Here in the final part of our Launch Editorial, we look closer at the acquisition in the Telecoms and CCaaS space of Five9 by Zoom. Zoom experienced a fivefold growth in 2020 for obvious reasons. With its growth at a more reasonable rate of 7.3% in 2021, it has also encouraged investment opportunities.
We speak the big players and voices in the sector and gather their views and opinions on the effect this consolidation will have, both on the market, the technology, the clients, the people, and of course, the customers.
What do you feel is the strategic rationale behind this?
“As companies head back into the office from home, the need to add services to Zoom’s incredibly successful video conferencing seems an obvious one. And Five9 is a good choice, (perhaps some would argue the only choice in the timescale?) to do this. This acquisition demonstrates again the importance of the contact centre in enabling any customer centric organisation to deliver on its promises” says David Baughan, Chief Client Officer at Business Systems (UK) bslgroup.com
“Microsoft Teams has also seen phenomenal success, and have now partnered with Avaya, and even the giants of the CX world; Genesys, Verint and NICE, who’ve continuously evolved to stay at the top of the CX tree for the last 10 years. In addition, we’ve seen Microsoft Teams partner with Google to supercharge their products rather than continuing to spend time building their own AI.
The CX industry is moving at such a rapid rate, ‘buy and partner’ is as prevalent as ‘build’ just to keep up.”
“Currently we are seeing two waves of consolidation around the CX contact centre world. One being in the BPO sector and the second in the CCaaS market. I believe that the CCaaS element was inevitable” Says Dave D’Arcy, Director EMEA Customer Care at Ring Central
“With a range of suppliers able to provide various components of the market’s requirements, there was always a strong likelihood that business would merge or be absorbed. Businesses are attracted to the ease of selecting and managing fewer suppliers, so looking at a unified offering is much more attractive than sourcing your cloud contact centre from one, then your messaging platform from another, your video conferencing functionality from yet another. As a result we are seeing deals like Five9/Zoom, Cisco/Broadsoft, Vonage/NewVoiceMedia etc”
“We feel activity has been stimulated by a number of key events” says Russell Attwood, Founder & Business Development Director at Route 101
“Firstly, the pandemic has been a catalyst for growth in the contact centre / customer service technology sector. Lots of companies struggled to provide the infrastructure to meet the demand for home working, as a result there’s been a significant increase in the volume of opportunities for companies (technology providers) who can meet that demand. SaaS providers have been best placed to meet that demand with their ability to rapidly scale to fulfil opportunities.
Secondly, consumer behaviour is changing at a rapid pace, people want to contact their suppliers using any channel and they don’t want to wait in queues. As a result companies need to consolidate their platforms onto solutions that can manage contact across any channel, which we refer to as omni-channel. Additionally, AI technology is rapidly emerging as a secret weapon to field lower value, higher volume contact, leaving Human Resources to manage the more complex, higher value contact.
Simply put, there are very few technology providers who can deliver that functionality and so to fill the gaps, they need to acquire
As a result, we’ve seen some major acquisitions over the last quarter, the key one being the Zoom acquisition of Five9, which demonstrates Zoom’s strategic intention of moving into Enterprise Communications, buying Five9 now gives them a contact centre capability…. Other leading Workforce Engagement and Contact Centre vendors such as Verint and Nice have also made numerous strategic investments to build out their own portfolio.”
What challenges do you see ahead?
“For Zoom, the leap from a well-managed video conferencing platform to the demands of the modern contact centre platform, the delivery of digital transformation, customer journey personalisation and AI driven self-service, is a considerable one” says David Baughan.
“It will be fascinating to see how Zoom leverages its brand. It will also be interesting to see how Zoom learns to appreciate the importance of supporting a mission critical contact centre in a hybrid working environment which hasn’t yet even started to settle down.
Although Zoom is obviously aware that significant resources are continually being spent on contact centre technology, it leads you to wonder if they are also aware that many of the same organisations are still struggling to deliver a seamless experience for their customers. This isn’t because the technology is at fault. It’s because the partner/reseller/vendor doesn’t quite yet understand the transformation process, the constant on-going energy required to work with your clients long past the project go-live, to keep them current, to constantly evolve their service and keep pace with an ever-demanding and evolving customer “
“There are 2 clear risks that I see” says Dave D’Arcy
“Growth by acquisition of course brings challenges, such as integration. The dilemma is often whether to maximise the economy of scale by integrating systems, processes, location and people, or to make do and accept an increased revenue at a potentially squeezed margin.
The other risk is that mass consolidation can be distracting. How do they ensure that disparate systems, process, culture etc don’t impact performance and delivery to the end customer.
Of course these challenges are not new and solutions are often cyclical. So we may just be at that point in the circle. But then it is also possible that this is likely to be path most trodden for some time to come”
What does the future hold?
Dave D’Arcy “I feel that there will be further consolidation in this area over the next few years with bigger SaaS providers being formed and more bespoke and start up businesses being consumed.”
“While there continues to be ongoing M&A activity in the BPO space, as the economy strengthens and businesses expand, we’re also seeing unprecedented M&A transactions and disruption in Customer Experience (CX) technology, says Megan Neale, COO & Co-founder of gig customer service (GigCX) platform Limitless
“Alternative models of service proposition like gig customer service (GigCX) are challenging the BPO ecosystem. For example, in November 2020, Facebook acquired Kustomer to power the way it provides customer service to businesses on its platform, and in that same month, Snapchat parent company Snap acquired Voca.ai, which builds AI-based voice assistants for customer support services. A month later, Salesforce acquired Slack in a $27.7B megadeal that would provide Salesforce’s customers with a centralised, collaborative place to work.
In mid-2021, cloud contact centre software company Five9 became Zoom’s first billion-dollar acquisition. It goes to show how quickly the CX landscape has moved from BPO-only to recognising that consumers want to engage in their channel of choice, be that Facebook, Snap, Slack, Zoom or other channels. Brands are already seeing demonstrable revenue uplifts, and customer loyalty via the new channels is on the rise.”
“It will be interesting to see how Zoom learns to be a strategic partner and a trusted adviser. Or will they choose to remain a tech provider? Says David Baughan “And lastly, will they need to also learn how to work with resellers and systems integrators like us? Zoom’s strategy will, I’m sure become clear very soon, and we will all watch with interest.“
What is very clear from the 3 parts of this Editorial we have put together, and all the comment and insights that our guests have so kindly contributed, is that the rate of expansion, integration, and consolidation is not expected to slow anytime soon. Some of the sums involved are eye watering, but not everyone and every business will surely be swallowed up or achieve New Gold Dreams for their founders and investors. What’s really interesting for me, is the level of innovation there has been in our sector that had led to this flurry of acquisition activity, so its vitally important that the sector remains competitive, and that there is always a place for start-ups and incubators and the clients have access to the latest thinking to deliver what ultimately everyone is trying to achieve : The best outcome for the customer – KG