Workforce Optimization’s Winners and Losers

3/15/2016
By Donna Fluss
destinationCRM.com

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The workforce optimization (WFO) market is transitioning from products dedicated to optimizing agent performance to solutions optimizing staff performance and providing engagement and enterprise analytics, and this change is having a major impact on the sector’s revenue and growth. The traditional contact center WFO market is still attracting substantial investment, but the growth rate for some of the applications, particularly the mature ones, is slowing down. At the same time, adoption of newer analytically oriented applications is expected to pick up.

The back-office and branch WFO market is under-penetrated; in some cases, new applications are being built from the ground up to meet back-office and branch needs. Also, many applications that were developed for contact centers either have been or are being retrofitted by WFO vendors to meet the needs of this sector. DMG estimates that there are 2.5 times as many back-office employees as front-office ones in the United States alone, based on the U.S. Bureau of Labor Statistics Occupational Employment Statistics Survey, from May 2014. (The total number of back-office employees in other developed countries could be even larger.) The challenge for WFO vendors is to learn how to sell to this market.

In the long term, the contact center WFO market has great potential, but the next few years may be challenging due to the continued slowdown in sales of traditional contact center WFO applications. As a result, DMG has reevaluated the market projections for the next five years; here is what we project for the various segments:

Recording. Innovations in recording are making it compelling for companies to replace outdated solutions. Since the cost of recording solutions continues to decrease, and voice recording is highly penetrated, this is not expected to be a growth market. Video recording, on the other hand, remains a growth area, but near-term adoption is expected to be low. DMG expects the recording market to grow at a rate of 1 percent each year for the next five years.

Quality assurance (QA)/quality management (QM). This market is expected to take a hit as companies migrate to analytics-enabled QA (AQA). DMG expects many companies to continue to purchase traditional QA/QM solutions. Unfortunately, vendors are not breaking out AQA revenue from other speech and text analytics revenue, so there’s no way to determine how much of revenue to attribute to AQA. DMG expects to see the traditional QA/QM market contract by 2 percent in each of the next five years.

Workforce management (WFM). This remains the most important productivity tool in the contact centers where it’s used, and it’s starting to find use as a tool for employee engagement. The newer WFM solutions have a variety of self-service capabilities that allow agents to manage their own schedules, including time off and schedule swaps, features especially important with Millennial employees. WFM is highly penetrated in contact centers with more than 250 agents, and now back offices are slowly starting to use WFM; this represents a large sales opportunity. DMG expects the WFM market to grow at a rate of at least 8 percent each year for the next five years.

Contact center performance management (CCPM). CCPM is both a strategic and a highly tactical tool that gives managers visibility into all aspects of their operating area. Since the revenue base for CCPM remains low, it will be easier, relatively speaking, to pick up momentum. Also, back offices are showing growing interest in these tools. DMG expects this sector to grow by 12 percent in 2015 and 2016, and by 14 percent in 2017, 2018, and 2019.

Speech analytics (SA). These solutions structure and find insights in phone conversations and have attracted the attention of companies large and small. The challenge is that too few organizations are realizing the expected payback. The industry continues to need best practices and expertise to drive this IT segment forward. DMG expects the market to grow by 15 percent in 2015 and 2016, 14 percent in 2017, and 13 percent in 2018 and 2019. But if vendors can do a better job of making the results actionable, sales will increase at a much faster rate.

Text analytics (TA). This is the killer app in the world of social customer care, as TA solutions structure and find insights in written interactions. The challenge: Social customer care has not yet caught on. But as the volume of social interactions increases, companies will need structured programs to address them. Since the base for TA is low, DMG expects to see strong growth in this segment, though it may not take off the way it should. DMG predicts the market will grow by 20 percent in 2015, 22 percent in 2016, and 25 percent in 2017, 2018, and 2019.

Desktop analytics (DA). This broad grouping of capabilities captures everything employees do at their desktops; it also provides workflow and process automation functionality that can substantially improve the performance of both front- and back-office operating groups. DA is increasingly used in back offices to track employee work items. The user base for this relatively new analytical capability is low, which gives it great potential for growth. DMG expects the DA market to grow by 30 percent in 2015 and 2016, and by 25 percent in 2017, 2018, and 2019.

Enterprise feedback management (EFM)/surveying. This segment has undergone extensive enhancement during the past few years, with the solutions increasingly used to engage customers and alter outcomes. Most EFM solutions are sold in the cloud, and many come with professional services to help organizations realize their benefits. DMG expects this sector to grow by 16 percent in 2015, 17 percent in 2016, and 18 percent in 2017, 2018, and 2019.

eLearning. Considered a part of WFO suites, eLearning does not attract a significant amount of investment dollars, and in fact many open-source eLearning tools are quite good, so it’s hard to build a strong business case for it. DMG expects eLearning to continue to grow by 3 percent per year for the next five years.

Coaching. Though agents need continuous feedback, many enterprises are not willing to pay for this functionality, and vendors have been meeting their customers’ needs by including coaching functionality in a variety of other applications. DMG does not expect any significant revenue growth in this category over the next five years.

Gamification. This emerging application, which allows organizations to institutionalize a reward-and-recognition process for their staff, is just starting to be considered a part of WFO suites. A growing number of organizations are willing to invest in gamification as long as it’s not too expensive. Although the base for this segment is very low, DMG expects it to grow at 15 percent in 2015 and at 18 percent or more each year from 2016 through 2019.

Customer journey analytics (CJA). DMG expects CJA solutions to become essential, as these applications give visibility into all aspect of the customer life cycle. A few CJA solutions are on the market, and more are under development. A great deal of what is currently considered CJA is a technology platform combined with and supported by professional services. DMG expects the CJA market, which currently has very little revenue, to grow by at least 15 percent in 2015 and 2016, 18 percent in 2017, and 25 percent in 2018 and 2019.

The vast majority of WFO applications are sold as on-premises solutions, although EFM and CJA are almost all cloud-based. Leading WFO vendors claim that their customers want primarily on-premises solutions, but this is changing. There is growing demand for cloud-based WFM, and interest in other cloud-based solutions is picking up. As with many types of contact center applications, the hybrid deployment modelwith some solutions on-premises and others in the cloudwill be the most common model going forward.