NICE Analyst Summit 2023 – What Leadership Looks Like, But Some Cautions as Well

Last year, I attended NICE’s Analyst Summit in Morocco, and as good as that event was, the 2023 edition was even better. If you don’t know by now, the setting was even more exotic – Peru – and aside from the great content from their leadership team, our expedition to Machu Picchu was definitely a bucket list item.

My travel schedule has never been heavier, and while I haven’t been able to write up my takeaways until now, the main messaging is still timely. I would also urge you to read colleague Blair Pleasant’s excellent review of the event, which provides great detail behind the themes I touch on below.

NICE is clearly doing a lot of things right, and I’ll start my analysis by summarizing what that looks like. However, this is no guarantee of future success, and I’ll outline some cautions that need to be considered. I certainly think the outlook for NICE is very positive, but some factors could get in the way, and it’s only fair to note those as well.

What Leadership Looks Like

On the success side of the ledger, I’ll start with strengths of the company, and then some market-based factors that play to those strengths.

Their growth story  Not only are revenues strong, but they’re profitable – and not many players in this space check both boxes. CEO Barak Eilam cited plenty of numbers to support this, including $2.4 billion now in revenues, putting them in the top 25 of global public enterprise software cloud companies. Gross margins are at the 70% level, and with $1.7 billion cash on hand, they are not beholden to the whims of investors, giving them a free hand to make acquisitions as needed. They’re supporting over one million – “way more” – agents on their CXone platform, and 70% of new customers are deploying digital channels now along with voice. Another important growth indicator is going upmarket for larger deployments, and this year they’ve had 250% growth in new enterprise customers – and all of them – 100% - are using Enlighten AI.

Domain expertise  Aside from being a cloud-native contact center player – this is all they do – NICE is especially focused on being an AI leader. Their bench is deep with 650 AI engineers, and about 15% of revenue goes to R&D – and that level has been steady over the past few years. That’s over $300 million at current levels, and the cumulative effort seems to be paying off now with Enlighten AI. In short, they know cloud, they know CX, and they know AI.

Critical mass of data   Nothing is more important for AI than data, and NICE is managing 20 billion interactions annually across 40+ channels and 240+ workflows. They view these data sets as “technology assets”, and when it comes to building the best AI platform, that’s exactly how to be thinking about data. While this number may actually not be all that big in the world of large language models, they’ve been doing this for a long time at scale, and in the CCaaS world, that makes for a pretty strong head start.

Company culture  This might well be the secret sauce for NICE’s success. You don’t have to look far in this space to find players who have come and gone, and management teams with turnover at the top and through the ranks. Barak Eilam and Barry Cooper have been the steady helm at the top for over 10 years, and that filters down to what Barak calls the “spirit of the company”, and being “obsessed with winning”. These might sound like empty phrases if the company wasn’t so consistently successful, but solid leadership sets the tone for NICE to be “game-changers, not just players”.

Any one of the above would be recipes for success, but collectively, it’s a strong foundation to benefit from trends that are driving contact centers both to the cloud and to adopt AI. Here are three such trends that I view as helping drive their success.

FOMO  Fear of Missing Out isn’t just for Tik Tokkers, and this is no doubt part of the rush to AI. The pandemic accelerated the rush to cloud, and has definitely benefited CCaaS players, but the allure of AI is still pretty fuzzy. Intuitively, contact center leaders know this is the future, even if they have minimal understanding about AI. They also know that things are moving too quickly to stand idle, and risk falling behind everyone else by taking a wait-and-see approach. Every CCaaS provider has an AI story, and the ones who can demystify it and clearly demonstrate the tangible benefits will lead the market. I think the above factors show why NICE is one of those leaders.

Need to get a better ROI on new technology  FOMO alone won’t carry the day for AI, and Barak rightly noted there are challenges for getting business leaders to see the value in new technologies. He talked about how current approaches to investing in tech are piecemeal – which is fine for point solutions, but not something as transformative as AI. There’s “disjointed ownership” of key pieces like knowledge and data, and a “naïve approach to automation” that obfuscates the ability of tech leaders to see the bigger picture with AI. By viewing AI as a solution to only automate tasks you’re already doing, puts it in a cost reduction box, and if the savings don’t materialize, AI won’t last long enough to provide the real ROI that NICE is so passionate about. As such, the ROI factor is as much a threat as an opportunity, but there is a clear need to deliver a better ROI for business leaders, and NICE has shown its ability to do that, especially for enterprise-level customers.

Brand protection  For many businesses, the brand is everything, especially as it’s getting harder now to differentiate products and services. The rise of digital technology is helping re-define value propositions around “experiences” that create the emotional connections that anchor customers to brands. Barak talked about how companies are investing more to “rejuvenate” their brands, and for NICE that translates into a “grand CX opportunity” to help customers do that with AI-driven customer engagement capabilities.

What Could Go Wrong?

As the above shows, NICE is playing a pretty strong hand, and there’s no reason for their success to not continue. However, there are factors that can work against this, and Barak touched on some headwinds that could come into play. Of course, much of this is market-based, so the impact would be felt by all CCaaS players – and beyond – not just NICE.

AI doesn’t deliver  FOMO is driving businesses to AI faster than they’re probably ready for, but the rush for the exits will be on if the benefits don’t materialize. As mentioned, a better ROI on new tech is needed, and the leash will be short for results, especially if interest rates stay high and the economy becomes uncertain.

AI doesn’t establish trust  Performance aside, trust with AI isn’t great to begin with, but when deployed properly, this concern can be overcome. However, AI is taking on an omniscient aura that permeates our entire existence, and with few guardrails in place, there’s good reason to be wary, not just for contact centers, but on a personal level. Concerns about privacy, ethics, data ownership, etc. are valid, and frameworks will need to be established, either by regulation or industry-based best practices. Nobody knows what that will look like, but given how fast AI is evolving, it needs to happen sooner than later.

Customers are still at a very basic level  During the customer panel, Lisa Irons of Hastings Direct noted that they’re at an “embryonic” stage with AI, and it’s very much “seat of the pants” with them. While NICE is living deeply in the AI world, many contact centers are still struggling just getting to the cloud, and for them, AI is more of a futuristic plan. NICE is very much aware that customers need to deploy AI at their own pace, so things may not move as quickly as NICE would like. The desire is no doubt there for AI, but being willing and able can be two different things.

Democratization of software  Barak mentioned this, and it’s worth noting that it cuts both ways. The advent of no/low code means that NICE can develop new applications quickly and at low cost, and that drives the continuous innovation needed to maintain market leadership. However, it also means that contact centers can do it as well, and for those so inclined, there will be less need to use vendors like NICE. In reality, this will only have a minor impact on NICE, as few contact centers can get far on the DIY path with AI. Over time, their capabilities should grow, but not likely enough to be a drag on NICE’s overall momentum.

Experience continuum concept doesn’t resonate  NICE is a very strong marketing company, and an even stronger engineering company. The big takeaway from the Analyst Summit was how they’re wrapping the CXone value proposition around the “experience continuum”. It’s a clunky term that is as complex as it sounds, but is plain as day to technical folks and CX pros. As analysts, we can follow along, but will their customers see it, and will channels be able to sell it? John Willcuts – and others – did a great job breaking this down, and explained how “our depth of AI is how we differentiate”. Barry Cooper helped us visualize how CX is a continuum between automation and assisted interactions – it’s not one or the other. The customer journey is ongoing, and CX can’t be viewed as a series of isolated interactions. Enlighten AI does all that – hence the name – but my view is that connecting all those dots may be harder to do than it looks. Perhaps not enough to slow NICE down, but to necessitate some extra hand-holding for customers to see the light.

Conclusion

NICE went out of their way to treat us so well for this event, but to me, it’s just an extension of how they seem to do everything. They treat their partners and customers very well, and have often stated how much they value working with the analyst community. Having great technology and healthy sales are essential markers of business success, but ultimately, it’s about people and the communities we create. They do all of these very well, and not only does that translate into a great growth company, but it gives them the resilience to overcome the forces that impede that growth.

I’d be remiss to conclude without leaving you a taste of the broader experience. Peru is not an easy place to get to, let alone the trek to Machu Picchu. I took hundreds of photos – we all did – and posted many during and after the event. I’ll share more soon on my blog, so you’ll have to check for that, and perhaps watch for updates on my LinkedIn feed. Otherwise, here are two of my video clips – first from the train enroute to Machu Picchu, and then the view from the top. Hope you enjoy that, and would love to hear your thoughts any time.