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Interactive Intelligence Builds on CaaS Capabilities

Just about a year ago, I wrote here about Interactive Intelligence Doubling-Down on CaaS, i.e., Communications as a Service. The title was based on a comment by company CEO Don Brown on a financial analyst call. Further fruits of that investment and executive attention are evidenced in both top-line results and new CaaS capabilities announced today by Interactive Intelligence.In a year when contact center license sales were down 20+% worldwide, Interactive Intelligence posted an admirable 8% increase in revenues in 2009; this was followed by a 19% YoY increase in 1Q10. Financial analysts are already calling predictions of 13% revenue growth for the year conservative.

While the proportion of revenue attributable to CaaS today is small (about $1 million per quarter), the offering is clearly gaining momentum. One of three Q1 million-dollar deals was for CaaS and three of 13 deals greater than $250K were also for CaaS. Interactive Intelligence reports that in 2 of the last 3 quarters, 25% of new order dollar volume was attributable to CaaS.

One of the distinguishing characteristics of Interactive Intelligence's CaaS offer is that it is not a multi-tenant solution. Instead, a dedicated virtual machine is provided for each customer by Interactive Intelligence in their data center. The pro here is a greater sense of data security and ease of remote management for enterprise customers. The con is one that is more relevant to the market than to Interactive Intelligence's specific offer: the typical service provider channel partner (e.g., British Telecom or AT&T) will be less interested in a solution with this architecture.

The new CaaS capabilities announced today extend both the portfolio of applications offered by CaaS and the ability of enterprise customers to use and manage their implementation. Workforce management and Agentless Dialing (e.g., outbound IVR) are now CaaS options. Interactive Intelligence also announced the CaaS Web Portal, which allows customers visibility to billing information and administrative changes. Future capabilities of CaaS Web Portal will include call monitoring and access to call recordings.

On a February 2010 Collaboration analyst update call, Cisco's VP for Global Collaboration Sales Carl Wiese was asked a question by analyst Vanessa Alvarez of Frost & Sullivan about how the company would balance offering hosted and premises-based solutions. "In the aggressive state (versus the most likely or pessimistic view), we think that in the next 4-5 years hosted could be 25-30% of the market place."