2016 North American Cloud Contact Center Applications ... · represents a 15% increase over 2014. Recurring revenues, which include cloud subscriptions and support fees from on-premise

2016 North AmericanCloud Contact Center Applications

Growth Excellence Leadership Award

2016

BEST PRACTICES RESEARCH

© Frost & Sullivan 2016 2 “We Accelerate Growth”

Contents

Background and Company Performance ........................................................................ 3

Industry Challenges .............................................................................................. 3

Growth Performance and Customer Impact ............................................................. 3

Understanding Growth Excellence Leadership ................................................................ 9

Key Benchmarking Criteria .................................................................................. 10

Best Practice Award Analysis for Interactive Intelligence ............................................... 10

Decision Support Scorecard ................................................................................. 10

Growth Performance ........................................................................................... 11

Customer Impact ............................................................................................... 11

Decision Support Matrix ...................................................................................... 12

Research Methodology ........................................................................................ 13

About Frost & Sullivan .............................................................................................. 15



Background and Company Performance

Industry Challenges

Movement to the cloud is one of the key growth drivers in the contact center industry.

What started as a hosted alternative to premise-based systems twenty years ago,

emerged as an additional cloud-based alternative a little more than a decade ago, and

then rapidly accelerated to being today’s deployment method of choice. While slow to

start, in the past five years this development accelerated so rapidly that numerous new

market participants emerged to take advantage of the cloud, and most well-established

premise-based vendors launched cloud versions of their own products.

And the cloud hasn’t been confined to one area within customer contact. Whether entire

suites of products or best-of-breed applications, the industry has offerings for all contact

center capabilities. Adding to this complexity is the very nature of cloud-based

applications, which allow companies to easily adopt them from different vendors and mix

and match to create an entire contact center ecosystem.

However, such rapid change and wealth of options has introduced a level of confusion to

the market. Questions as to whether cloud versions of contact center solutions are as

feature-rich as their counterparts has been one concern, while issues around security,

reliability, and scalability are concerns as well. Cloud vendors have had to address these

issues and more, while building up the track record, references, and brand recognition

long enjoyed by their premise-based counterparts.

A company that excels in this environment has a difficult road to travel. It needs to be

visionary in its understanding of the market and in executing on product roadmaps. It

needs to be nimble and responsive to customer demands from design through deployment

and support. It needs to provide flexible deployment models, provide strong service-level

agreements, and make it easy and affordable for businesses to attain products. And it

needs to be able to convey to the market its value proposition amongst all the hype and

marketing noise.

Growth Performance and Customer Impact

Interactive Intelligence is one such company, with a two-plus decade history of innovation

and leadership in customer contact. While it has been recognized numerous times in the

past for customer value and market leadership, Interactive Intelligence also has cracked

the code on attaining and maintaining particularly strong growth in the cloud-based

contact center market, and continues to excel compared to its competitors based on the

following criteria: growth strategy, above market growth, price/performance, growth

sustainability, customer ownership experience, and brand equity.



Criterion 1: Growth Strategy

Since its inception in 1994, Interactive Intelligence has followed a growth strategy fueled

by innovation, industry firsts, and a keen eye to customer needs and industry trends. For

instance, the company was one of the first to offer an all-in-one suite of solutions, and a

cloud-based alternative to its premise-based system. When it introduced Communications-

as-a-Service (CaaS) in 2009, it gave Interactive Intelligence an entree into the emerging

cloud/hosted market, and a strong base to develop cloud expertise and market credibility.

Throughout its tenure the company has delivered numerous industry firsts in application

design. For instance, it was one of the first to come out with real-time speech analytics,

which could be administered as an application module within its suite, rather than an add-

on application from a third-party requiring separate administration. It was also one of the

first to realize that the capabilities used in the contact center would benefit all areas of a

business and went about designing Interaction Process Automation (IPA) in 2008. IPA was

a step above the nascent Communications Enabled Business Process (CEBP) applications,

which were slowly being developed by competitors at the time, as it encompassed more

far-reaching business automation than just communications.

However, Interactive’s growth strategy also has extended beyond its product development

roadmap. When the company was founded it stepped into a market that was dominated

by a few large call center vendors, the majority of which had entrenched installed bases of

PBXs. Marketing a new type of product – a suite of applications including switching

functionality, rather than those developed over time as adjuncts, took considerable skill in

public relations and marketing, and this became a strong suit for the company. Strong

products, along with creative marketing campaigns and relentless pursuit of press

coverage, helped to propel market awareness of Interactive Intelligence.

The last crucial piece of its growth strategy is vision and nerve. The most recent example

is having the biggest impact. In 2011, CEO Don Brown and his team saw the limitation of

current systems that weren’t leveraging new technological advancements or addressing

rapidly changing customer service expectations. So, in 2012, he went to the company’s

board of directors to ask for the money to completely overhaul the platform and software

code base of the company’s flagship Customer Interaction Center (CIC) product – a code

base that also powered CaaS -- in order to create a new one from scratch. His vision was

to build a cloud platform that wasn’t just integrating different applications, but one with a

more modern architectural approach that would be infinitely scalable and flexible. The

result was the PureCloud platform, launched in 2015, which has dramatically accelerated

Interactive’s growth.

Criterion 2: Above Market Growth

PureCloud was initially aimed at the small-sized contact center market, with a target of

<100 agents. The goal was to test it with a couple dozen customers then in early 2016

rapidly expand to accounts up to 1,000 agents. By 2017, it planned to expand into



accounts of 10K or more. Instead, sales took off and scalability proof points happened

more quickly. The company reported in its 2015 year-end earnings call that PureCloud

deployments were happening across all market size segments, and in many cases were up

and running within weeks of signing.

The 2015 year-end financial highlights included total revenue of $390.9 million, which

represents a 15% increase over 2014. Recurring revenues, which include cloud

subscriptions and support fees from on-premise licenses, increased 23% to $230.7 million

and accounted for 59% of total revenues. Cloud-based revenue increased 62% to $97.9

million.

In Q2 2016 cloud sales soared as the company signed 204 PureCloud customers, which is

up over 70% from Q1 2016. Cloud subscription revenue was also up 43% year-over-year.

Of note, in Q2 37% of PureCloud customer deals resulted from channel partners.

As of June 30, the company had over 300 PureCloud customers worldwide and more than

135 PureCloud channel partners. These new partners have been quick to embrace

PureCloud, with 192 partner technicians already certified on the new cloud service

worldwide.

Criterion 3: Price/Performance

With PureCloud, the company has introduced a full-featured contact center and business

communications offering that is simple, scalable, and affordable. Indeed, the company

priced this offering to disrupt the market. It consists of three services for customers.

PureCloud Collaborate includes persistent chat, presence, five-person audio/video

conferencing, geolocations, and content management, and is offered as both a free and

paid service ($9.99/user/month).PureCloud Communicate (from $19.99/user/month) is a

full-fledged PBX and UC service that also includes the entire Collaborate feature-set.

Finally, PureCloud Engage (starting at $69.99) is a complete contact center offering that

also includes the Collaborate and Communicate capabilities.

PureCloud is modular, enabling customers to deploy full-fledged customer engagement

features, or just the Collaborate or Communicate pieces. The decision to provision telco

resources directly from Interactive Intelligence – an option called PureCloud Voice – was

also based on making it as fast and simple as possible for customers to deploy the service.

The company also took a number of steps to make it easy and affordable to adopt

PureCloud. It created a subscription plan that enables customers to pay monthly for what

they use, with no commitment and no hidden fees at competitive prices. It also

implemented an online ordering process that enables organizations to purchase directly

from the company’s website, and that lets customers change their subscription at any

time.



Criterion 4: Growth Sustainability

Interactive Intelligence has a strong cloud story to tell in its architectural approach with

Amazon Web Services (AWS), as well as the individual cloud applications that make up its

portfolio.

Adoption of its cloud applications runs across all contact center sizes, and while initially

targeted at the smaller market, adoption has come from companies of all sizes. This

should continue unabated as PureCloud supports higher line ranges. However, Interactive

Intelligence also has an advantage in being able to address the large untapped potential in

the under-served SMB market, which will further support growth. SMB customers are

seeking the same functionality as their larger counterparts through vendors that can help

them deliver expert customer service without the costs associated with premise-based

deployments.

Moreover, the company has a large installed base of CIC customers it can use to help fuel

growth in its cloud base, and reception of the PureCloud announcement has been quite

positive. In addition to the company’s normal strong marketing efforts, Interactive

Intelligence also is providing incentives for migration to the new platform. For example, it

announced a June, 2016 promotion that provided a 40% discount off of the list price to

CIC customers who license any PureCloud Engage 2 or Engage 3 seats through June 30,

2018. Interactive Intelligence has also developed integrations between CIC and PureCloud

so its premise-based customers can use certain cloud features.

In 2015, the company expanded its Global Partner Program for Systems Integrators and

telecommunications/carrier partners by adding new revenue opportunities in the cloud

market. Interactive Intelligence believes the enhanced program better supports its

existing contact center-focused partners, is helping it more quickly bring to market its

PureCloud offerings, and is extending its services business to reach new customers,

especially large, multinational organizations.

Finally, the company continues to address current customer requirements and unmet

needs through continual development of both its CaaS private cloud platform and

PureCloud. For instance, at its June, 2016 customer and partner event it announced

myriad new PureCloud features, including a WebRTC softphone with recording, speech

recognition, text-to-speech and other media services; Twitter monitoring, queuing and

response; real-time user geolocation; and scheduled callbacks. The company also has a

healthy roadmap of products and enhancements in the pipeline. This includes what strikes

Frost & Sullivan as visionary work in areas such as machine learning for outcome

optimization and customer journey mapping.

Criterion 5: Customer Ownership Experience

Interactive Intelligence seeks to ensure that customers have a positive experience across



the lifetime of their engagement with the company. From the outset, when businesses

start to work with Interactive Intelligence, the company strives to understand the breadth

of business needs, matching them with its contact center capabilities, but also the greater

business. The company’s cloud platforms enable customers to also use its breadth of

telephony and UCC applications, and content management capabilities, which are fully

integrated across platforms. PureCloud is also modular, allowing customers to deploy a

full-fledged contact center, or just the Collaborate or Communicate pieces. It is also

extremely fast and easy to set up and maintain.

And it’s not just the consumption model that is of importance to customers, but

Interactive Intelligence’s long term commitment to continually improve its products. As

part of this, customers have come to expect continual innovation, which the company has

been open about years before some capabilities come to fruition. For instance, customers

and partners are regularly treated to glimpses of what is coming down the development

pipeline, which are often developments spoken of in visionary terms across the industry.

Examples of this include the use of big data, virtual reality (VR), artificial intelligence (AI),

predictive analytics, and machine learning to improve the customer experience.

Criterion 6: Brand Equity

Interactive Intelligence has garnered considerable brand equity in the past decade, which

is only growing stronger. The company is consistently on the short list of companies to

investigate in requests for proposals (RFPs), as well as mentions by competitors

themselves. It invests heavily in creating brand awareness with great success from classic

ad and article placement, to unique and attention-getting marketing campaigns that

generate leads and sales engagement.

One of the keys to its success in marketing its brand is its network of approximately 400

resellers in over sixty countries. The company brings a consultative approach to the sales

process, which enhances both brand awareness and the customer’s experience. It has

strong technical sales teams as well as sales engineers who understand both the technical

and business needs of customers. This means that new customers going through the sales

process have a team that understands the entire picture, and is able to translate business

needs into technology, ensuring that what is being proposed is specific to the business

environment. It also is afforded more recognition for being a partner, when it recently

achieved Advanced Technical Partner status with AWS in the AWS partner network, which

should open up more opportunities and brand awareness for its capabilities.

Interactive Intelligence has worked diligently at making the sales process simple through

greater partner enablement. It moved North American sales into four super regions and

expanded its mid-market teams. It reduced contractual commitments for CaaS solutions

from five years to just one year, and produced simplified contractual commitments for

PureCloud. The company also invests heavily in pre-sales, marketing, and sales personnel

in each region of the world within which it has a presence.



Conclusion

With its industry-leading growth in the cloud contact center applications market,

competitive and feature rich capabilities, and excellent customer support, Interactive

Intelligence has earned Frost & Sullivan’s 2016 Growth Excellence Leadership Award for

Cloud Customer Contact Applications.



Significance of Growth Excellence Leadership Growth Excellence Leadership is about inspiring customers to purchase from your

company, and then to return time and again. In a sense, then, everything is truly about

the customer, and making those customers happy is the cornerstone of any long-term

successful growth strategy. Companies that excel in driving growth strive to be best-in-

class in three key areas: meeting customer demand, fostering brand loyalty, and carving

out a unique, sustainable market niche.

Understanding Growth Excellence Leadership

Companies that creatively and profitably deliver value to customers ultimately set up their

businesses for long-term, rapid growth. This is what Growth Excellence Leadership is all

about: growth through customer focus, fostering a virtuous cycle of improvement and

success.



Key Benchmarking Criteria

For the Growth Excellence Leadership Award, Frost & Sullivan analysts independently

evaluated two key factors—Growth Performance and Customer Impact—according to the

criteria identified below.

Growth Performance


Criterion 2: Above-Market Growth

Criterion 3: Share of Wallet

Criterion 4: Growth Diversification


Customer Impact

Criterion 1: Price/Performance Value

Criterion 2: Customer Purchase Experience


Criterion 4: Customer Service Experience


Best Practice Award Analysis for Interactive Intelligence

Decision Support Scorecard

To support its evaluation of best practices across multiple business performance

categories, Frost & Sullivan employs a customized Decision Support Scorecard. This tool

allows our research and consulting teams to objectively analyze performance, according to

the key benchmarking criteria listed in the previous section, and to assign ratings on that

basis. The tool follows a 10-point scale that allows for nuances in performance evaluation;

ratings guidelines are illustrated below.

RATINGS GUIDELINES

The Decision Support Scorecard is organized by Growth Performance and Customer

Impact (i.e., the overarching categories for all 10 benchmarking criteria; the definitions

for each criteria are provided beneath the scorecard). The research team confirms the

veracity of this weighted scorecard through sensitivity analysis, which confirms that small

changes to the ratings for a specific criterion do not lead to a significant change in the

overall relative rankings of the companies.



The results of this analysis are shown below. To remain unbiased and to protect the

interests of all organizations reviewed, we have chosen to refer to the other key players

as Competitor 2 and Competitor 3.

DECISION SUPPORT SCORECARD FOR GROWTH EXCELLENCE LEADERSHIP AWARD

Measurement of 1–10 (1 = poor; 10 = excellent)

Growth Excellence Leadership

Growth

Performance

Customer

Impact Average Rating

Interactive Intelligence 10 8 9.0

Competitor 2 7 7 7.0

Competitor 3 7 8 7.5

Growth Performance


Requirement: Executive team has a shared vision for the organization’s future growth,

and has created and implemented a strategy that is consistent with that vision

Criterion 2: Above-Market Growth

Requirement: Company’s growth rate exceeds the industry’s year-over-year growth rate

Criterion 3: Share of Wallet

Requirement: Customers allocate a greater percentage of their total spend to purchasing

products or services produced by the company

Criterion 4: Growth Diversification

Requirements: Company is equally able to pursue organic (e.g., distribution channel

optimization, new product innovation) or inorganic (e.g., acquisitions, partnerships)

growth opportunities consistent with the long-term objectives of the organization


Requirement: Company has consistently sought out opportunities for new growth,

enabling the organization to build on its base, and sustain growth over the long-term

Customer Impact

Criterion 1: Price/Performance Value

Requirement: Products or services offer the best value for the price, compared to similar

offerings in the market

Criterion 2: Customer Purchase Experience

Requirement: Customers feel like they are buying the most optimal solution that

addresses both their unique needs and their unique constraints


Requirement: Customers are proud to own the company’s product or service, and have a

positive experience throughout the life of the product or service



Criterion 4: Customer Service Experience

Requirement: Customer service is accessible, fast, stress-free, and of high quality


Requirement: Customers have a positive view of the brand and exhibit high brand loyalty

Decision Support Matrix

Once all companies have been evaluated according to the Decision Support Scorecard,

analysts can then position the candidates on the matrix shown below, enabling them to

visualize which companies are truly breakthrough and which ones are not yet operating at

best-in-class levels.

DECISION SUPPORT MATRIX FOR GROWTH EXCELLENCE LEADERSHIP AWARD

High

Low

Low High

Cu

sto

mer I

mp

act

Growth Performance

Competitor 2

Competitor 3

Interactive

Intelligence



The Intersection between 360-Degree Research and Best

Practices Awards

Research Methodology

Frost & Sullivan’s 360-degree research

methodology represents the analytical

rigor of our research process. It offers a

360-degree-view of industry challenges,

trends, and issues by integrating all 7

of Frost & Sullivan's research

methodologies. Too often, companies

make important growth decisions based

on a narrow understanding of their

environment, leading to errors of both

omission and commission. Successful

growth strategies are founded on a

thorough understanding of market,

technical, economic, financial,

customer, best practices, and

demographic analyses. The integration

of these research disciplines into the

360-degree research methodology

provides an evaluation platform for benchmarking industry players and for identifying

those performing at best-in-class levels.

360-DEGREE RESEARCH: SEEING ORDER IN

THE CHAOS



Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices

Frost & Sullivan Awards follow a 10-step process to evaluate award candidates and assess

their fit with select best practice criteria. The reputation and integrity of the Awards are

based on close adherence to this process.

STEP OBJECTIVE KEY ACTIVITIES OUTPUT

1 Monitor, target, and screen

Identify award recipient candidates from around the globe

Conduct in-depth industry research

Identify emerging sectors Scan multiple geographies

Pipeline of candidates who potentially meet all best-practice criteria

2 Perform 360-degree research

Perform comprehensive, 360-degree research on all candidates in the pipeline

Interview thought leaders and industry practitioners

Assess candidates’ fit with best-practice criteria

Rank all candidates

Matrix positioning all candidates’ performance relative to one another

3

Invite thought leadership in best practices

Perform in-depth examination of all candidates

Confirm best-practice criteria Examine eligibility of all

candidates Identify any information gaps

Detailed profiles of all ranked candidates

4

Initiate research director review

Conduct an unbiased evaluation of all candidate profiles

Brainstorm ranking options Invite multiple perspectives

on candidates’ performance Update candidate profiles

Final prioritization of all eligible candidates and companion best-practice positioning paper

5

Assemble panel of industry experts

Present findings to an expert panel of industry thought leaders

Share findings Strengthen cases for

candidate eligibility Prioritize candidates

Refined list of prioritized award candidates

6

Conduct global industry review

Build consensus on award candidates’ eligibility

Hold global team meeting to review all candidates

Pressure-test fit with criteria Confirm inclusion of all

eligible candidates

Final list of eligible award candidates, representing success stories worldwide

7 Perform quality check

Develop official award consideration materials

Perform final performance benchmarking activities

Write nominations Perform quality review

High-quality, accurate, and creative presentation of nominees’ successes

8

Reconnect with panel of industry experts

Finalize the selection of the best-practice award recipient

Review analysis with panel Build consensus Select winner

Decision on which company performs best against all best-practice criteria

9 Communicate recognition

Inform award recipient of award recognition

Present award to the CEO Inspire the organization for

continued success Celebrate the recipient’s

performance

Announcement of award and plan for how recipient can use the award to enhance the brand

10 Take strategic action

Upon licensing, company may share award news with stakeholders and customers

Coordinate media outreach Design a marketing plan Assess award’s role in future

strategic planning

Widespread awareness of recipient’s award status among investors, media personnel, and employees



About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth

and achieve best in class positions in growth, innovation and leadership. The company's

Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined

research and best practice models to drive the generation, evaluation and implementation

of powerful growth strategies. Frost & Sullivan leverages almost 50 years of experience in

partnering with Global 1000 companies, emerging businesses and the investment

community from 31 offices on six continents. To join our Growth Partnership, please visit

http://www.frost.com.

http://www.frost.com/

Documents

2016 North American Cloud Contact Center Applications ... · represents a 15% increase over 2014. Recurring revenues, which include cloud subscriptions and support fees from on-premise