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Five9 Acquires IVA Leader Inference Solutions

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A business person putting two pieces together
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After the stock market closed today, Five9 announced the acquisition of intelligent virtual agent (IVA) company Inference Solutions. The purchase price is $172 million, $148 million in cash and $24 million when certain bookings targets are met. Inference brings 550+ customers, among them several joint Five9 customers.
 
Inference was founded in 2005, spun out from Telstra Research Labs — think of it as the Australian version of Bell Labs. Headquartered in San Francisco, the company has additional offices in Austin, TX and Melbourne, Australia. The Australia tie continues with the location of Inference’s employees, 30 in the U.S. and the remaining 30 in Australia. Callan Schebella, CEO and founder of Inference Solutions told me during a pre-briefing that all 60 employees will be joining Five9 after the deal closes.
 
BroadSoft/Cisco Technology Partner
The Telstra connection can be seen in other ways as well. The list of companies in the Inference reseller network is replete with dozens of traditional and IP-based carriers, including AT&T, Telus, Vonage, and of course, Telstra. Many of these resellers have a long-standing technology relationship with BroadSoft, acquired by Cisco in 2018, and continued under Cisco.
 
Here’s a brief timeline of the relationship between BroadSoft and Inference:
  • In Oct. 2012, BroadSoft introduced Call Center Xpress, a bundled call center solution that enabled telecommunications providers to deliver a hosted call center solution to complement BroadSoft’s unified communications product. Inference Solutions provided the interactive voice response component of that solution.
  • In Aug. 2017, BroadSoft announced enhancements to its contact center solution BroadSoft CC-One which included speech-enabled IVR in collaboration with Inference – whose tagline at the time was “Revolutionizing IVR.” As recently as January 2020 at CiscoLive Barcelona, Inference Solutions was described as providing the advanced IVR for speech-enabled self-service for Cisco Webex Contact Center.
  • In Sept. 2019, Inference announced it was offering conversational AI for Cisco’s premise unified communications and contact center platforms.
In the cadence of Inference’s relationship with BroadSoft/Cisco, one sees the ongoing development of both self-service technology and Inference’s portfolio. From IVR to speech-enabled IVR to conversational AI and IVAs, Inference has consistently stayed abreast of technological changes and incorporated them into its products.
 
In addition to product development, Inference’s ties to Cisco and BroadSoft is also evident in its list of channel partners. Cameo, Servion, NTT, and Presidio are a few of the companies on the list that are well-known as Cisco advanced technology partners for contact center.
 
Delivering Digital Labor
Circling back to the reported number of Inference customers, the historical perspective makes clear that not all of these are IVA customers. But they are mostly contact center customers, many of them on-premises or hosted solutions, that are now or will be soon, looking for a multi-tenant CCaaS application. Inference gives Five9 a second sales strategy — in addition to contact center as a service, its salesforce and partners can work with prospects looking to improve the level of interaction automation.
 
Automation of interactions and decreasing dependence on live agents is top of mind for companies all over the world in 2020, heightened by the pandemic. Inference positions its virtual agents as costing 10% of a human agent. That kind of straightforward comparison is possible because of the company’s pricing model, which similar to a contact center software license, is priced per (virtual) agent/per month.
 
When Schebella relayed his estimate of $400 per month per IVA, my first reaction was that it was twice the cost of a fully-loaded contact center license for a live agent. Schebella broke it down this way. A fully-loaded agent in the U.S. might cost $40,000 per year, an Inference IVA $400 per month. “With the Inference platform, when you ask how much will it cost to get started, the answer is $400,” said Schebella. “If you don't like it, you can turn it off. If you want another virtual agent, you just add them as you need them,” he added.
 
That price is incredibly inexpensive compared to competitive alternatives, according to Schebella. As shown in the graphic below, Five9’s Practical AI approach is served well by the low cost of entry and ease of expansion.
 
Vendors often have schematics that highlight their position in the market, and I’m not endorsing this one by publishing it here. But it helps explain how Inference positions its solution – as having low deployment complexity and low cost of entry. The text attached to the lower left quadrant says that the professional services approach of these competitors — including NICE inContact and Genesys — “essentially excludes them from targeting the mid-market.”
 
A graphic on Five9’s Practical AI approach
When completed, Inference Solutions will be Five9’s third acquisition in a year, Whendu in Nov. 2019, and Virtual Observer in Feb. 2020. During his tenure as CEO of Five9, Rowan Trollope has talked about delivering the promise of artificial intelligence to the contact center. For most of that time, Wall Street analysts have asked when AI revenue would become significant for Five9. Both goals are advanced by today’s announcement.
 
Editor's note: This post has been updated from the original.

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