Jason Alley of Interactive Intelligence joins UCStrategies' Jim Burton for a discussion about their new cloud-based solution addressing contact centers from 10 to 50 agents, the Interactive Intelligence CaaS Small CenterSM.
Transcript for New Cloud-Based Contact Center Offering from Interactive Intelligence
Jim Burton: Welcome to UCStrategies Industry Buzz. This is Jim Burton, and I am joined by Jason Alley from Interactive Intelligence. Jason and I are fortunate enough to be at Enterprise Connect in Orlando, Florida this week. Jason, I see that Interactive has a pretty exciting announcement. Please give us an update on that.
Jason Alley: I would love to, Jim. We have announced the availability of the Interactive Intelligence CaaS Small CenterSM. It is an exciting new cloud-based solution designed to give smaller contact centers with 10 to 50 agents, the advantage of a mature and simplified product offering, with reduced risk and scalability for future growth.
As add-on to a contact center implementation, Caas Small Center also provides unified communications capabilities for up to 100 business users to help streamline operations.
Jim Burton: Well Jason, that is really interesting, because when we have talked in the past, we explored how well Interactive has been doing in the high-end contact center space. Can you give us a little insight as to what is driving this focus down towards the smaller end of the market?
Jason Alley: You bet; that’s a really interesting question Jim, and I will need to set the stage a bit to help provide the proper context. Last year at Interactions 2012, our big event for customers, partners, analysts and consultants, we invited Clayton Christenson, a Professor at Harvard Business School, to come and speak to us. His talk was really fascinating. Professor Christenson described what he called the “innovators dilemma.” He explained that at the upper end of the market, you have certain performance demands being met by what are considered to be high-end providers. And that what often happens is that a disrupter emerges offering a more flexible, nimble approach. They don’t meet all of the requirements needed at the high end of the market, but they add those capabilities over time, close the gap, and encroach on the business of the high-end providers. Now if you relate that, the innovators dilemma, to our business history at Interactive Intelligence, it gets really interesting.
Back in the 2006 timeframe, we assumed the role of the disruptor with our innovative all-in-one platform. It was then that we deliberately set a growth strategy, anchored in moving up-market, so we could challenge incumbents at the high end of the market, for the larger contact center opportunities. Up until that point, not many large contact centers really knew who we were, and we certainly were not recognized as a market leader. Well, I am pleased to say that that has certainly changed. We have successfully come up-market and now compete very effectively at the high end, addressing even the largest contact center opportunities.
We are also recognized as the market leader in the contact center industry by today’s leading analysts. So, if we look at the numbers, that’s probably the best evidence to look at. In 2005, our average deal size was $87,000. In 2012, our most recent complete year, the average deal size grew to $306,000. If we compare the number of deals over $250,000 in 2005, there were 23. In 2012, there were 68. Finally, in 2005, we had one deal over $1,000,000. In 2012, the number grew to 49. A follow-on element of our growth strategy came into play in 2009. And you have to really credit Don Brown, our CEO, who foresaw tremendous opportunity in the cloud communications market. He saw it as a tremendously growing space. And as a result, we re-architectured our offering and began a major push toward the cloud. This included how we compensated our sales force, how we organized as a company, and really impacted us throughout.
What was the result of this additional growth strategy? Last year, in 2012, our cloud business accounted for 35 percent of total order dollar volume, and we expect that to approach or possibly exceed the 50 percent mark in 2013. Needless to say, this combined growth strategy of being a disrupter, by moving up market, and making a hard push to the crowd, has been a fruitful one for us. And it has allowed us to enjoy financial success, and bring on some really great brand name customers.
So with that background, let us circle back to your original question. Why has Interactive Intelligence decided to focus on the smaller contact center market? Well first, along our journey, we discovered that small contact centers have the same core requirement in serving their customers as those of large contact centers. However, we also discovered small centers are greatly underserved. This represents a significant opportunity. According to the research we’ve seen, it’s estimated that 65 percent of the contact centers in the world have less than 50 agents. The second reason is just as important, and that is that we made a deliberate decision to return to our roots and become our own disrupter to prevent newer entrants from moving up-market and competing with us at the high end of the market, like we did with other incumbents.
So in summary, the reason that we are going after the small contact center market very aggressively is two-fold. Number one, to take advantage of a significant opportunity, and secondly to protect the high end of our business.
Jim Burton: Well that’s great, I was there last year and listened to Clayton Christenson, and it was fascinating, the example you showed in the beginning, how he talked about how markets evolve and how they change and how the incumbent can get run over if they are not careful. So it sounds like you have done the right combination of things to take advantage of that in listening to the professor. So tell me a little bit more about the Caas Small Center, and what unique value are you bringing to this small customer base?
Jason Alley: Well Caas Small Center offers significant value in four main areas. First, improved ability to deliver a great customer experience. Secondly, to lower TCO and offer reduced impact on the customer’s internal organization. Thirdly, expense protection and a safer migration to the cloud, and finally, long term investment protection.
Jim Burton: So let’s go into each one of those and we’ll do them one by one, and I’ll follow the lead that you just gave me, so why don’t we start off first with how are you delivering a great customer experience?
Jason Alley: The answer really has to do with product maturity. We made sure that when we offered Interactive Intelligence Caas Small Center, that our customers would be offered a broad set of applications that they could start off with, and then add to over time. This includes the same core applications and differentiated functionality that today’s largest contact centers enjoy, including things such as multi-channel communication, real time speech analytics, and Salesforce.com integration.
Another key component of product maturity is reliability. And Caas Small Center runs the same proven technology platform that powers thousands of mission critical contact centers worldwide. It is an eighth-generation platform that we have been developing and nurturing over the past 18 to 19 years. And as with larger centers, we offer guaranteed service levels and proactive monitoring and support with a 24 x 7, 365 world-class knock.
Now let’s talk about security. That’s another key factor associated with product maturity. CaaS Small Center operates in the very thin environment as contact centers with the highest security and compliance requirements. That includes companies in financial services, health care, insurance and government.
Jim Burton: So Jason, how does Caas Small Center help with minimizing the impact to internal organizations?
Jason Alley: That’s a really important question. Small contact centers typically do not have access to armies of IT resources. The administration and management of applications must be easy, and at every step of the design of Caas Small Center, we ask the question, “How can we make it simpler for our customers?” When making decision around pricing and packaging, deciding what’s in and what’s not, the yardstick we used was always, which way is simple? We are deciding what should be bundled and what should not, the question was, what’s simpler? If there was functionality that was more complex in nature, we did not include it. So at every step of the way, we try to simplify the experience for our small center customers, which in return, offers them the ability to minimize the impact to their internal organization.
Jim Burton: Well that’s great, so following your list of comments you made earlier, the next question I have got for you is how does Caas Small Center help the expense protection and provide a safer migration to the cloud?
Jason Alley: Well small centers can’t afford to have huge cost overrun for projects due to unforeseen complexity. And for some, it may be their first move to the cloud, but regardless, small contact centers want to make sure that there is not a significant amount of additional risk added to the mix when they move to the cloud. And recognizing this, we have taken four steps to help small centers better manage financial and operational risk. First, we don’t require a long-term commitment, we offer a simple month-to-month contract. Secondly, there is no lengthy complex implementation required, and in fact, we’ll guarantee to have the customer up and running in 15 business days. Thirdly, we wanted to make sure that our small center customers knew that they were not going to get lost in the shuffle. So what we have done is, we’re assigning a dedicated implementation manager to each small center implementation. Finally, the customer doesn’t need to spend a dime with us before they see what they are getting. We have our Caas Quick Spin portal, which offers customers the ability to go online and quickly access capabilities that we offer in the cloud. So we feel like with these four steps, we have been really thoughtful about delivering an environment that really does help manage financial and operational risks for small contact centers.
Jim Burton: Well I don’t want to sound negative here, but you know, as you are kind of going through all these wonderful things you do for them, it reminds me a lot of the ads that I see in TV. Which is, you sign up and you get all these special services, but there’s no protection for the long term. And so the financial investment you make in the short term, you get a little bit surprised down the road. So, putting it back into contact center terms, how does Caas Small Center help with the long-term investment protection?
Jason Alley: That is a really good point because as you know, businesses change, their size changes, environments change, you might be a contact center who has 32 agents today, but what happens if we grow to 70 agents, or 90 agents, or 125 agents, heck even to 1,000 agents level? Perhaps the company is growing rapidly. Perhaps as they grow, the requirements change, so there’s a need for more complex functionality. With Caas Small Center, we provide an upgrade path for these small contact center customers, no matter how large they grow, or how complex their requirements become. They can even scale to the tens of thousands of agents if need be, and this all happens without switching providers, platforms or applications. And no new training is required; just an easy migration from Caas Small Center to a Caas edition that supports a higher user count, which provides access to additional functionality needed.
Again, we’ve really been thoughtful about making sure that we are delivering in the areas that these small contact centers care about, by providing product maturity, simplified offering, reduced risk, and scalability and the ability to move forward as the company needs and protect their investment.
Jim Burton: Well, it’s a great story and I am very excited for you. I remember when you announced your first cloud or hosted services several years ago, and at that time, everyone was thinking that you would be approaching the low-end of the market. So you’ve had a chance to go through a whole learning cycle here and come back to market with some really exciting features capabilities, functionality, and I think quite frankly, one of the most important things is how you deliver to the market. Comments that you have made about some of the guarantees you have getting the system up in 15 days, don’t pay until you have used it, that type of thing. I think those are all going to go a really long way in contributing to the success of this product. So Jason, I want to thank you for your time today. I have enjoyed our podcast as usual, and look forward to seeing you out on the show floor.
Jason Alley: Look forward to seeing you as well, Jim, and thank you very much for your time.