Genesys Makes a Good Call in Buying ININ
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.
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.