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Genesys: Picking up Momentum in a Down Economy?

Genesys: Picking up Momentum in a Down Economy?

Genesys: Picking up Momentum in a Down Economy?

3/27/2003
By Donna Fluss
ICCM Weekly

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When Alcatel announced its acquisition of Genesys Telecommunications Laboratories in 1999, many predicted the beginning of the end of Genesys. The cultural differences between Alcatel, the massive French Telecom provider, and relatively small Russian-founded Genesys, a technology-oriented CTI company, were daunting. Well, the pundits have been proven wrong. Two years after the acquisition, Genesys shows signs of growth and may be one of the soundly performing units of Alcatel, but there is no way to be sure.

The Alcatel influence is felt throughout Genesys: its CEO came with the acquisition, but its CTO and COO are both long-time Alcatel employees. And, the reporting requirements are definitely mandated by Alcatel. In the past, Genesys was proud and open about its accomplishments. Now, while Genesys claims to be doing well, executing effectively and expanding its business – major accomplishments for any company this past year but particularly so for a telecom vendor – they can’t provide data to support these statements as their numbers are buried in the financials of a large Alcatel business unit.

Genesys says that it is successfully expanding its product lines and its reach throughout an enterprise. Backing up its claim, in 2002 Genesys added speech self-service and voice portal capabilities by acquiring Telera, enhanced its mid-market strategy and products with its Express product line, and has gone to market with a new J2EE-compliant desktop solution, Contact Navigator. The strategy and timing for all three moves makes sense as they address market needs. But without numbers supporting either growth in revenue, customers, or market share, it can’t be determined if the new strategy and products are working.

While Genesys continues to dominate the CTI market, its claims of successfully expanding its reach beyond the contact center to other parts of the enterprise, the “reach goal” for many of the current contact center vendors, has to be viewed with caution. In the recent past, when Genesys freely shared its accomplishments and challenges, it was clear that it had not been successful in expanding beyond CTI to work force management or eService, two areas that it attempted to enter through acquisitions.

The market welcomes a success and it is possible that with Alcatel’s influence, international reach, sales force, R&D budget and market share Genesys has found a stabilizing influence with a large and receptive customer base to whom it can up-sell and cross-sell. But, if that were the case, you’d think Alcatel would want to share its success and foresight in making this acquisition. With reported 1999 revenues of approximately $130 million (in its last year of reporting independently) Genesys represents virtually a rounding error as compared to Alcatel’s Euros 16.5 billion reported in 2002. But if Genesys is performing well, Alcatel should share this information to give a boost to the struggling US communications industry.

Although it is impossible to accurately gauge Genesys’s performance, the company appears to have made a number of well-timed strategic moves this past year. While many of its competitors have been forced to “right size” staff and offload non-performing assets, it looks like Genesys’s staff level has remained relatively stable since it was acquired in 2000. Genesys has also successfully expanded its product line, growing organically through internal development and acquisition. Genesys seems to be benefiting from the size and reach of its parent’s sales force, which is giving it depth in APAC, EMEA and in Eastern Europe without a great deal of investment. And, at the end of 2002, Genesys hired a new SVP of Marketing, filling a position that was vacant for close to a year. Hopefully, Genesys can successfully shift from being a technology-oriented company dedicated to engineering expertise to one that also appreciates the importance of clear marketing programs and messages.

On a stand-alone basis (prior to being acquired) Genesys’s product offerings and revenue were smaller than those of Avaya (formerly Lucent), Nortel and Siemens, whose customers it now targets. Even though their base was significantly smaller, it’s a great success story if they’ve been able to increase revenue and market share during tough economic times when their competitors have faced significantly decreasing profits. (Analyst firm Frost & Sullivan indicates that Genesys increased its market share for CTI, E-Mail Response Management software, Chat and Workforce Management software between 2000 and 2001.)

On the product side, Genesys remains tied to its functionally rich CTI solutions. The vast majority of its approximately 2500 customers use its CTI products for screen pop and the Genesys Framework (once known as the T-Server) is required as a core component of many of its offerings. Genesys products are designed to work together but can also be sold independently of each other. If a client already has the Genesys Framework for CTI, it can be used to support other Genesys products.

Genesys, like most of the switch providers, is moving away from its proprietary past and has begun to offer products that use industry standards and non-proprietary hardware. While Genesys continues to support all of the major PBX platforms as they migrate to IP, its new IP Contact Center solution (IPCC) allows the use of off- the-shelf hardware for its servers and IP cards. The cards can be purchased from Alcatel (of course), Cisco, AudioCodes, RadVision and others that support H.323. The architecture of its new thin client desktop application, the Genesys Contact Navigator that went to market on August 28, 2002, is very compelling. Enterprises looking for a J2EE-compliant desktop solution that does not have any applets on the client should consider this application. This desktop product is already installed at more than ten customer sites and has proven effective when used in conjunction with other Genesys multimedia components.

Genesys acquired the assets of Telera, a voice portal company, in May 2002 in order to extend its self-service offerings for both premise-based solutions and service providers. In February 2003, within a few short months of finalizing this acquisition, the company announced the release of the new Genesys Voice Portal that includes support for international telephony interfaces and multi-language capabilities for French, Spanish, German and Italian. Investments in this product line make it clear that this is new area of emphasis for Genesys.

Stable product architecture, a major Genesys strength, may turn into a weakness in the long term. The company’s roadmap does not reflect any fundamental architectural enhancements, which means that customers will not be forced to retire products that they depend upon. However, there are some Genesys products where major enhancements would be beneficial, for example Genesys Workforce Management. Genesys acquired this product from NextAge in 1999 and since that time has made incremental changes to the application such as advanced schedule modeling and flexible agent preference fulfillment. Even with its web-based client for supervisors, system users would like to see improvements in ease of use and functional richness. Nevertheless, Genesys claims to be increasing its investments in its workforce management application, which would make sense as it could facilitate the development of an enterprise-wide performance management offering.

A recent addition to Genesys’s product line is IPCC, a stand-alone, soft switch with a universal queue. However, while moving in the right direction, it’s still missing some basic ACD functionality, including silent monitoring, barge-in and adherence reporting (which is available in its workforce management product). And while Geneys has a strategy to facilitate integration with tool kits, not many are yet available and won’t be until the next major release, due in 2003.

Like so many of Genesys’s products, its IPCC is technically alluring but, as has been the case throughout its history, early releases continue to require a great deal of debugging by its customers. IPCC was released in May 2002 and six sites in EMEA currently use the product. The initial release was quickly followed by a maintenance release in December of the same year.

There is a great chance that Genesys is picking up momentum in the down economy. Genesys is one of the only companies in this market not to have done substantial staff downsizing and to be enhancing its product lines both through acquisition and substantial internal development. Hopefully, Alcatel will decide to share Genesys’s success with the market. Sure, Genesys is just one component of a much larger entity, but why not share good news?

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