Merced Acquisition Spurs NICE Changes
April 19, 2012

Last December NICE Systems announced a definitive agreement to acquire Merced Systems. I have been covering both companies for several years, and initially it wasn’t obvious to me why the acquisition made sense. My colleague Mark Smith wrote about the deal and expressed concerns about how the acquisition would impact both sets of customers and both organizations. Now it turns out that the Merced acquisition will have a much bigger effect on NICE than expected.

NICE Systems has a history of acquisitions to expand both its workforce optimization capabilities (IEX for workforce management, eGlue for smart agent desktop and process analytics and Fizzback for customer feedback management, to name just three) and also its overall portfolio (such as Actimize for financial risk management). NICE does not treat all acquisitions the same in terms of organizational management: IEX has always operated as a virtually stand-alone business, but eGlue was totally absorbed into the existing organization, and by all accounts Fizzback is going to remain fairly independent. Thus the Merced acquisition raised a number of questions about how tightly these systems would be integrated, whether users with multiple products would have to cope with different user interfaces and potential overlaps in product capabilities, and through which channel customers would get support.

During a recent briefing I once more learned to expect the unexpected as executives told me the acquisition has had a significant organizational impact on NICE Systems. At the top level the company will still operate as three divisions – Enterprise, Actimize and Security. Enterprise is the division that I focus on most as it covers customer management and contact centers. It will now operate as four business units: workforce optimization, recording and analytics, voice of the customer (VOC) and performance optimization.

Workforce optimization includes quality monitoring, workforce management (including IEX and GMT), performance management and “pay for performance” – basically the former Merced Systems products. Recording and analytics includes just that, all the recording and analytics products. VOC is customer feedback management and associated analytics (the Fizzback products). Performance optimization is the group leading NICE’s quest to persuade customers to implement more of its products across the enterprise and not just in the contact center.

In this arrangement there are a number of overlaps across product lines, such as the output from recording and how it feeds workforce management, the analytics products, which impact all groups, and customer feedback as input for quality monitoring. A new cross-unit marketing group has been set up to help address these issues and presumably help define a strategy for even closer integration as time goes on.

Why is this change important? After all, a company’s internal organization doesn’t usually have much impact on customers. In this case it may be significant because of changes in the ways companies must now handle customer interactions. My research into customer relationship maturity shows that the foundation of doing this has shifted. After completing the research, I wrote that companies must now support multiple channels of interaction with their customers, and those interactions are likely to be handled by more and more business units. As a consequence, companies need to close the loop for many of the processes associated with handling customer interactions – communications management and capture, quality monitoring, workforce management, training and coaching, compensation management, voice of the customer, customer feedback, analytics and performance management – if they are going to deliver excellent customer experiences at every touch point. To support this, companies need processes that cross business unit boundaries and more integrated systems. To achieve this, their choice is to buy a fully integrated suite of products or spend time and money integrating stand-alone systems. Thus it seems that the acquisition of Merced has spurred NICE to take a more integrated approach and support companies as they try to improve interaction-handling not only in the contact center but across the enterprise. The Merced products also fill some important gaps in NICE’s portfolio, such as compensation and performance management.

Some wrinkles will need ironing out, and it will be some time before the integration is fully completed. However, when the dust settles, NICE Systems will have one of the most complete suites of products in the areas Ventana Research calls agent performance management, customer experience management and contact center analytics that are key components of my research agenda.

How is your company coping with multiple communication channels? Have you synchronized interaction handling across business units? If so, please tell us more and collaborate with me on customer and contact management.

Regards

Richard Snow – VP & Research Director


 

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