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1 Cloud-Based Contact Center Infrastructure Market Report Reprint Reprinted For:

2 Table of Contents 1. Cloud-Based Contact Center Infrastructure Overview Cloud-Based Contact Center Infrastructure Market Share Analysis Enghouse Interactive... 8 About Enghouse Interactive About DMG Consulting LLC i - DMG Consulting LLC

3 1. Cloud-Based Contact Center Infrastructure Overview The cloud-based contact center infrastructure market has matured rapidly, and there is now a standard set of capabilities that many of the vendors are trying to deliver for their customers. A few years ago, DMG specified the modules and explained the reasons why each of them was needed. Since then, these capabilities have become the de facto standard for what end users want in a cloud-based solution and what most of the vendors are striving to deliver. There are, of course, exceptions, as there are now over 100 competitors in this sector, once the carriers are included in the count. There are many reasons why enterprises are now willing to move their telephony and contact center solutions to the cloud, but ease and simplification are major drivers. When companies are looking for a cloud-based contact center infrastructure solution, an ACD or dialer, they generally want to simplify their operating environment, including minimizing the number of vendors they need to interact with to obtain the applications they need. As a result, a growing number of end-user organizations are looking for cloud-based contact center infrastructure vendors with a broad set of capabilities that extend far beyond traditional call control (inbound or outbound). Figure 1 presents a functional view of a cloud-based contact center infrastructure solution. It shows the core capabilities and functionality that end users want from their cloud-based contact center infrastructure providers. This Figure also shows the more commonly used optional modules. Over time, some of these modules will move from optional to core functionality. Workforce management is on the cusp and will likely be migrated from optional to core module in the 2015 edition of this Report. The introduction of the cloud-based contact center infrastructure solutions did a great deal more for the general contact center infrastructure market than simply introduce a large number of new competitors. It reflects the highly dynamic nature of this market. By making it easier and financially viable for companies to acquire and implement contact center solutions, cloud-based infrastructure has changed the dynamics of this sector. Contact centers of all sizes, including small ones with as few as 10 agents, are now demanding applications that were traditionally viewed as appropriate for only larger operating environments. As Figure 1 shows, a contact center solution should come with the ability to handle multi-channel inbound, outbound (preview, progressive, predictive and non-automated), blended, , chat/instant messaging (IM), short message service (SMS) and, increasingly, social media interactions. The ideal solution is built on a multi-tenant architecture, and supports the use of virtualization. (This technology approach helps keep down the operating costs for the vendor, and DMG Consulting LLC

4 therefore, for their customers.) All cloud-based contact center solutions should support time division multiplexing (TDM) as well as session-initiation protocol (SIP)-based transactions. These solutions should have out-of-the-box connectors and APIs that enable integration with other premise-based, cloud-based, homegrown and third-party applications. Most cloud-based contact center infrastructure solutions are built using a services-oriented architecture (SOA) to facilitate integration and the delivery of new functionality. The core functionality of modules in these solutions is: ACD, universal queue (UQ), IVR, computer telephony integration (CTI), outbound, campaign management, unified communications (UC)/presence, recording, reporting, unified messaging and mobile applications. There are also many optional modules, the most important of which is workforce management (WFM), a critical productivity tool for contact centers with more than 50 agents and/or a great deal of complexity. Figure 1: Cloud-Based Contact Center Solutions Source: DMG Consulting LLC, October DMG Consulting LLC

5 2. Cloud-Based Contact Center Infrastructure Market Share Analysis The numbers in this year s Report do not reflect the strength of the market, as they show only a 12.8% increase in seats from the prior year. The smaller than expected increase in cloud-based contact center seats is due predominantly to improved visibility and transparency into market activity numbers from many vendors. As in many emerging markets, the vendors initially overestimate their market activity numbers; this could be on purpose or because they do not have a good way to track them. Either way, early market activity numbers are often inflated, and at some point, the vendors' reporting processes mature and they attempt to provide more accurate numbers. This has happened to some degree this year, and DMG expects that we will see more of the same next year. However, despite the relatively small increase in reported seat growth during the past 12 months, adoption of these solutions has never been greater. Companies of all sizes now consider cloud-based contact center solutions viable options and are including these vendors in selection processes. The cloud-based contact center infrastructure market is hotter than ever, which is why DMG estimates that there are over 200 worldwide competitors, including a growing number of network service providers (carriers). (DMG has visibility into many regions of the world, with the exception of parts of Asia.) In this year s report, DMG also made an effort to standardize the way that vendors report seats, and worked to exclude IVR ports from the agent seat count. In the past, there was little consistency in whether vendors reported named or concurrent users the vendors shared whatever numbers they had. (A named or licensed agent is one who is literally named and assigned an individual license. A concurrent user-based license is one that limits the maximum number of users at any given point in time.) Typically, the number of concurrent users is less than the number of named/licensed users. This year, DMG attempted to standardize on named/licenses users, although we included some of the concurrent data in the footnotes for the Figures. Many of the cloud-based contact center infrastructure vendors also sell IVR services to their customers without agents. Although DMG always asked the vendors to exclude IVR-only users from their numbers, we believe that some of them included this activity in the past, in order to make their numbers appear larger than they were. DMG believes that there still are some IVR-only users included in the agent numbers provided by vendors, but a great deal less than in prior years. Figure 2 shows cloud-based contact center infrastructure activity for 25 companies, up from the 23 named vendors in last year s Report. Although most DMG Consulting LLC

6 of these vendors are based in the US, this analysis includes more competitors from Western Europe. In prior years, DMG also named a few Cisco partners, but chose not to list them this year because we do not have adequate visibility into their performance. (Since Cisco includes their activity, this does not negatively impact the validity of the total activity numbers.) The Other category in this year s analysis accounts for 70% more customers and 75% more seats than were listed by name in this Figure. The large number of competitors in this sector is a major concern, as it is not sustainable, and there will be a shakeout. Despite their current ineffectiveness, DMG expects that the carriers will be one group of survivors in this market, as selling cloud-based contact center seats is a logical extension of what they do today. Additionally, many organizations logically reach out to their carrier to ask for help in this area. Unfortunately, many of the carriers are dysfunctional and ineffective at selling and implementing contact center capabilities, even when the business is handed to them. DMG has seen some progress in this area; Verizon appears to be the best in the US, and BT in the UK, although many companies have faced challenges when trying to do business with these companies. DMG also expects to see a group of leaders emerge who are very good at what they do. These will be vendors who have excellent offerings, and are highly effective at implementing, integrating, customizing and supporting their customers. (See the Cloud-Based Contact Center Infrastructure Leadership Criteria in Section 20.) Some of these vendors will be public and others will be private, but their ownership structure will have less of an impact on their ability to execute than how well they are funded. Figure 2 shows that as of the end of August 2014, there were 14,945 customers of all sizes using 1,302,788 seats of cloud-based contact center infrastructure. This is an average of 87 seats per customer, although the implementations range from a couple of seats to thousands. As was the case in the last few years, Cisco accounted for the largest number of seats, 16.2%, a decrease from the 17.2% they had last year. incontact moved up one position to capture second place this year. They accounted for 7.1% of all seats. (incontact s numbers are as of June 2014.) Genesys came in third place this year with a 6.6% share of all seats. (This year, all of Genesys s numbers are combined, instead of reporting Echopass separately. Last year these two vendors were reported separately because DMG s market activity analysis was completed before the acquisition was announced.) Enghouse, a company that predominantly sells to carriers and does not typically sell to end-user organizations, came in fourth place with a 5.4% share of all seats. British Telecom, one of the users of the Enghouse solution, came in fifth DMG Consulting LLC

7 place with an estimated 5.3% share of all seats. (The double count is eliminated from the totals in the analysis.) Five9 was in sixth place with a 4.6% market share. Connect First came in seventh place, accounting for 2.8% of all cloudbased contact center infrastructure seats. Content Guru, based in the UK, came in eighth place with a 2.3% share of the market. Verizon, a carrier, was in ninth place, accounting for 1.9% of all seats. 8x8 came in tenth place, also with approximately 1.9% of all seats, but 500 fewer than Verizon. Interactive Intelligence was in eleventh place with 1.8% of the market. West Interactive and Oracle are both estimated to have accounted for approximately 1.7% of all cloud-based contact center infrastructure seats; DMG has limited visibility into the performance of either of these companies. LiveOps accounted for 1.5% of the seats in the cloud-based contact center infrastructure market. Figure 2: Cloud-Based Contact Center Infrastructure Market Activity, as of August 2014 Vendor Customers Number of: Seats Market Share (seats) Cisco , % incontact 2 1,000 92, % Genesys 3, , % Enghouse , % BT , % Five9 6 2,100 60, % Connect First , % Content Guru , % Verizon , % 8x8 9 1,100 24, % Interactive Intelligence , % West Interactive 4, , % Oracle , % LiveOps , % LiveVox/Zipwire/Voxeo 4, , % NewVoiceMedia , % Noble , % Bright Pattern , % Presence Technology , % Magnetic North 101 3, % NexxPhase , % DMG Consulting LLC

8 Figure 2: Cloud-Based Contact Center Infrastructure Market Activity, as of August 2014 Vendor Customers Number of: Seats Market Share (seats) VoltDelta , % 3CLogic , % Altitude Software , % AVOXI , % Other 18 6, , % Subtotal 15,406 1,407, % Less double count 19, 20 (461) (104,925) -8.1% Total 14,945 1,302, % Notes: 1. Includes the activity for Cisco s cloud-based contact center infrastructure distribution partners, BT, Cable & Wireless, Orange Business Services, and many others. 2. incontact numbers are as of the end of June incontact reports the same number of concurrent and named agents. 3. Genesys purchased a number of cloud-based contact center vendors, including Echopass, Soundbite and Angel. Includes Echopass, Soundbite and Angel agent-related activity. 4. DMG Consulting estimates. 5. Vendor reports concurrent agent licenses. 6. This year, Five9 reported named users. In prior years, Five9 reported concurrent agents. In 2014, Five9 reported 41,000 concurrent agents. 7. Content Guru reports the same number of concurrent and named agents. 8. Estimates provided by Verizon. Verizon appears to have improved visibility into their cloudbased contact center infrastructure numbers, which explains the change from the prior year. (Also, the prior year s numbers included custom cloud activity, which is not included in this year s numbers.) The Verizon numbers are for their agent-related activity only. 9. Licensed/named agents; the number of concurrent agents is 20, The numbers reflect the performance of West Interactive s collection of cloud-based contact center infrastructure offerings. 11. LiveOps has 350 customers, of whom approximately 230 are contact center infrastructure users. 12. Aspect released a cloud-based contact center infrastructure offering at the end of 2013, after acquiring Voxeo and a 51% ownership of Bright Pattern. (This new offering is called Zipwire.) Most of the LiveVox activity was IVR-oriented. 13. NewVoiceMedia (NVM) has 13,625 concurrent agents and 15,129 named agents. 14. Presence Technology sells to carriers in Spain and South Africa, specifically BT Spain, Vodacom South Africa and Vox South Africa. 15. Vendor reports the same number of concurrent and named agents. 16. VoltDelta reported concurrent agents. VoltDelta has 26 enterprise customers for their ACD solution and supports 55 carriers. 17. AVOXI has 1,145 call center seats and 3,300 cloud-pbx extensions. 18. There are more cloud-based contact center infrastructure vendors than are identified by name in this analysis. Therefore, we have included 70% more customers and 75% more seats in DMG Consulting LLC

9 Figure 2: Cloud-Based Contact Center Infrastructure Market Activity, as of August 2014 Number of: Market Share Vendor Customers Seats (seats) to cover the unnamed vendors in the Other category. 19. The double count was removed from the analysis. BT sells the CosmoCom offering that was acquired by Enghouse. Verizon sells two cloud-based contact center infrastructure offerings, one from incontact and other from Genesys. (The Genesys offering is based on the legacy infrastructure and is not part of recent Genesys acquisitions.) 20. All network service providers/carriers are resellers, not manufacturers of cloud-based contact center infrastructure solutions. Therefore, all of their activity is assumed to be a double count. Source: DMG Consulting LLC, October DMG Consulting LLC

10 Company Overview Founded: 1984 Number of employees: 950 Product Profile Headquarters: 80 Tiverton Ct Suite 800 Markham, ON L3R 0G4 Canada interactive.com Ownership: Public TSX: ESL Product name: Contact Center Service Provider (CCSP) Version: 7.1 GA: September Enghouse Interactive Enghouse Interactive is the communications software and services division of Enghouse Systems, a public company that is traded on the Toronto Stock Exchange (TSX: ESL). Contact Center Service Provider (CCSP) was developed to address the cloud contact center requirements for service providers offering a multi-tenant platform. The platform operates as a stand-alone contact center offering or it can be deployed as an overlay to existing communication environments. Enghouse continues to grow their contact center software business via strategic acquisitions and organic growth. Enghouse s most recent acquisition, IT Sonixs, in March 2014, adds real-time speech analytics and coaching capabilities to their cloud-based contact center solution set. Enghouse Interactive s go-to-market strategy is to drive a new wave of personalized customer experience, by empowering organizations with innovative solutions that enable interactions anytime, anywhere and anyhow. Enghouse Interactive sells primarily on an indirect basis through a global network of channel partners. Their target market includes carriers, outsourcers and service providers. Deployment options include on-premise/private cloud, public cloud, community cloud, and hybrid solutions. The company maintains production data centers in the US (3), UK, Sweden, Croatia, Israel and New Zealand. CCSP supports inbound, outbound and blended voice, , chat and video. Core components of the solution include: automatic call distributor (ACD), interactive voice response (IVR), computer telephony integration (CTI), voic , virtual queuing, conferencing, recording, surveying, coaching, and historical and real-time reporting. Enghouse provides optional outbound list management capabilities via an original equipment manufacturer (OEM) agreement with Sytel. Enghouse offers quality management, workforce management (WFM), speech analytics and desktop analytics through a partnership with Verint. Enghouse also partners with NICE and Telopti for WFM capabilities. Agent scripting is facilitated via integration with third-party providers. The system is localized in 15 different languages including: Chinese (Taiwanese, People s Republic of China, Hong Kong), Dutch, English (US), Finnish, French, German, Hebrew, Italian, Japanese, Korean, Portuguese, Russian, Spanish and Turkish. TouchPoint client is the new HTML5-based interface for agents and supervisors. TouchPoint provides agents with a unified interface and integrated softphone for handling multi-channel inbound and outbound activities, chat sessions, and video interactions. For text-based interactions, agents have access to a library of standard phrases and DMG Consulting LLC

11 responses and spell check. Agents also have a record function that allows them to manually start and stop recording of sensitive customer data. The supervisor interface provides customizable real-time dashboard views to manage and monitor agents, agent groups and queues. Supervisors can initiate a live monitoring session where they can listen in, whisper coach, and/or join a call. Supervisors and agents can communicate with each other via an internal chat function. Using a broadcast feature, the interface allows supervisors to distribute information and send links to agents. The supervisor interface, with the exception of live monitoring capabilities, is mobile-enabled. CCSP has a centralized Web-based administration environment for agent and application-level set-up, configuration and management. Functional Capabilities ACD routing CCSP supports skills-based, conditional, service level, data-directed, value-based and real-time adaptive routing. Call routing is configured using the same graphical design and development tool that is used for IVR scripting. IVR CCSP includes a graphical Web-based application development environment for creating IVR scripts and call flows. Users select icons that represent IVR and call flow functions from a palette, and drag and drop the workflows into the desired flow pattern. Communications Portal is a separate, optional offering that provides capabilities for creating more advanced self-service applications, such as interactive voice and video response (IVVR) and speech-enabled self-service systems. Outbound CCSP supports manual, preview, progressive, predictive, click -to-call and robo-dialing. Preview, progressive and predictive dialing activities are limited to voice only. Campaign Manager is the environment used to configure, schedule, execute and manage all aspects of outbound dialing campaigns. Supervisors can schedule, start and stop campaigns, and can see the status of those campaigns in progress. Campaign Manager supports the use of multiple Do-Not-Call (DNC) lists, including national, customer-created and system-created lists derived from agent dispositioning. Calling lists are scrubbed against the DNC when they DMG Consulting LLC

12 CRM/servicing functionality Dashboards, reporting and alerts are loaded into the system and assigned to a campaign. CCSP has connectors to CRM applications, including SalesForce, SAP, Siebel and Microsoft Dynamics. Connectivity to other third-party applications is performed using application programming interfaces (APIs). Enghouse also offers Tracker, their own case management tool for basic CRM, as a standard component of CCSP. The standard reporting environment is based on SQL Server Reporting Services. It has 50 out-of-the-box tabular reports that include ACD agent, queue, configuration/audit, dialing, event audit trail and licensing reports. For ad hoc reporting, data can be exported in extensible markup language (XML), hypertext markup language (HTML), tagged image file format (TIFF), portable document format (PDF), Excel, Word, or comma separated value (CSV) files to thirdparty reporting applications. CCSP allows users to create personalized interactive dashboards using gadgets. The real-time monitoring dashboard allows supervisors to set individual thresholds that will send an alert via message or SMS if a key performance indicator (KPI) exceeds established parameters. The historical database schema is open and allows users to download data to any third-party reporting tool. Security CCSP utilizes Active Directory for user authentication, and Windows Integrated Authentication for system access control. Permissions can be configured by role or on an individual-user basis. CCSP provides a detailed audit trail report that tracks all configuration changes, including user details, date/time stamps, and details of changes made. CCSP utilizes advanced security modeling, system partitioning, and a passwordprotected application interface to isolate and secure data for each individual tenant. All traffic between platform components is transmitted securely utilizing secure socket layer (SSL) 128-bit encryption. All data stored in the database servers can be secured using the SQL Server capabilities, which support several DMG Consulting LLC

13 Future Version: 7.2 Target Date: March 2015 symmetric key encryption algorithms, including DES, Triple DES, RC2, RC4, 128-bit RC4, DESX, 128-bit AES, 192-bit AES, and 256-bit AES. Enghouse Interactive issues a major release every 18 months, with service pack updates between major version releases. The following product enhancements are expected to be delivered over the next 12 to 18 months: VocalCoach integration addition of speech analytics capabilities from IT Sonixs, Enghouse s newly acquired company, into the CCSP platform to perform voice analytics of CCSP recordings Admin refresh migration of the administrator interface to the new HTML5-based user interface Central integration server addition of a new central integration server with a range of open APIs to facilitate enhanced interworking with third-party applications Expanded messaging connectors a set of new connectors to enhance connectivity with the messaging server Win2012 technology upgrade upgrade of the CCSP platform from Win2008 to Win2012 servers DMG Consulting LLC

14 About Enghouse Interactive Enghouse Interactive is a global leader in providing solutions that deliver differentiated customer experience and maximize the value of every customer interaction. Enghouse Interactive s comprehensive portfolio of interaction management solutions span Omni-channel call centers, Computer Telephony Integration (CTI), self-service Interactive Voice Response (IVR), knowledge management, operator consoles, call recording and quality monitoring, media voice services, and outbound dialers. These solutions support any telephony environment and flexible deployment options, on premise or in the Cloud. With Enghouse Interactive solutions, your customers can reach you anytime, anywhere, and anyhow. About DMG Consulting LLC DMG Consulting LLC is a leading independent research, advisory and consulting firm specializing in contact centers, back-office and real-time analytics. DMG provides insight and strategic guidance and tactical advice to end users, vendors and the financial community. Each year, DMG devotes more than 10,000 hours to producing primary research on IT sectors, including workforce optimization (quality management/liability recording), speech analytics, workforce management, performance management, desktop analytics, surveying/voice of the customer, text analytics, cloud-based contact center infrastructure, dialing, interactive voice response systems and proactive customer care. Our actionable solutions are proven to deliver a lasting competitive advantage, and often pay for themselves in as little as three months. This reprint is excerpted from the Cloud-Based Contact Center Infrastructure Market Report, which was released in November 2014 with the permission of DMG Consulting LLC. More information about this Report and DMG Consulting is available at DMG Consulting LLC

15 2015 DMG Consulting LLC. All rights reserved. This Report is protected by United States copyright law. The reproduction, transmission or distribution of this Report in whole or in part in any form or medium without express written permission of DMG Consulting LLC is strictly prohibited. You may not alter or remove any copyright, trademark or other notice from this Report. This Report contains data, materials, information and analysis that is proprietary to and the confidential information of DMG Consulting LLC and is provided for solely to purchasers of this Report for their internal use. THIS REPORT AND ANY DATA, MATERIALS, INFORMATION AND ANALYSIS CONTAINED HEREIN MAY NOT BE DISCLOSED TO OR USED BY ANY OTHER PERSON OR ENTITY WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF DMG CONSULTING LLC. Substantial effort went into verifying and validating the accuracy of the information contained within this Report, however, DMG Consulting LLC disclaims all warranties as to the accuracy or completeness of this information. DMG Consulting LLC shall not be liable for any errors or omissions in the information contained herein or for any losses or damages arising from use hereof.

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