; and enhanced inbound capabilities.

“We were very excited about the features contained in the release and what they could bring to the market and our customer base,” said Aspect spokesman Tim Dreyer. “Preparing for this was a very large focus for our organization, with an emphasis on building enhancements and quality assurance measures into the many capabilities of the platform. This release really marks in some respects a new beginning for Aspect into a more growth-focus, market-aggressive company.” 

Investment and Expansion

That growth will be driven by a heightened focus on research and development and new product releases, as well as investment in outside companies, Bloom said.

Bloom in late September told INTERNET TELEPHONY that Aspect expected to hire around 50 to 75 new engineers within the next 14 months. Aspect in the past few years has dedicated 8.5 to 9.5 percent of its revenue to R&D, he added, but the company plans to up that to 15 percent in 2013 and to 20 percent in 2014.

As for potential investments, Blooms said Aspect is interested in strengthening its arsenal in the areas of advanced analytics, live chat, and contact center quality management companies and product lines.

“I wouldn’t be surprised to see one or two acquisitions in the next 12 months,” he added.

Deals might be in the form of equity or partnership as opposed to full purchases, Bloom said. Whatever the case, Aspect is extremely well capitalized to make such deals considering it has more than $100 million ($148.6 million according to the most recent reports) cash on hand and the ability to tap additional capital through Golden Gate Capital, he continued.

Bloom expects that all of the above will put Aspect on a path to double-digit growth over the ensuing years.

Looking Up

That will be an uphill climb.

Aspect’s third quarter financials were slated to come out the second week of November, which was after this issue went to print. However, the company put out an Oct. 22 press release indicating it expects revenue for the three months ended Sept. 30, 2012, to be approximately $111.5 million, compared to $133.2 million in the third quarter of 2011.

This is an increase of approximately 4 percent sequentially from $106.9 million for the three months ended June 30, 2012. The statement indicated that, “as expected, year over year, third quarter total revenue was down, driven heavily by unfavorable license revenue which was down 42 percent year over year, substantially due to extraordinarily large one time dialer migration deals in the prior year. Subscription maintenance revenue was down 8 percent for the third quarter over the prior year.”

It went on to say that Aspect expects net income for the three months ended Sept. 30, 2012 to be $7.8 million, compared to net income of $10.3 million in the prior year's third quarter and a net loss of $10.5 million for the three months ended June 30, 2012. And it added that pro forma EBITDA for the three months ended Sept. 30, 2012, will be $33.6 million, compared to $48.3 million in the prior year's third quarter and $24.8 million for the three months ended June 30, 2012.

"We are encouraged about sequential quarter improvements in key performance measures for the third quarter of 2012,” Bloom was quoted as saying. “We returned to revenue growth and improved our margins and pro forma EBITDA for the third quarter of 2012 on a sequential basis. During the third quarter of 2012, we continued a trend of what is now 97 new logo customers captured over the trailing four quarters. In the third quarter alone we signed 19 new logo customers, with more than half of these accounts generated through our effective indirect channel strategy. For the first nine months of 2012 overall, we have now closed a total of 71 new logo customers, a 16 percent increase over 2011, and a slightly favorable increase in average contract value for those transactions. Our ‘Tiger Shark' Unified IP 7.1 release is getting good traction in the market with over 20 deployments in process since its launch in late August."

Customer Target (News - Alert) and Go-To Market

Aspect has 7,000 customers worldwide and is adding 100 new customers a year on average, Bloom said. He added that the company attracted 250 new customers over the past 10 quarters.

Most of Aspect’s revenue comes from tier-2 call center operations with hundreds of seats serving multinational enterprises. Seventy percent of Aspect’s business is from Canada and the U.S.; the rest comes from elsewhere in the world. And about 15 percent of its revenue comes via channel partners including independent software vendors, resellers, and systems integrators. Bloom in late September said Aspect has a “stake in the ground” to double its revenue through the channel over the next 24 months.

"Part of Aspect's channel growth strategy is to attract and engage new partners that have a robust Microsoft practice," said Debbie Moon, Aspect’s channel development director, in a late September statement announcing new North American channel partners ExtraTeam and Qoncert. "ExtraTeam's strong capabilities installing and servicing SharePoint and Lync deployments offer Aspect a great opportunity to jointly partner with customers looking to add or expand a Lync-based Aspect contact center."

She added, "The second part of Aspect's channel strategy is to expand our workforce optimization footprint by partnering with solution providers like Qoncert. Qoncert has a strong unified communications practice and wanted to supplement that service offering with Aspect's industry leading workforce management and optimization solutions."

Special Sauce

Bloom told INTERNET TELEPHONY that the strategy laid out above; Aspect’s expertise in such verticals financial services, healthcare, insurance and telecom; the flexibility it offers customers by allowing them to either license its software, buy it based on subscription, or opt for a hybrid model; and the company’s strong existing customer base, product set and years of experience make it a standout in the industry.

"Aspect is an asset-rich organization at a time when enterprise businesses are rethinking how they compete through differentiated customer experiences," said Bloom at the time of his appointment in early August. "This is a pivotal time for the company to capitalize on its technologies, strategic investments and industry relationships in order to successfully prepare and position ourselves for sustained market growth and investor returns in the years ahead."

Edited by Braden Becker