Genesys Makes a Good Call in Buying ININ

Genesys Makes a Good Call in Buying ININ

By J.R. Simmons August 31, 2016 2 Comments
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Genesys Makes a Good Call in Buying ININ by J.R. Simmons

So a decision has been made that is a culmination of some recent announcements – Genesys is buying Interactive Intelligence (ININ): here's the link to the announcement. This is on the heels of a number of posts about potential and actual M&A activity in the UC and Contact Center market that had led to much speculation. Which means that other changes are likely forthcoming. In case you missed them, some of the more significant announcements recently:

Strictly from a client-side, big picture viewpoint, I think some of the possibilities are crazy and some make sense. A few of my UCStrategies associates, such as Phil Edholm and Marty Parker, are much better at crunching the raw corporate financials and understanding the nuances of sales volume, cash flow, financing, return on investment, etc. All of that is important, but sometimes it is the marketplace reaction – the buyers of the technology solutions – that is more critical to the success of the potential transaction.

Given the above announcements and the possible combinations, Genesys buying ININ is more logical than many others. Although the direction of the technologies involved are different and the initial statements are that both product lines will be supported, it would not be surprising if Genesys makes the ININ PureCloud product the focus of the future cloud offerings. It appears to scale more easily and should be more cost competitive in the mid-size CC market than the current Genesys approach.

Another benefit of the ININ acquisition is the ability for Genesys to respond to clients that are seeking both a contact center and UC solution. The lack of a branded and integrated UC solution has sometimes caused Genesys to miss out on opportunities; many COMgroup clients with moderately sized contact centers along with UC requirements want a single vendor solution. ININ is also using a collaboration-focused user interface with the PureCloud product that will help position Genesys to compete against products like Cisco’s Spark and Unify’s Circuit.

Avaya’s Dilemma

Some of the other original announcements listed above are still in play and could produce interesting results. But not necessarily positive. Many potential customers are leery about making an UC or Contact Center investment based on Avaya’s solution when its financials continue to slowly deteriorate. If Avaya wants to remain a major player in the UC space, selling off the contact center business does not make sense. It is a key part of Avaya’s portfolio that draws buyers and keeps existing customers. In fact, many decision makers seek a quality comprehensive (single-vendor) solution and Avaya’s technical portfolio fits – several competitors are often downgraded due to the perception of an underperforming contact center component. Avaya without an integrated contact center solution could become an also-ran.

If Avaya’s plan is to sell off a majority of its assets, like UCStrategies expert Dave Michels has speculated (http://talkingpointz.com/a-fork-in-avayas-road/), then it is more logical as part of a larger plan. It also would mean the end of the Avaya we have known. Selling off a part, such as the data networking business or the Zang division created via acquisition, does not break apart the core UC portfolio, but may not produce the needed financial relief by themselves.

If Avaya does sell its contact center business (because it is the most valuable asset), the new buyer will be faced with a number of technology challenges. The core of the Avaya call routing engine is embedded in its Aura communications manager code; unless the buyer also wants the UC business, it would require a re-write that also could impact the reliability initially.

This is also why it would have been odd if Genesys actually did acquire the Avaya contact center business. Perhaps it would have been buying market share, but ININ is a better fit for Genesys – both technically and financially. Thus, Avaya will be pursuing other options, but it remains to be seen if a buyer is interested enough to take on the challenges.

What about ShoreTel?

ShoreTel may have been a good option for Genesys if the goal was simply adding a good UC plan to the core Genesys contact center business. Now that that option is off the table, the ShoreTel possibilities remain interesting. Most likely is that someone will be (or already is) making a pitch to acquire them – ShoreTel’s stock has underperformed even while the product line gathers good reviews and its market share has risen. Mitel chased ShoreTel before and could again. Every six months or so Microsoft is rumored to be interested in various telecom players, although they have passed on many opportunities. Although Microsoft is one of the few companies big enough to absorb Avaya if they wanted, ShoreTel is a better value. However, it would not be surprising to see a completely different angle, including private equity investment or even an acquisition instead of a sale.

So we wait – ShoreTel could be the next major player to make some big news.

 

2 Responses to "Genesys Makes a Good Call in Buying ININ" - Add Yours

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Dennis Goodhart 8/31/2016 10:39:58 AM

J.R. i like the Genesys & Interactive merger. I call it a merger because I believe that the out of the box thinking and inventiveness at ININ is light years ahead of Genesys approach to the typical contact/call center and will help drive Genesys to create new products and enter new market spaces.

When Avaya announced Zang at EC back in March, that was, at least for me the bell tolling the end of Avaya as we know/knew it.

It makes a lot of sense for Avaya to spin off their contact center business either as a separate stand alone company, of as the "New Avaya". I don't know the percentage of the contact center market Avaya has (Phil, Marty?) but it is a large share. Avaya has a loyal customer base, they understand the market spaces they are in and can be successful in providing both cloud and premise services.

They can continue to serve their existing customers while expanding into new markets. Let Zang deal with the everyday Telephony & UC needs.

One sleeper in the whole Contact Center arena; SAP. Should they ever decide to market their call center technology separate from SAP software, market it in the U.S. and integrate it into their cloud offerings, it could change the whole game especially in the large enterprise space.
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Kevin Brown 9/1/2016 1:50:03 PM

I don't tend to view it quite the same way as Dennis as being a merger of equals. Genesys' history in large and globally disparate contact centers is much different than ININ's. I've worked with Genesys for 21 yrs and through thick and thin, good and bad, they've clearly "gotten it" with contact centers of 500+ seats, and follow the sun strategies in multiple global data centers. ININ's perspective comes in with midsize centers which have a huge footprint and the market is still growing.

I've worked with ININ too and though they are scaling up, they still have a ways to go on scaling in their hosted product offering. But that's not a knock, I have yet to find a single vendor that has the hosted model nut cracked. I do strongly feel that they are miles ahead of Genesys in speed of provisioning and understanding program management 101 that's required to fire up a new customer. Hopefully they will maintain their provisioning and account management teams and teach Genesys a thing or two while they are at it.

As for Avaya, my perspective sounds very dark and foreboding. I honestly don't see a way out of their predicament. Perhaps a massive liquidation sale at a discount where taking a risk of buying their market and merging it with an existing product line, perhaps Siemens/Unity. It's a little bit like a mansion in the hills of Los Angeles burning down. Their PE owners want to get SOMETHING out of it, but even if someone buys just the land, do they have the cash to rebuild, replace and pay the taxes on the resulting end product?

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