The 2005 CRM SERVICE Leaders

CRM magazine presents the Service Leaders awards to the most impressive providers of customer care architecture, technology, and services who have worked tirelessly over the past year to improve their capabilities so that contact centers can go about their crucial business more efficiently and effectively than ever before. The editors recognize the top-three leaders in CTI, IVR, quality monitoring, Web self-service, workforce management and optimization, contact-center outsourcing services, and agent-facing universal desktop applications. The Service Leaders rankings are derived from a weighted formula that includes financial performance as well as analyst ratings for depth of functionality, reputation for customer satisfaction, and corporate and management direction.

COMPUTER TELEPHONY INTEGRATION

The Market

The telephone is still the most common way for customers to contact a company, but far be it from a call center manager to discourage people from using a less expensive means of contact like the Web or email. Traditional computer telephony integration (CTI) methods are enabled through a complex-but-functional public switched telephone network, but more contact center managers are considering Voice over IP (VoIP), which provides a single corporate data network for all customer communication needs.

VoIP cuts telephone costs by transmitting voice signals in packets over private or public networks via the Internet Protocol, obviating the need for separate telephone circuits. This provides three primary benefits to customer companies: lower cost, less complexity, and the ability to create a virtual call center where agents can work from home. While all of the leaders in the CTI space have traditional circuitswitched solutions, they all have robust VoIP offerings, as well.

The Leaders

A moderate score of 3 from analysts surveyed in the company direction category weighed on Avaya's ability to claim the top spot. Regarding interoperability with other vendor products, Bernard Elliot, research area leader for contact centers at Gartner, says, "There's limit with what you can do with them-Avaya does Avaya." Still, if you're in the Avaya environment, odds are you're quite happy. No other CTI vendor came close to Avaya's customer satisfaction score of 4.2, according to analysts polled.

Avaya's CTI offering comes as part of its Customer Interaction Suite, which extends its predictive routing technology to email and the Web, available in both circuit-switched and IP-based environments. Solutions in this suite scale from the Avaya IP Office, suitable for small call centers, to its S8700 platform for high-volume centers.

Nortel Networks edged out Cisco Systems on the list of CTI leaders this year, but is still going through some difficulties largely due to its financial woes. "Nortel seems to be slowly fading from the market as their financial difficulties overwhelm their product offerings. The low-end portfolio, Business Communications Manager (BCM), with its focus on IP telephony, has made it easier for call centers to deploy CTI-the same cannot be said of the higher end Succession products," says David Peterson, president of PowerHouse Consulting.

Nortel tied Avaya for the lowest score of 3 in company direction, and tied Cisco for the lowest score of 3 in depth of functionality, according to analysts polled. Keeping it among the leaders, however, is its score of 3.3 in customer satisfaction, besting Cisco's low score of 2.8.

Nortel offers circuit-switched, IP-enabled, and IP-based products for small-and-medium business with its Symposium Express and BCM, and for larger businesses with its Symposium Call Center product line.

* The Winner

Genesys Telecommunications Laboratories, a wholly owned subsidiary of Alcatel, tops the CTI list for the second year in a row. Last year, Genesys received high marks for its integration capabilities-and this year is no different. Customers can purchase preintegrated plug-ins for smoother integration into other call center applications from vendors like Oracle, PeopleSoft, SAP, and Siebel.

Not surprisingly, its scores in both company direction and depth of functionality topped the charts with a 4.5 in each, according to analysts polled. "They're the only one who really sells the stuff," Elliot says, adding that competitors are selling CTI solutions as a hook to sell other call center products.

Genesys has expanded its Customer Interaction Management Platform to increase support for multivendor networking VoIP, and standards like Session Initiation Protocol. The platform enables interactions via traditional voice, VoIP, email, and Web chat.

-David Myron

INTERACTIVE VOICE RESPONSE

The Market

Speech solutions can act as a way to help alter the paradigm that contact center managers are never-endingly faced with: migrating customers who call in to contact centers with basic customer inquiries like checking account balances to more cost-effective channels like an interactive voice response (IVR) system. Although these solutions can drastically slash costs, companies have been locked in to vendors. Open standards like VoiceXML and Speech Application Language Tags (SALT) are freeing end users and allowing newer players like BeVocal, TuVox, and VoiceGenie Technologies to throw their hats into the ring. These newer kids on the block are not the biggest dots on the radar screen, but they are turning heads. For now, though, we turn our attention to some of the more ripe vendors. Competition is tight: In a first for CRM magazine's Service awards, two companies tied as winners in a category.

The Leader

It's been a bumpy cycle financially for Nortel Networks: The company is continuing to work on the restatement of its financial results for prior quarters. Still, even Nortel's estimated unaudited revenues for just the second half of 2004 of approximately $5.1 billion are more than double the revenue of its closest competitor within the space for the entire year. Clearly a dominant presence, the company offers a wide-ranging product portfolio of self-service solutions. Its Nortel Self-Service Platforms (formerly Periphonics Self-Service Platforms) includes its Media Processing Server (MPS) 100, MPS 500, MPS 1000, and Voice Processing Series/Information Server, with MPS 500 and MPS 1000, including VoiceXML. "Periphonics had lots of market penetration when Nortel bought them," Peterson says. "They moved very quickly into the IP space, [but] Nortel may be dragging them down with all their financial problems."

The company launched its Web-Centric Self-Service solution in 2004, which also uses open industry standards. But not all analysts are impressed. "They were late with VoiceXML compared to some of the other guys," says Sheila McGeeSmith, president and principal analyst of McGee-Smith Analytics, and "[they] have a muddled story with MPS and Web-Centric Self-Service." Even so, Nortel Networks' reach is still felt. Gartner placed the company as a leader in its Magic Quadrant for IVR and Enterprise Voice Portals for 2004.

* The Winners

Call them the New England Patriots of the IVR playing field. Last year's category champion, Avaya, reeling in $4.1 billion in revenues for fiscal year 2004, compared to 2003's $3.8 billion, has reclaimed its throne for the second year in a row. After gaining momentum in the IVR space with its Conversant software and now with its Avaya Interactive Response solution, Avaya managed to record solid marks from our analyst poll in both company direction and reputation for customer satisfaction, despite the headaches that some customers may have experienced migrating from a Conversant platform to an IR platform. "They lost customers because they didn't really manage the process well," McGee-Smith says, but, "they've got a nice full product portfolio in contact center [solutions], and the IVR [ties] into that well." The company's ammunition includes Avaya Contact Center Express, a multimedia contact center solution designed specifically for midsize companies, and the Avaya Speech Applications Builder, allowing developers to design speech automation services using open standards (including VoiceXML). Avaya and IBM announced that they will deliver speech-enabled self-service solutions, combining the former's IP-based contact center software for self-service with the latter's WebSphere infrastructure software. And the company's billion-dollar decision? Acquiring Tenovis GmbH & Co. KG, a provider of enterprise communications systems and services, in a deal that will require Avaya to pay about $370 million in cash and take on about $265 million in debt. When fully integrated, though, Avaya expects the acquisition to add approximately $1 billion to its annual revenues.

Avaya shares the spotlight with last year's second runner-up, Intervoice. Although its revenue barely compares with that of its much larger competitors (for the four quarters completed November 30, 2004, Intervoice amassed $178.1 million, compared to its previous four quarter earnings of $160 million), the company managed to outscore both Avaya and Nortel for its reputation of customer satisfaction and its functionality. It was just a few tenths of a point away from perfect scores in both categories. "The fact that you can host it or buy the application yourself works out well for a lot of clients, because they may-particularly for speech applications-want to start out with a hosted application and then bring it in-house," says Elizabeth Ussher, a vice president at META Group. Intervoice's Omvia Voice Framework, which the company claims is the most open voice solution product on the market, supports a traditional, VoiceXML, or SALT environment. Both the Omvia Voice Framework and its Voice Express packaged applications support Microsoft Speech Server 2004. -Coreen Bailor

QUALITY MONITORING

The Market

The quality monitoring (QM) market is at a pivotal point in its evolution. QM tools record customer interactions to ensure that quality levels are being met, and can help managers keep track of agents' performances, while spotting problem areas that can be improved with e-learning solutions. Vendors in the space, however, looking to further their reach and break away from the pack, are moving into the enterprise with either product enhancements or acquisition moves. "The successful vendors, going forward, will be those that realize that quality monitoring is just one point on the map," says Ken Landoline, vice president and principal analyst at Saddle-tree Research. "They really need to expand into the full breadth of a suite of products that is going to optimize overall business performance in the enterprise." In the QM and workforce management markets that are, according to Jim Davies, principal analyst at Gartner Research, at least 60 percent penetrated, this year's QM leaders took steps to keep up with this trend and their competition.

The Leaders

With its solid 13 percent revenue growth NICE Systems maintains its position as a leader in the QM arena, despite its slightly below-average (but still solid) score for reputation for customer satisfaction. Still, analysts were most impressed with NICE's platform, awarding the company higher marks for functionality than any other vendor in the space. The 2004 category champion's release of NICE Perform illustrates the company's ability to extend beyond the contact center market and move into the enterprise as a whole. "They've realized the call center QM market is starting to become a bit saturated," Davies says. "Looking at their strategy, they're trying to get into other customer-facing departments within the organization by leveraging the relationship they already have with the call center. They are trying to drive their recording, evaluation, and analytical software into these other departments to positively impact the performance of the enterprise as a whole."

The company, by reaching into the security market and capitalizing on its channel partnerships, is hoping to extend its reach. "What NICE has done well is twofold...having a diverse portfolio of products-security, logging, and quality monitoring-and...benefiting from being in the right business at the right time," says Carole Macpherson, senior program director at META Group. "NICE has also leveraged a strong partnership channel (e.g., Avaya) and has secured deals based on these significant brands." If NICE continues to move more into the enterprise via product development or maybe even an acquisition, look for the $252.6 million company to have a strong chance at reclaiming its crown.

Our previous year's runner-up, Verint, is steadily nipping at the heels of its competition, even while receiving the category's lowest marks for company direction. In fact, according to some industry insiders, the company has gotten much less aggressive in its strategy. "The company is more focused on the call center and looks to differentiate itself through superior analytical insight," Davies says. "However, their analytical focus for the security and BI markets does tend to mask their QM product line. I have not really seen them do much from an integration [or] mergers/acquisitions standpoint," he says. Even so, Verint's strong numbers for both its functionality reputation and reputation for customer satisfaction, and its impressive 27.7 percent sales growth over the past four completed quarters, helped to maintain its in-the-top-three status.

* The Winner

Making the category's biggest leap from last year's rankings, due largely to its progressive vision, is last year's third-place finisher, Witness Systems. Despite its third-place ranking for its reputation for depth of functionality, Witness outperformed all category contenders in reputations for both customer satisfaction and company direction. In fact, the company added more than 200 customer wins to its client base, while boasting a customer retention rating greater than 95 percent for 2004, which may help account for its $141.3 million in total revenue, an impressive 30.8 percent increase over 2003's tally. And, according to Paul Stockford, chief analyst of Saddletree Research, the company's acquisition of workforce management vendor Blue Pumpkin positions the combined company as the market leader in developing an integrated workforce optimization solution.

Macpherson agrees: "Witness leaves behind a fragmented and specialized market with over 25 vendors that offer one or two pieces of a [production value management] suite and enters into a new arena with fewer competitors." Aside from the acquisition, Witness enhanced its solution capabilities, including extending its eQuality software to improve the productivity of back-office functions like order fulfillment and billing, with eQuality Office.

eQuality Office allows companies to capture employee desktop activities, evaluate recorded transactions, place sample recordings in contact folders for specific business functions, and identify best practices, allowing users to edit recorded transactions to create e-learning solutions. The burning issue, however, is how well Witness can integrate with Blue Pumpkin. That still remains to be seen, which will surely make 2005 a memorable year for Witness. -Coreen Bailor

WEB SELF-SERVICE

The Market

For a decade companies have struggled to make their Web presence act as more than brochureware. Creating intelligent, informative, and accessible portals for customer service has long been a primary goal of many organizations, and it is only now that fully integrated content development, database storage, and search-and-retrieval systems are starting to come into alignment to deliver a self-service experience that is a meaningful alternative for a significant portion of Internet users-an evergrowing population. The leaders in this space have, whether by aggressive acquisition or grass roots growth, established themselves as serious practitioners and providers of low-cost, high-efficiency service solutions for digital consumers and business buyers.

The Leaders

ATG (including recent acquisition Primus) has broad experience providing solutions to a range of problems businesses need their online presence to solve. The commercefocused ATG got an instant boost by picking up Primus's highly regarded knowledge base and customer-facing capabilities. That's the good news. The bad news is that the year ahead will be a challenging one for ATG, as it must rationalize Primus, itself the product of multiple acquisitions, and bring a coherent self-service product to market. "The one thing I would ding them on now is that they have five different [self-service] platforms...a couple of things ATG was working on, and Primus has at least three different platforms," says Alien Bonde, president of research firm ABG.

The pairing has failed to improve on Primus's middling reputation for customer satisfaction, which hurt the company's ranking last year and, left unchecked, could push ATG off our leaderboard entirely. Web self-service is still an emerging market with a number of different styles and appreaches, and no single provider has yet proven itself to be indispensable.

KANA has stayed the course of its latest reinvention to become a knowledge and service specialist. Last year's category winner does not appear to have made any major missteps and continues to integrate and build out its self-service offerings. "Their technology has been around a while...but they're proven as a self-service company," Bonde says. One of KANA's biggest accomplishments in the self-service space was securing the services of former Primus CTO Charles Isaacs after the ATG acquisition. In the same role at KANA, the knowledge management veteran should drive KANA's technology vision for some time. Watch for KANA to further improve its prebuilt integration with other enterprise software systems.

The Winner

RightNow Technologies was just an up-and-comer last year, but a solid 12 months of growth, a successful public offering, and high marks from clients make it this year's category winner. RightNow's key to success? "They sell well because they solve problems for people," Bonde says. The ondemand knowledge bases the company provides have proven intuitive to set up and maintain for strapped support organizations, and have been received well enough by customers to make the subscription model ring up happy returns for RightNow.

What RightNow is not is the most powerful and feature-filled self-service solution on the market-but quite often, technical dominance and market success are two very different things. "We've dinged them on the technology, but they have been brilliant in terms of execution and reputation," Bonde says. "Greg [Gianforte, RightNow CEO] would disagree, but we think they could add more search capability and more management capability."

For RightNow to remain a category leader, it will have to evolve with a growing number of interested clients. "Their FAQ approach to the world is [best] in the highvolume CPG industry, which is where they do well...but they have only one look-and-feel, and you know immediately when you are on a RightNow site because they all look alike," says Forrester Vice President John Ragsdale. -Jason Compton

WORKFORCE MANAGEMENT AND OPTIMIZATION

The Market

Staffing a contact center requires properly trained individuals and a robust communications platform. Staffing a contact center well often requires technology that can quickly provide solutions for the best allocation of scarce support resources into an ever-broadening demand for services. This year, reflecting the industry's trends, CRM merges the categories of workforce management and workforce optimization, and considers the problem of efficient contact center staffing holistically.

The Leaders

Aspect Communications, last year's Service Leader and still the largest player in the space by revenue, remains a force to be reckoned with in the workforce management and optimization space. However, the company may have taken its eye oft the ball. Our analysts did not feel that Aspect has been aggressively expanding its capabilities in the discipline, focusing instead on building out self-service capabilities. "I don't think workforce management has been center stage [at Aspect] even though it is an important part of their revenue," McGee-Smith Analytics' McGee-Smith says.

Although in no danger of falling from grace with still-strong marks for direction and customer satisfaction, watch Aspect carefully for signs of taking seriously the changing needs of the contact center. "I think they could definitely use some help in regards to being more forward-looking and bolstering up in the workforce management space," says Mark Smith, a senior vice president at Ventana Research.

Blue Pumpkin has recently been acquired by quality monitoring specialist Witness Systems, and the oftdecorated provider of scheduling and skills analysis will have a challenge ahead of it this year as it works to maintain customer confidence during the growing pains of assimilation. "How research and development will survive going forward, and how much synergy they'll get from the Witness solutions are question marks," McGee-Smith says. Ventana's Smith says the buyout gives Witness greater depth and Blue Pumpkin customers more certainty. "For customers, clearly, Witness brings call center infrastructure that makes a lot of sense."

Blue Pumpkin remains the overall category leader for depth of functionality, long the strength of its bragging rights in workforce management. The Blue Pumpkin/Witness pairing will be challenged to prove that it can provide true value to customers, rather than simply a functionality connector 18 months down the road.

The Winner

IEX earns our top recognition in workforce management and optimization this year, on the strength of a resurgent revenue stream and the critical acclaim of our panel of analysts, who lauded the company for its dedication to customers. The company has built a reputation for maintaining its loyal core customer base, and is often praised for its focus. "IEX says, 'We are a workforce management vendor, and that's what we do best,'" Gartner's Davies says. Already the property of a larger, publicly traded company (Tekelec), IEX has built from within and partnered for capabilities it does not already have, such as strong performance management. "Being under the financial umbrella of the larger company, there is no real pressure," Davies says.

Recent improvements to the company's TotalView product suite have focused on both scheduling flexibility and ease-of-use matters, such as streamlined sign-on and thin client operation. Tekelec recently acquired Steleus, a performance management specialist for the telecommunications industry, but the move seems unlikely to disrupt IEX's operations. "They're building out in a pragmatic fashion, and have a good set of capabilities," Smith says. -Jason Compton

OUTSOURCING SERVICES

The Market

Call center outsourcing providers are like field goal kickers on a football team: They don't receive much attention unless something goes wrong.

Stability is the name of the game, and the market leaders emphasize their capacity to help companies take better care of their customers.

To select the top providers of call center outsourcing services, results were weighted by company direction, including anything done over the past 12 months to improve the customer experience-acquisitions, facility upgrades, and new services. We also gauged them by reputation for customer satisfaction, depth of services, and market share.

The competition in call center outsourcing is tough, and the leaders added an array of services and capabilities to meet customer demand and keep one step ahead. "The top-ten vendors all provide a broad array of services from advanced self-service to business process outsourcing and right-shorine," says Katrina Howell, strategic analyst and program manager at Frost & Sullivan.

Many of these companies' efforts were driven by cost-cutting initiatives by the firms and their customers, which is largely why they have been seeking new low-cost regions to offshore their operations. This may spark some more merger and acquisitions in the call center outsourcing space as these companies seek to buy technology and facilities rather than build them. Additionally, outsourcing companies have been aiming to play more of a business intelligence role, as customers are increasingly using technology like Web self-service to lower costs.

The Leaders

Analysts gave EDS mixed reviews when it came to company direction and customer service, and it also received higher-than-average scores for its reputation for depth of services. One of the reasons for the mixed reviews is partly due to preferential treatment. According to META Group's Ussher, EDS reserves its best call center outsourcing services to companies that are EDS customers through and through.

While analysts praised TeleTech for its company direction, the company received a lackluster rating in reputation for customer satisfaction (3.4), according to the analysts polled. TeleTech signed a five-year agreement with Avaya to provide hosted contact center infrastructure and applications, as well as professional services to midsize and large enterprises worldwide. The companies said their joint offering, called Intelligent Systems on Demand, provides a suite of contact center solutions for businesses that contract out their customer service operations. This flexibility should win TeleTech new business and perhaps raise satisfaction levels, particularly from those interested in paying as they go.

The Winner

Convergys is this year's call center outsourcing market winner. Most analysts surveyed agreed that Convergys was the best-rounded company among the top outsourcing providers. Convergys has shored up its BI potential in 2004 with smart acquisitions, such as the company's recent acquisitions of Encore, Digital-Think, and Finali, which accounted for approximately one third of its 2004 revenue growth.

"We are looking at a lot of business intelligence solutions," says Bobby D'Arcy, a marketing communications rep for Convergys. "The acquisition of Encore improves our collections management and credit management, and we are always looking to add to our offshore piece."

Convergys views Australia as a natural growth opportunity for outsourcing, as most of its residents speak English and are waking up just as their North American counterparts are tucking themselves into bed for the evening. -David Justrow

AGENT-FACING UNIVERSAL DESKTOP

The Market

When frustrated customers call customer service and support departments, they want answers immediately. One hiccup from the agent, the process, or the technology and an angry customer will only get angrier. To prevent this, however, a lot needs to happen instantly in the background-the right information needs to be retrieved in a timely manner, and then relayed to the customer in the most appropriate way. One solution helping agents keep some semblance of sanity while all of this is happening is the agent-facing universal desktop application.

It's the application that culls customer, product, and scripting information into one source so agents can ask customers the right questions or make the best offers. As improved technology in SFA, marketing, and analytics is enabling professionals to share valuable data across the enterprise, it may come as no surprise that the focus this year for universal desktop application vendors and their customers is on data integration and analytics. "It's absolutely critical-and becoming more so-for call centers to know what's [happening] on the sales side and vice versa. We're seeing more cross- and upselling in the call center, so it's not just a pure service application anymore," says Denis Pombriant, managing principal of Beagle Research Group.

The Leaders

For years analysts have lauded SAP AG for its focus on both the application and integration layers, which makes the tie-in between front- and back-office applications that much easier. "Integration and cross-enterprise processes are becoming the key to success in CRM. With the front-office/back-office story, Oracle and SAP have the best vision, especially SAP, because it is creating an ecosystem of vendors around NetWeaver," says Forrester Research's John Ragsdale. That's why he adds, "SAP isn't software, it is a religion."

Almost two years after the June 2003 release of mySAP CRM 4.0, SAP plans to provide a sneak peek of version 5.0 at its annual SAPPHIRE event in May. One of the upgrades, according to SAP executives, will be in email response management, which will enable companies to push out autoresponse and autosuggest emails to customers, as well as to automatically take in email requests.

After Oracle finalized its hostile takeover of PeopleSoft in January, some might ask why the two companies are considered separately in our Service Awards issue, rather than combining them into one entity. Our decision to evaluate them separately this year is based on Oracle's plans to operate PeopleSoft as a wholly owned subsidiary and its intention to release PeopleSoft Enterprise 8.9 this year, followed by Enterprise 9 and EnterpriseOne 8.12 next year.

PeopleSoft received the highest marks in customer satisfaction (with an average rating of 3.8) and the second highest marks in depth of functionality, according to analysts polled. Still, hurting the company is its direction, or lack thereof-that's why analysts saddled PeopleSoft with the lowest score in company direction. "We have to believe what Oracle is saying about being committed to PeopleSoft CRM, but having been in this industry for 10-plus years, Oracle can't have both Oracle CRM and PeopleSoft CRM" Ragsdale says.

The Winner

The residual dissatisfaction from the many failed CRM implementations of yesteryear is still hurting Siebel Systems when it comes to customer satisfaction. And analysts' scores reflected as much, penalizing the company with an average score of 3.4 for customer satisfaction, the lowest on the leaderboard. "Customer satisfaction is always a struggle for Siebel, partly undeserved in my opinion, but it is what it is," Ragsdale says.

Keeping Siebel atop the leaderboard this year, however, were its scores in company direction (4.4) and a near-perfect score (4.91 in depth of functionality, according to analysts polled.

Several factors helped Siebel's scores in company direction: For starters, Siebel strengthened its commitment to serve the small-and-medium business market by releasing version 6.0 of its Siebel CRM OnDemand product line in January. Additionally, the acquisition of edocs, an e-billing and self-service software provider, in the same month will undoubtedly complement its application. Also, the company released Siebel 7.7 in June of last year. Siebel's focus on usability, ease of installation, and faster performance with this version resulted in nearly 800 companies either selecting or upgrading to version 7.7 within six months after its release. -David Myron