NICE Systems Setup for Strong 2010 with Analytics and Events
February 23, 2010

NICE Systems is a well-established vendor in the contact center market, and despite a sluggish start, it finished 2009 very strongly. In the fourth quarter the company broke all its records for revenue, order backlog, non-GAAP operating profit and margins, which in turn contributed to a record year of revenues of $589 million and $120 million of cash generated. These results confirm NICE Systems as one of the most stable companies in the contact center space. It runs two discrete lines of business: enterprise contact center and security systems that also acquired and integrated a complex event processing (CEP) technology from Actimize that enable new forms of Operational Intelligence , which among other things helps prevent money laundering and fraud. These business lines and technology advancements are doing well and have contributed to these impressive financial results.

What interests me most is the contact center business and how the company generated this impressive performance in what has been a difficult market. NICE Systems has an integrated suite of products called SmartCenter , which includes most of the components needed to operate a multichannel contact center. However, my research into the state of the contact center market showed that two of its main products – call recording and agent quality monitoring – are nearing market saturation and are becoming harder to sell. Thus the latest addition to this suite, which provides cross-channel analytics , is significant. It allows companies to track how customers use multiple communication channels to access customer service, gathering knowledge that is of growing importance to companies running multichannel customer service, so much so that the NICE Interaction Analytics Business Solutions has already generated some multimillion-dollar contracts.

The forces driving this demand also align with some key findings in my benchmark research on customer experience management (CEM)  and agent performance management (APM):

• Customers are demanding better service, which is driving up interaction volumes. Companies need to understand better what channels customers are using and what causes them to contact the company.
• More companies are adopting voice over Internet Protocol (VoIP) telephony in their centers, which is driving demand for better systems to ensure the best performance from VoIP systems.
• Companies need to reduce their operating costs, which is another reason they need better understanding of how their current systems are working.

All of these factors combine to produce increased demand for customer and contact center analytics; in fact, I am seeing a demand for analytics in every aspect of CEM – technology including overall performance, agent performance, agent training and coaching, a 360-degree view of the customer to drive better business performance, and social media analytics so companies can understand what their customers are writing about them on social media sites. I have seen increasing adoption of customer-centric performance management, and I expect that these adoption rates are about to increase dramatically.

These pressures indicate an interesting time for the contact center market in 2010. NICE Systems will of course have to go on competing against its two primary competitors, Aspect  and Verint , while also facing up-and-coming vendors with similar suites, such as Envision , KnoahSoft and VPI . Innovative new product lines like cross-channel analytics will help NICE, but even there it will face increased competition from specialist contact center analytics vendors such as Clickfox , Enkata , Merced Systems  and Symmetrics . Nevertheless, NICE Systems has a strong customer base and a comprehensive suite of products, and as long as it keeps doing the basics right, keeps enhancing its existing products and adds new solutions to its portfolio, I see no reason why it shouldn’t have another strong year in 2010.

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Richard Snow – VP & Global Research Director


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