Interactive Intelligence Innovation in Cloud Contact Center Communications

Joining Jim Burton in this UCStrategies Executive Insights podcast is Brad Herrington, Senior Manager of Solutions Marketing at Interactive Intelligence. Topics include how the company has adapted to changes in the contact center industry, the growth of the company's cloud business, and how it is serving the small contact center market.

Jim Burton: Welcome to UCStrategies Executive Insights. This is Jim Burton, and I am joined today by Brad Herrington, Senior Manager of Solutions Marketing for Interactive Intelligence.

One of the things in my observation of Interactive Intelligence over the years is that they have continued to evolve their product and their business. Where at one point you would say they were a CPE company; we know that is no longer just the case, because of all of the work they are doing with cloud solutions, which we will talk about.

The other thing is that at one point, you would look at their sweet spot for a sale, and you might say at one point it was 50 (seats). Then it got to 150. Quite frankly, today it is probably closer to 500. That tells us a couple of things - their product portfolio has really evolved over the years.

While we are going to focus, I think, on cloud solutions and their small contact center solution, I thought it would be helpful, Brad, if you could just start us off by giving us some background about what your overall product portfolio is. Then we'll jump into some of the more current workings that you have got based on cloud and small contact center. Let me turn it over to you.

Brad Herrington: Thanks, Jim. From an early stage we have always been an all-in-one solution. Software based, contact center focused from the very beginning; and when we say all-in-one, we are talking about all the pieces that a contact center needs to run today. When we started out it was multimedia queuing, the centralized ACD, the IVR, the voice messaging, the things that we have expected for many decades. As the product has evolved, we have added on things like the full recording suite: recording calls, recording e-mails, chats, all the other media that you record. Then also adding on other products like optimizer to do your workforce management, your scheduling, and all the things that had to do with your staffing. Then really just sort of rounding out the suite with things like Tracker, which is the ability to track all the different types of interactions. Because it is no longer just phone calls; it's things like feedback so that you can get your after-call surveys or your web surveys. All the feedback you want from consumers and customers. How well you are doing.

Then your outbound dialing and whether that's agentless campaigns, or the traditional and collections type of campaigns. We have really created from I guess the word we hear a lot about is an organic model. None of these are acquired or bolted on, or even integrated. I don't even like to use that word because integrate means you took disparate things and you fit them together, whereas with our recording and our workforce management and our outbound dialing, our speech analytics; it was created from one common set of code.

We just continually added on over the past 16, 17 years since we launched the product. That is really the breadth of what we do is that full contact center suite. Then, we were also at the same time your unified communications, because you cannot perform any of those functions from the contact center unless you are a PBX. You have the company directory; and you have integrations to back office things. Whether that is Microsoft Lync, or Exchange, or other parts of the corporate infrastructure. We are the PBX for a lot of the companies that deploy our solution.

That really is sort of our overall model, that all-in-one type of platform. Where we provide everything from a simple voice call and dial tone all the way up to your speech analytics and your multimedia queuing and on, and on. As you mentioned, our scalability is obviously changed.

We started out like a lot of people, board-based many years ago. That has sort of put a limit on how many you could plug into one box. Now it is all software based, all SIP. Now we are up to the 4- or 5,000-agent type of solution.

Jim: Brad, there is one thing I would like to add here, which is really important. Because while you do have your own standalone solution that could offer many of the PBX features and functions; I know that you work in those on a regular basis depending on which partner you are working with.

As an example, if you are working with Microsoft Lync, it is not something where your goal in life is to change out the call control for Lync and provide those PBX functions. That is a case where you would work with them, pass it over to them, and provide the contact center component for that.

Brad: Exactly, we do like to say we are "all-in-one." But we are not "all or none." That means that I have this large suite of products. But you do not have to use all of these if you have the PBX in place. You have something that is doing like you mentioned, Lync. They are already the PBX. They are handling the directory - that's great. What parts of these solutions do you actually need there? In a lot of cases some people say, "I havedecades of development already in my IVR. I am not going to rewrite it just because there is a new system." Okay, that's fine. I mean, you may keep the PBX, the IVR. You will hand off the call center functions to us. We are mix-and-match, all-in-one, we have everything that you could need. But it's not an "all-or-none." You don't have to take everything. We have the ability to integrate with anything from a Salesforce to a Lync, from the data to the voice side. A good point - thanks for bringing that up.

Jim: Why don't we jump into some of the new things that you're working on? I think one thing that would be very interesting is for people to understand how your cloud business has grown, and what percentage of the business it is today.

Brad: As we mentioned early on, we were obviously a premise company starting out. Now that has really changed from our early days. I think our last release would have been our Q1 as we talked about this. Cloud-based orders just in that quarter were up about 42 percent over the previous year.

The fastest growing part of our business is obviously the cloud. That's what we are hearing about every day. That's where we are getting the biggest uptake in new customers signing new accounts. Obviously, the bulk of our revenue is still on-premise space. But that's just because that's how the industry was, obviously. Everybody had it on-site. Really what we are seeing is new orders.

The fastest growing portion of our revenue is coming from the cloud side. It's not premise anymore. It has really shifted. It shifted in the past probably four years very quickly.

Jim: One of the things that I was told when we were at your Connections event is that almost half of your business now is coming from cloud.

Brad: Yes, it is fast approaching that. Cloud-based revenues accounted for 46 percent of total revenue in Q1. It's really becoming a growing part of our business. It's not just new accounts. I will talk about just one that we had. We actually just had an announcement recent, which is Kohl's. They have been a customer of ours for a long time, over a decade I think. Premise based, and they are now moving to cloud. They are keeping the same infrastructure, the same solution. I don't know if the agents will actually notice any difference. Because it's the same product, the same look and feel, the same functionality. But for them, they decided to move the cloud and continue to focus on their core business. They can meet their demands. Focus really on what they make money on. Really, they're just sort of saying, "you know what, it's time to move to a cloud-based system."

That's where we are seeing - and not just new companies. Or they are looking for new technology. They are going to cloud. We are also seeing the existing customers even using our own on-premise gear to actually move toward the cloud at this point; which is very encouraging from a product and from a business model standpoint. You sort of get that validation that yes, you are not only doing it write on-premise, but we would like you to continue to do this and in the cloud with you.

Jim: Well, that's really good. The one thing that I thought was kind of interesting is when you first got into the cloud, I had a couple of interviews with Joe Staples, the Interactive Intelligence CMO. We were talking about the target market you were going after at that time. That target market was the small call center.

As it turns out, you have done very well with large call centers. In fact, surprisingly so; some of your biggest accounts have been coming from large contact center solutions based on the cloud solution.

Interactive Intelligence recently announced a new small end contact center cloud solution more targeted toward that particular audience so that audience is not left behind. Maybe we could spend a few minutes talking about that process and that product.

Brad: As you mentioned, when we first started out, when you had been talking to Joe, we were looking at the industry as it existed. There were contact center players that were premise based. They were very large. They supplied very high robust systems to large contact centers. That was ourselves, and Cisco, and Avaya, Genesis... everybody knows the names. Then when you looked at the cloud based, it was very small types of contact centers: 10 agents, 15 agents, 30 agents; and that really was not the business that the premise companies were focusing on. We thought, as you had said at your interview, that is what we will do. We have a product that will fit both of these. It's the same product. Let's try and focus on some of these. By customer demand, surprising even ourselves. I wish we could take credit for marketing it the right way.

But to be honest, the customers that we got were very large, hundreds of agents, thousands of agents coming to us for cloud-based contact centers. That's where our business took off. It was the very large multi-national, multi-sites type of contact centers that were looking for cloud. It was sort of a market that was looking for somewhere to go. I don't think a lot of people were really thinking that is what was out there. As you mentioned, a lot of our early wins were very large customers.

We really focused on that. We focused on being this high availability, high agent count type of cloud-based solution. In the meantime, we sort of left behind the 10 to 50 type of agents. Because let's be honest, you chase the revenue. That's what you do when you are trying to build a business. What we have done now is back in the first quarter of this year, we announced CaaS Small Center, which is our Communications-as-a-Service for small centers. Between 10 and 50; and looking back for the same type of footprint that we originally started on.

We have this offering for that type of company. It's the same product, the same functionality. But as we all know, the cost and the ROI change as you get into high agent counts, more customization. Things like that, that's still for the large contact centers. The 10 to 50, it's a set list of features. But it's still running the exact same system that we do for our large contact centers. The availability of all of the features is there. But you also get the reliability and long-term protection, all the things that the large companies were looking for.

We were actually coming back down and saying that we can offer this to the 10- to 50-agent contact centers. Rather than having to come out with a separate product, it's just an offering. It is still our same data centers. It is the same solution that we have had for years. We have just packaged it different for that specific market, obviously. Price points and things like that are much more sensitive at 10 agents than 5,000 agents. Because there is obviously an economy of scale that goes along with some of these.

Yeah, we are focusing back now down on the small center. Also, with the small center, they are much more interested in Unified Communications functionality. Like the IP PBX and the presence, the unified messaging, and the conferencing that they may not be interested in at the higher end. Because as you mentioned, they may have, and Microsoft is already doing their PBX for them. Or they have some other infrastructure in place. But on the small side, your 10, 20, 30, those companies, they are actually more interested in getting a unified type of solution: "I need contact center for 30 agents and phones for another 100. Because that's the size of my company."

We are trying to play best of both worlds there to that smaller market. It's been a change, as you mentioned. Hopefully not next year, we won't say we have come out with another one for small centers. But at this point we have our standard CaaS for the large call centers. Then we have CaaS Small Center for that 10 to 50 agent area.

Jim: Well, as a prospective user, you have got to be impressed with the fact that your product is based on a platform that has worked for very large companies, very large, complex contact centers. They know that underlying all of the stuff that I would be using, as a small company, I would have access to that. That is really powerful.

Brad: Yeah. I think that is part of our educational marching orders for this area of companies, these 10 to 50, is that a lot of times that size of a contact center did not have call recording or workforce management - and scheduling, those were things that were high ticket items that were added on when you got over a certain few hundred agent level. Or, there was a very minimal set of features that you have received for sort of a lower level product.

I am not discounting anyone that's in that market. I am just, from our platform standpoint, the idea that you can say, the same solution that a large 5,000 agent multinational contact center is using for recording and speech analytics, and mobile, and messaging, and all the other things that go along with it. You can have that for down in the 10 to 50 space. Yes, it is good for them because they get the same reliability. It's the same data centers, everything else. They are getting the sort of best of both worlds here with that small area that we think has been underserved for a while.

Jim: Well, I agree. In fact, you are providing them a full-service, full-featured opportunity where in so many cases your competition at that low end, really ACDs, which just don't have nearly the flexibility. While someone getting into the business may think that an ACD serves them well, it will not take them very long before they figure out they really want all those features and functions that the other vendors are using. Because those are the things that help differentiate them and give them competitive advantages.

Brad: Right. Being cloud-based, they can layer these on as needed or as budget allows. Or as their customers dictate. Something we used to think of as complex as real-time speech analytics where we do the word and phrase spotting in a real-time conversation and alert people. That used to be something that was, boy, just a few years ago, that was a consultant's dream. That was a long implementation process that involved hundreds of agents.

Now, that's something that you can just turn on for the small centers. You can say, "would you like to have real-time speech analytics for your 35 agents?" Great, it's just something you turn on, which is something that and let's be honest. In that size of a call center, you probably would not even put out a bid to look for speech analytics. Because you don't have the bandwidth. Or, that's just not cost effective at that. But with economies of scale that we have, we are managing all of this.

We can offer them things like the speech analytics or customer satisfaction surveys. Or integrations to things they may use like Salesforce, or RightNow, or Oracle, or things like that. Boy, they used to think, "someday we will get there; we are going to be big enough." For us, it is like, "it's software." It should not matter, the actual user account at this point. It should be functionality available from 10 to 10,000, and everywhere in between. I guess that turned into a sales pitch. I apologize if this podcast has gone the wrong way for you, Jim.

Jim: Well, no, we are trying to educate the market. I guess I would look at it a slightly different way. If I look way back at the beginning days of Interactive intelligence, you started off kind of mid-market and maybe the low end of the mid-market. Then you were able to scale your way up to service some of the very largest contact center requirements.

But in the same time, you have been able to scale all the way down. That's something that companies have a very hard time doing. They start off in one marketplace. They try to move up and down. While they make traction going up a little bit or down a little bit, Interactive has done an incredible job of moving all the way down to the bottom. But you have been able to drive your platform, this robust platform for that.

Then you have been able to scale it up to deliver it for some of the very largest organizations. Kudos to Interactive Intelligence, and to Don Brown, and his vision in making that happen.

Brad: Yeah. I think a lot of that goes back to software. It's that our recording solution is software. Our speech analytics solution is software. Our customer satisfaction is software. If you know something about that, there are no constraints on board space, and ports. Things that we used to count.

There used to be spreadsheets to figure out how many ports inbound and how many ports outbound that we used to have to worry about in the days of cards. With software, I mean, do you want to record two calls? Or you want to record 90 million of them? We have somebody who is recording 90 million a month now. In that case, it's just more software. It has changed the dynamics.

SIP has obviously helped immensely in this to getting down to this lower level where we are no longer bound by the hardware constraints we used to. I think it was just six or seven years ago when we still had the old cards out there. It was a different ROI for these small call centers. Now, it's software. We can make this work and make it effective on any scale.

Jim: Yes, very good. Well, it has been exciting to watch, I can tell you that. I think it has been very beneficial for the industry to see this happen. Certainly your competition is not standing still. But quite frankly, it's difficult to find very many of them who have kept up on the innovative front that you have.

Brad: Thanks, I understand what you are talking about. I think having that organic "all-in-one" is really paying dividends now as we are moving to the cloud. Where a lot of competitors are still a little bit hardware-based or boxed-based. It's very hard to get there. Still great solutions, I mean, toe to toe for this industry, for recordings, and all the other things that we do in the industry. But, yeah, trying to get to a cloud solution... I think that is why Salesforce is so successful in what they did as opposed to a lot of the other CRMs that we saw for decades out there. Boy, you build it that way to scale up and down and it all works together. I think that is sort of the approach we took here with the communications side.

Jim: I am excited about what you are doing. Quite frankly, I am excited about the fact that I know we are going to have another call sometime in the future with the next generation of product. It has not been announced yet, some of the new things that Interactive is working on. But, rest assured as an analyst who follows this marketplace, we had a briefing May in Indianapolis about some of the things to come. It's very exciting and I'm sure we will have a chance to be talking about that in a few months.

Brad: That sounds good. Yes, we will keep you abreast of what we have got. Hopefully, yes, here in the next six, eight months, we will have some more, some more good podcast fodder to talk about.

Jim: Great. Okay, Brad, it is always good talking to you. Thanks for your time today.

Brad: Thank you.