Sheila McGee-Smith
Sheila McGee-Smith, who founded McGee-Smith Analytics in 2001, is a leading communications industry analyst and strategic consultant focused on the...
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Sheila McGee-Smith | August 31, 2016 |


Q&A: Genesys CEO Dishes on Interactive Intelligence Buy

Q&A: Genesys CEO Dishes on Interactive Intelligence Buy Following today's $1.4 billion acquisition announcement, I grabbed 15 minutes with Genesys CEO Paul Segre for a beyond-the-press release interview.

Following today's $1.4 billion acquisition announcement, I grabbed 15 minutes with Genesys CEO Paul Segre for a beyond-the-press release interview.

The contact center world woke to the news that two of the long-standing leaders in the market are combining forces. Genesys has announced its intention to acquire Interactive Intelligence in a deal valued at $1.4 billion.

The transaction comes on the heels of the late July announcement that private equity firm Hellman & Friedman had acquired a significant stake in Genesys, with an investment valued at approximately $900 million. And it follows on this month's swirling rumors of possible Genesys acquisitions.

I had a chance to grab 15 minutes on the phone with Genesys CEO Paul Segre and President Tom Eggemeier, and tried to make them count by posing questions about points not answered in the press release.

What will happen to the Interactive brand?
Understandably, Segre said Genesys has made no final decisions on branding. He did say, however, that the company should be making those decisions by the deal's expected close by the end of 2016.

My take: While both are strong, clearly Genesys has the bigger, global brand. I would expect to see the combined entity called Genesys, but Interactive product names, especially PureCloud, to survive.

Will members of the Interactive executive team be joining Genesys?
Don Brown, Interactive founder and CEO, will not be joining the newly created entity, but will spend time supporting the transition, Segre said. As to other executives, Genesys has made no specific decisions, "but we do have the greatest respect for not just Interactive Intelligence's products but also the team that has built and delivered them to the market," he added.

My take: Note that the two executive sales leaders, Gary Blough and Paul Weber, have been at Interactive since the beginning. They joined from Software Artistry, an earlier company Brown founded that has since been acquired by IBM. Often a tight executive team like this stays together, in this case perhaps to a new venture or just as likely into the sunset with their spoils.

The press release discusses both CPE and cloud development continuing. What is Genesys' view of the mix of deployment models over time?
"My belief is that in the Genesys segment, the high-end enterprise market, there will be premises solutions for a long, long time -- for at least a decade," Segre told me. That said, those customers want to move to cloud-like architectures, which is why our strategy is to offer the same software from the low to the high end -- to allow for easy migration.

Segre went on to say, "Cloud adoption continues to increase, from small to large and from the periphery in." As the size of the contact center increases, the probability of choosing cloud today decreases, he added. The smaller the contact center, the more likely it is to be looking at a cloud solution. But even the biggest banks, for example, are using cloud for peripheral applications like collections while keeping the "core" contact center on premises or in a single-tenant hosted environment.

My take: Today, a combined Genesys and Interactive offer six contact center solutions: Premier, Business and Enterprise Editions on the Genesys side and Customer Interaction Center (CIC), CaaS, and PureCloud Engage on the Interactive side. I expect in two years that number will dwindle. My guess? To three.

The lines between CRM and contact center continue to blur. At its June Interactions conference, Interactive demonstrated a new PureCloud module called Relate, planned as a customer journey-rich "lite CRM." How will that fit into the Genesys portfolio?
Without commenting specifically on Relate, Segre answered, "Particularly in the midmarket, we have seen a desire to have a broader application suite for customer care. Within Genesys, we have filled that need with a partnerships -- e.g,, with BluIP." However, he noted, "we won't go head to head with Salesforce or Oracle."

My take: Sounds like the approach will be similar to that of Zendesk, which offers some voice contact center capabilities while partnering with contact center infrastructure leaders on sophisticated enterprise customers.

Both Genesys and Interactive are contact center partners for Microsoft Skype for Business. Has the future of that partnership been part of the acquisition discussions to date?
"We are committed to the open system approach we at Genesys have always had," Segre said. Both the Genesys and Interactive solutions will continue to work not only with Skype for Business but increasingly with Microsoft Dynamics as well. "We see our tight relationship with Microsoft continuing as Skype for Business takes more and more market share."

My take: It will be interesting to see how Genesys approaches creating a contact center offer to work in an Office 365/Cloud PBX world.

In addition to contact center, all three of Interactive's offers (CIC, CaaS, and PureCloud) have UC and collaboration components. How will that impact the relationship with Microsoft?
"With the acquisition of Interactive Intelligence, there is some overlap [in the Genesys and Microsoft portfolios]," Segre acknowledged. He went on to echo something Interactive's Brown has said for years: "We will go to market with contact center; we won't lead with unified communications."

My take: For years, Genesys has struggled to compete in customer bids that combined contact center and enterprise communications requirements, scenarios where Avaya and Cisco could compete more easily. Especially in certain market segments, the Interactive UC components will help level the playing field.

Deals like this one have the promise to alter market dynamics dramatically. As Joe Manuele, group executive, Customer Experience and Collaboration, at Dimension Data, messaged to me earlier today, "Let the games begin."

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