Joe Staples Discusses Interactive Intelligence 2011 Performance

9 Feb 2012

Joe Staples, Chief Marketing Officer of Interactive Intelligence, joins Jim Burton of UCStrategies for a conversation about the company's 2011 performance, and an unusual promotion the company is currently undertaking.

Also on ucstrategies.com on this topic:

Jim Burton: Welcome to UCStrategies Executive Insights. This is Jim Burton and I'm joined today by Joe Staples from Interactive Intelligence. Joe and I have done a whole series of these podcasts and it's always interesting because it seems like there's a theme here. It seems like every podcast we're talking about the great growth Interactive Intelligence has had over the previous period of time. And this quarter is no exception. So Joe can you talk to us a little bit about the growth and where it's coming from?

Joe Staples: Sure. Thanks Jim, and thanks for taking the time with me today. Overall we just announced these results. In 2011, our total order growth was 28% year-over-year. And then more of a focus that we 've put on the cloud space, and what falls into a broader bucket of recurring revenue, that increased 33% year-over-year and now represents 44% of our total revenue. So 2011 was a real good year for us.

We think 2012 is shaping up strong as well. I'd probably point to a couple of things that have been important in that growth. One is the model that we pursued around cloud-based communications. And just really seeing the market grab onto that want to look at that as a possible deployment model either on the UC side or in the Contact Center.

And then the second one is one that we've talked about for, I guess, about three years. We launched the product and it was a slow go early on and that is around process automation. And certainly a core component of what you guys have talked about relative to the UC value proposition. But in 2011 we really saw some nice traction. Some good-sized deals with our product, ITA, and people automating process around mortgage financing, lead generation and lead processing, returns, employee onboarding. So that also has contributed to the success of the company.

Jim: Joe, you made a comment about 44% of your total revenue coming from services, including cloud. That seems like a very large number. Are you surprised at that large percentage? Because you have a good-based business anyway but for 44% to be from those types of services seems to be a very big move in the market.

Joe: That is a nice number. We are pleased with the number and we think we've modeled it out to grow in 2012 and beyond. And I think the importance for us is, what it does is, it makes for running a business, it makes the business so much more predictable. Instead of constantly looking at, "Ok, what are we going to do this quarter compared to last quarter?" A pretty big share of that is now turning into recurring revenue making it very predictable. And we think that's beneficial to our customers as well, because it provides kind of an added level of security for them and knowing that the financial foundation that the company is built on.

Jim: Well that's great and as you know I am doing a podcast with Jason Alley very specifically on that topic of cloud. So there is going to be additional information for those listeners out there to understand a little bit more about that marketplace.

Joe, I remember that podcast we did about IP quite a number of years ago and I think most of us thought at that time it might be a little bit early. It's great to hear you are getting traction with it now. Can you explain a little bit about what type of customers, what the value proposition is and why you think it's growing at this time?

Joe: What we've seen is the business is really coming from customers who have manual processes. So they're not just looking at padding some communication events to something that they've already automated. We're looking at people who are doing things manually, who are passing pieces of paper around or relying on agents or employees to actually perform functions that are prone to have errors in them. So they're looking at it and saying, "Wait a second, can I take all of that processed work and actually automate each of the steps of it?"

We've been pleasantly surprised that it really has spanned across a lot of different process types. There's not a single instance that everybody's doing this kind of a process. It's really been broad in its scope and nature. But I think the value proposition is that it's very quantifiable as far as the ROI goes. They look at it and they say a process that used to take eight days can now be done in two days. Those can be turned into hard dollars that a CFO can look at and justify.

If you then look at kind of the process that we go through, been a little bit surprised at how short the sales cycles have been. Customers have looked at it and said, "Yes, we can identify the processes that we think we can automate." And then we have a team, and this is probably the biggest difference for us from a business standpoint, is we formed a dedicated process automation team. That includes pre-sales engineers and consultants and developers. We're developing some templates for these process automation pieces.

So what will happen is a customer will identify what process they want to automate. We'll bring in a pre-sales engineer who will scope out the project. And then we have consulting resources that will spend a period of time defining those processes, developing swim lane diagrams, going through on paper exactly what needs to happen. And then the programming can be done through professional services. So I think we've somewhat cracked the code how to simplify this and how to deliver the value for our customer.

Jim: And there's no question the value can be tremendous because you're eliminating that human latency, as you mentioned. And when you start taking multiple days down into single days or hours for a process, that's major improvements, better customer satisfaction. So I applaud you as I did when you came out with the product. I thought there was great opportunity and I'm glad to see that it's finally paying off for you.

Joe: Thanks. And I think the other thing Jim, is there's nice opportunity for consultants and for resellers in this. They're always looking at, how do we add value? We're just now scratching the surface of third party consultants coming to us saying, "I have a specialty in this vertical and I'd like to add process automation to my specialty for that vertical." So we're just starting to engage with them, starting to put them through training. And we think if we can build out that kind of ecosystem of consultants out there that can help in the deployment of this, it's just going to perpetuate the success of the product.

Jim: Yes, and I think quite frankly, it's something of real value to the channel itself because the model for the channel is changing like cloud services. Adding these to their arsenal are just new additional ways to make revenue and to provide services for their particular customers, so I think that's great.

Joe, I'd like to change topics a little bit because I think a good segue is to give you a story. Christmas this year we had some good friends that were over Christmas afternoon and they brought presents as usual, except the presents were fairly small. They gave my wife a card and the front of the card read, "What do you give a woman who has everything?" She opened up the card and inside it said, "A goat." I laughed at first, as you just did, and I thought, "Well, that's pretty interesting." And then I got the same card and I thought, "Alright, so explain this to me." And they did. And it was actually one of the things that we were both very pleased with.

When we looked at Christmas and talked about all the things that we did, it was very meaningful to us to realize that in fact something that probably would have just been one more item in our Christmas list, we were pleased to find that something valuable had been given to somebody that needed it. And I understand you have a goat program of your own, so could you explain that?

Joe: We do - and I hadn't seen those cards before, but that sounds terrific. Our program is one where if a prospect meets with us, sits down, listens to what we have to say relative to improving their business communications, we will donate a goat to an under privileged family in an underdeveloped country which is a program that Oxfam has really pioneered.

But our reasoning behind it was very similar to the people that gave you and your wife the gift. We looked at it and thought, what could we give to somebody that would provide some motivation and open the door for our salespeople? And we thought we probably can't give them anything that they haven't already gone out and bought if they really want it. And there's also a lot of restrictions around people actually accepting gifts from vendors. That's frowned upon or not allowed by a lot of companies.

So we came up with the idea of here's an opportunity to get a bit creative, a bit clever, open the door and at the same time actually do some good in the world. And by the way, if you bring your boss we'll upgrade the gift to a cow. These animals are donated to these people in under-developed countries and it's livelihood for them. What they can do with these animals is sustain their families, is exactly what they need. So we look at it as it's a nice way to open a door to engage in a conversation with a prospect and at the same time to actually go out and do some good in the world.

Jim: Well, we know that Interactive Intelligence has a number of programs to help the community and to help others and I applaud you for that. We'll put a link on this podcast to your site where people can learn more about it. I know that when I had heard about it and what value it did and how valuable a goat can be to a family, I had no idea. And again, I applaud you for your efforts there.

Joe: Thanks.

Jim: Joe, thank you a lot for your time today, it's always a pleasure and I look forward to the next one.

Joe: Thank you.