Merger fever--for better or for worse?

About 10 years ago, during one of our TBT (Telemarketing and Business Telecommunications) trade shows, I was confronted by one of our exhibit salespeople who frenetically exclaimed, "The industry is contracting!" I was confused and concerned. We were just a scant number of years away from our call center beginnings and we were already worrying that the market had peaked.

What prompted the hysteria was the simple fact that IMA, one of the leading call center software vendors, had purchased another vendor known as Kaufman Systems. Of course, now we see how silly we were to think the market had peaked. Sillier still was the notion that a single merger or acquisition signals a major shift in market dynamics, but I will never forget the day that our salesman cried wolf.

A few years later, at another one of our TBT(R) trade shows, I met two entrepreneurs who had recently started a company called Elan Software with a product called GoldMine. TBT(R) was the first show they had ever exhibited at and they were eager to become big players in the contact management market. I really admired these two guys, but knowing the established players had already secured strong market positions, I felt these guys hardly stood a chance. Nevertheless, the company's pioneers made a great point. They told me they chose this market because there was no Lotus in it (referring to Lotus 123). They were right the big players were well-known, but not a single one of them held the majority of the market share.

It's been less than a decade since that encounter and IBM has swallowed up Lotus while Microsoft has taken over the dominant spreadsheet position with its Excel product. At the same time, GoldMine has become a top-rated contact management software package that is universally known. In fact, the GoldMine product became so well known, the company adopted it as its new name.

What's the point of my trip down Memory Lane? There are actually two: I ) There is still no Lotus in the call center market, so any new call center software company can grow from obscurity to become a top-selling product in a matter of years. 2) Mergers and acquisitions in any industry are not necessarily a bad thing.

Let's start with point 1. In my opinion, the reason there is no Lotus in the market is simply because the call center industry doesn't conform to the computer industry models with a one-sizefits-all, shrink-wrapped solution for every problem. There are simply too many different call centers on too many different platforms doing too many different things for that. For example, collections is similar to fund raising, but not really the same. Inbound is not just outbound in reverse, but a separate function with its own set of pitfalls and considerations that must be weighed ever so carefully. For a market as diverse as this, there's lots of room for well-managed start-ups that produce great products to grow and prosper.

As for acquisitions and their market impact (point 2), it's a good time to discuss the topic as there is a frenzy of acquisitions taking place in this market so it's important to understand exactly what's happening.

While wading through the myriad press releases devoted to the latest mergers, it becomes apparent that there are many reasons for mergers to take place. To understand all this activity, I have put together some features that compose the ideal call center software and hardware solutions. Think of these items as pieces of a jigsaw puzzle. Once you determine what pieces are needed, you can fully understand how today's call center vendors are trying to complete their own ideal product puzzle. The following is a list of what I feel are all the features/functions and modules that a complete call center offering should consist of.

* Predictive dialing,

* ACD,

* Call blending,

* Logging/monitoring,

* Help desk/customer service,

* IVR/Web/self-service,

* Web callback,

* Speech recognition/Text to speech,

* Multimedia routing (Voice, fax, video, e-mail, chat),

* Complete reporting and analyses,

* Agent performance evaluation,

* Field sales connectivity,

* CTI,

* Scalability,

* Platform independence,

* AIN (Advanced Intelligent Network) /SS7 connections,

* Adherence to open standards, ODBC, SQL, COM,

* Easily customizable/prograinmable,

* Upgradable/No forklift upgrades,

* External and internal sales channel (VARS and in-house sales reps),

* Simple yet powerful user and management GUI.

By analyzing the announcements of some of the companies making acquisitions, we can see how each company sees itself completing its individual puzzle. Davox, once known as a predictive dialer company, purchased AnswerSoft, one of the best call-control CTI packages available. So we have a case of inbound merging with outbound.

NICE, which is very well known in the logging and monitoring field, purchased Dees Communications, which has an entire suite of call center CTI products. More recently, NICE acquired IBS Corp, a company specializing in IBM and other client/server environments. Thus, NICE strengthened its position by broadening its call center offerings and then reaching out to acquire a company strong in the IBM and client/server market, which enhanced its platform independence.

Aspect Telecommunications' recent acquisition of Voicetek provides Aspect, a company well known for ACD products, with a plethora of new products; specifically, IVR, AIN connectivity, speech recognition and text to speech.

IMA's recent acquisition of both TELEMAR and Marketing Information Systems gives IMA a major presence in the AS 400 market. IMA, already strong in Unix and NT, now can round out its platform independence strategy.

Spanlink, well known for its Web callback technology, recently decided to purchase FastCall from Aurora systems, which was a subsidiary of Comdial Corporation. FastCall is an excellent call-control application with excellent CTI functionality extremely strong in inbound environments.

Sometimes a merger is not required when a simple resale agreement will do. Case in point is Mosaix, a company known for predictive dialers and business process automation software, when it recently signed an agreement to resell Teknekron's Performance Suite software, which allows monitoring and evaluation of call center agents. Not to be left out, Aspect's Consulting and Systems Integration arm will have the option to resell Teknekron's products as well.

Applied Voice Technologies (AVT) has been extremely busy lately. A company well known for voice mail and unified messaging, it recently decided to branch out in new directions. To that end, it purchased RightFAX, a leading provider of PC-based fax server software. It also decided to enter the call center market with the purchase of Telcom Technologies, a provider of low-end, stand-alone ACD products. More recently, it purchased AIFP, a provider of fax and electronic commerce software to Fortune 2,000 companies. AIFP has been renamed CommercePath and with this acquisition, AVT not only gets products, but a great distribution channel and presence into Fortune-class companies. A recent AVT press release caught my eye: it said that Bob Gilb of Microsoft has been named to the AVT board of directors. While we see hundreds of releases a month naming new people to boards of directors, this release was enlightening as it said, and I quote: "He will be especially helpful in assisting with the company's merger and acquisition efforts." So companies see mergers and acquisitions today as a strategic necessity.

Space limitations alone keep me from continuing this column indefinitely. There is so much activity in the market right now that if you blink, you could miss some critical news. This is certainly not the market of 1982 when this magazine debuted, as there were only a handful of regular players. Once, all call center software was simple and did a few things very well. Today, call center vendors are making a mad dash to offer a cutting-edge, comprehensive solution, including scalability, distribution channel and the like. Since time is critical and no one vendor can do everything by itself, I expect to see a flurry of mergers, acquisitions and resale agreements to continue for some time to come. The race is on and as long as call center products become more flexible and functional while meeting all our needs, call centers everywhere will be the winners.

ARD Training From Specialized Resources

If you are looking for in-depth education, specifically designed with your switch in mind and your switch is made by Aspect, Rockwell or Intecom, you should seriously consider Specialized Resources' Specialized Training Technical Education Center. One of the many courses offered is titled "Mastering the Aspect Call Center." This course is designed for the system manager, who, once completing this course, will be able to do the following:

* Understand the basic concepts of an ACD,

* Determine trunking requirements for the call center,

* Understand the components of the Aspect database,

* Build basic call-control tables for routing calls,

* Design procedures for automating the call center,

* Identify and interpret reports that are valuable to effective management.

This particular course lasts five days, but there are other courses that are completed over a period of weeks. There are also custom classes available; all you have to do is ask. Call centers are expensive to set up and operate. Maintaining call center equipment at peak efficiency and utilizing the appropriate features once dormant in your ACD can yield tremendous benefits. For now, there are few places offering this level of much-needed education. For more information, please visit www.sritelecom.com.

Nortel Expands WIn Web Solutions

Nortel (Northern Telecom) is no stranger to call centers. Some of the largest call centers I have visited run on Nortel ACDs. Not limited to the highend, Nortel has a pretty broad product offering, scaling down to the smallest of companies. Recently, Nortel named WebLine Communications a premier member of the Nortel Business Affiliates Program. This means that WebLine Communications will work to tightly integrate its WebLine software with Nortel's telephony products as well as market the WebLine solution to Nortel customers and distributors.

WebLine is a Java-based, enterpriseclass application that enables call center agents, sales and service representatives to visually interact with remote prospects or customers over the Web during any telephone call, using nothing more than their Java-enabled browsers. With WebLine, representatives can share static and dynamic Web content, navigate callers around the Web, demonstrate software and instantly transfer downloadable files all while conducting a voice conversation. Targeted at financial services and information technology companies, WebLine is an open-architecture solution that integrates with various ACDs and Internet telephony gateways.

Nortel's Business Affiliates Program acts as a liaison for external developers of CTI technology and provides valuable resources and services that might be otherwise unavailable to the independent software development market. For more information, please contact Nortel at www.nt.com or WebLine at www.webline.com.

Delta Airlines And Northern Kentucky University

What did Delta Airlines do when it realized it needed to staff its call center quickly and inexpensively? It opened a university campus reservation center, of course. The campus of choice turned out to be Northern Kentucky University and in its first year the center received 613,000 calls and is regularly receiving verbal and written compliments. Having been involved in the call center business since it was called telemarketing back in '82, this is the first I've heard of a call center receiving verbal and written compliments. Perhaps there is a lesson here.

The details are as follows: 135 representatives at the center working at 70 workstations are handling an average of 61,000 calls each month. In addition to answering domestic sales calls, the student representatives are also able to handle sales support and irregular operation calls. The students undergo 172 hours of training to handle calls from Delta's customers traveling domestically and assist on delayed or canceled flights.

IQI And ATC To Merge

Ed Blank and Associates was one of the few service agencies that existed back in the 1970s. Lexi International, which specialized in database marketing, was one of the few service agencies in California that actively pursued hiring actors that were between casting calls as agents in their center. Of special note was the fact that the best TSRs they had were comedians. During the service agency public offering craze of a few years back, these two great companies, located on opposite coasts, merged with a third company, InterServe, to form IQI, Inc. ATC Communications Group, a public company that has seen tremendous volatility in its stock price in the last few years, is now set to merge with IQI. This merger allows ATC, a company strong in inbound teleservices, to integrate with IQI, a leader in outbound teleservices. Together, this combination will yield a staggering 8,000 agents, 6,000 workstations and 21 call centers. The company's combined client base includes American Express, AT&T, Bell South, First USA, Proctor & Gamble, Sears, US West, Universal Card and Western Union. For more information, please contact Al Girardi at the GCI Group, 212-546-2208.

Sincerely yours,

Rich Tehrani Group Publisher

Rtehrani @ tmcnet.com

Copyright Technology Marketing Corporation May 1998
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