On top of all this, Avaya seems to have offered all employees a voluntary exit package.
What all this shows is that there is significant consolidation going on in the AI-assisted (or should I say, driven?) CCaaS market and that various players are battling to provide – or at least be perceived to provide – the most comprehensive and valuable platform while others fight for survival.
Yes, it’s nothing new, but can’t be repeated often enough. The CX market is and always was a high stakes platform game. The stakes got even higher with the advent, the promise and the necessary investments that generative AI and agentic AI require. While one can consider Salesforce’s acquisitions as tuck-ins that help rounding off its Agentforce platform, the other ones are a sign of something bigger going on in the CCaaS and customer service market segments. It is also notable that exactly these sectors get more and more referred to as CX market, whether this is a correct, or only good, attribution, or not. Hint: It isn’t.
Not unexpectedly, Salesforce is in the thick of all this, having a massive stake in Genesys and a strategic – at least for NiCE – partnership with NiCE. And regardless, of whether NiCE or Genesys turn out to be stronger, Salesforce wins.
For customers of the Salesforce ecosystem this, first of all, gives choice. For Salesforce, it gives access to a wide array of different customers and therefore the ability to fuel the data pipeline that Agentforce needs. With the different profiles of NiCE/Cognigy, customers need to establish for themselves whether they need the strengths on the customer service center side (NiCE/Cognigy) or the analytics and orchestration side (Genesys).
On the other hand, we have Verint getting into the fold of Thoma Bravo and being merged with WEM vendor Calabrio. This instantly creates a strong player that includes WEM and analytics capabilities. But looking into the Thoma Bravo portfolio, there is more, in particular Medallia. Adding Medallia’s capabilities adds improved journey management and especially a strong voice of the customer element that helps understanding and therefore improving customer sentiments at every single touch point. This would challenge CCaaS leaders like Genesys and NiCE by creating a comprehensive analytics story and a journey orchestration capability. With the help of UserTesting this gets even more pronounced as UserTesting’s technology allows the finding of a root cause of a problem identified using the Verint/Calabrio/Medallia stack. This combination can create something that one could call a total engagement and analytics platform that covers the capabilities of traditional customer service vendors, CCaaS vendors, and journey orchestration vendors. This has the potential to create a tectonic shift in these software categories, as they converge to form a kind of Gondwana of service solutions.
While this doesn’t necessarily create an immediate threat to the Zendesks and Freshworks of this world, it may severely limit their ability to enter into more complicated, multi-step service scenarios. On the other hand, this combination of Thoma Bravo capabilities needs to prove its ability to scale down to avoid being disrupted from below by vendors that have their strength in high volume ticketing scenarios.
I do not know whether this is what Thoma Bravo has in mind, but the scenario is quite appealing to me.
My analysis and point of view
But in any case, one thing is clear: The markets for conversational/agentic AI, CCaaS, UCaaS and customer service are converging while the markets are consolidating. And all of this seems to accelerate around two themes that NiCE and Genesys exemplify.
NiCE's is integrating vertically. The Cognigy acquisition is an integration move that aims at owning the full technology stack, from core CCaaS to best-in-class conversational AI. The goal is a seamless, single-vendor platform. The risks for customers are potential integration debt from the acquired asset, a less open and smaller ecosystem, and probably a premium licensing for these new capabilities after being locked in. The deepened Salesforce partnership is a pragmatic necessity to ensure relevance and access to the bigger ecosystem, not a fundamental strategy shift.
Genesys plays the ecosystem card. The capital injection from Salesforce and ServiceNow is probably a direct counter. It funds a horizontal integration strategy, betting that enterprises prefer a tightly integrated alliance of market leaders over a single-vendor suite, which is in line with both Salesforce’s and ServiceNow’s strategies. The risk is that these integrations remain shallow, and the "ecosystem" is more of a marketing concept than a technical reality. This largely depends on how the three parties build and execute their roadmaps.
Thoma Bravo’s portfolio around Verint can become a wildcard theme here. The merger of Verint and Calabrio would create a third force. This entity would not necessarily compete directly on the CCaaS infrastructure layer but would focus on the higher-margin levels, starting with WEM and interaction intelligence. Combined with the other portfolio companies, its power would come from either being a platform-agnostic integration hub—the "Switzerland of data" or becoming another vertically integrated solution.
With this convergence going on, customers will be able to create data informed and more seamless processes for their customers, simply because there will be deeper integration on a data platform level, not necessarily a software platform one.
What should customer executives look at now?
NiCE/Cognigy customers face significant integration risks due to two leading technologies being combined. Customers should demand a detailed, time-bound integration plan and roadmap with technical milestones. They need to have a deep and hard look at how their current licensing models are changed by new ones and model their TCO inclusive of probable premium "Cognigy-powered" features.
Genesys customers face a different execution risk. They require technical proof-of-concepts that demonstrate the depth and real-time nature of the Salesforce and ServiceNow integrations, respectively, along with a detailed integration roadmap. They should mandate that business value metrics be tied to the pricing and success of this "ecosystem."
Verint and Calabrio customers face a similar integration risk plus an uncertainty about the detailed positioning and future of Verint. Customers need to demand a detailed integration roadmap with milestones and clarity about the final strategy – platform neutrality or vertical integration.
Avaya customers are worst off – and have been for a while. Avaya is in survival mode. This situation requires immediate risk mitigation. Customers should work with a two-prongued strategy: Firstly, they need to secure existing SLAs and support commitments in writing. Secondly, they need to engage in a RFI/RFP process for at least two cloud-native CCaaS platforms. The objective is to have a fully vetted exit strategy that can be executed fast.
Some general recommendations
There is so much going on at a fast pace, that it pays off to reevaluate vendor roadmaps. An outdated understanding of your vendor's strategic position is a serious liability. The market of 18 months ago does no longer exist and the market of in 18 months will be very different from today’s.
As platforms consolidate, the risk of vendor lock-in increases. Customers should favor providers with a demonstrated commitment to an open, API-first architecture. There is no one-size-fits-it-all software platform for all businesses, nor will there be.
The current market will expose providers with weak financial fundamentals. Customers should review their vendor’s financial health and R&D investment as a default part of their due diligence.
Last, but not least, customers need to avoid AI-washing and require that any proposed AI solution be tied to a business case with measurable outcomes, such as reduced operational costs or improved containment rates. Additionally, contracts need to be tied to achieving these outcomes.
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