Whither Workforce Optimization?

On February 1, 2017 Donna Fluss, president of DMG Consulting, posted an article on destinationcrm.com entitled “Workforce Optimization is Under Siege.”  DMG Consulting, among other services, issues extraordinary lengthy questionnaires to contact center vendors every year and seeks to identify the features and functions of the software solutions those vendors provide.  DMG Consulting also goes to great lengths to shed light on the revenues those vendors generate from their solutions.

The February article is well worth a read.  Fluss reveals that total company first half revenue for 2016 was about $1.67 billion, down nearly $6 million from about $1.68 billion in the same period of 2015.  This is the first period over period decline ever experienced.  Some vendors did better than others.  She states that two companies accounted for the majority of the WFO sector’s revenue decrease in the first half of 2016: Verint and Aspect.  Verint’s total company GAAP revenue dropped by $58.1 million, a reduction of 10.3 percent.  Aspect’s WFO revenue is estimated to have decreased by $12.3 million, or 5.9 percent.

NICE revenue grew $14.4 million in the period, an increase of 3.3 percent.  She writes that this increase was likely due to inorganic growth via the acquisitions of VPI and Nexidia during the year.  Interactive Intelligence grew $22.3 million or 12 percent.  InContact increased by $21.8 million or 20.9 percent.  And Calabrio increased $11.3 million or 40.2 percent.  It should be pointed out that Interactive Intelligence was acquired during the year by Genesys and InContact was acquired by NICE.

Fluss finds that when viewing contact center WFO revenues exclusively, she sees a drop of 3.7 percent, from $714.3 million in the first half of 2015 to $688.1 million in the same period of 2016.  The reasons why are a bit illusive.  Fluss cites buyer confusion caused by many mergers and the fact that adoption of newer analytics products is slower than expected.  Fluss also writes that she believes the market will improve as new vendors enter, bringing new science and practices that will drive revenues up.

Maybe so.  This isn’t the first time that DMG has predicted that new vendors with new, easier to use solutions will transform the WFO market.

Several years ago DMG made a similar prediction with respect to the workforce management (WFM) market.  DMG said that existing WFM solutions were too difficult to use thereby limiting their uptake.  I wrote an article in the newsletter I produced back then reacting to DMG’s prediction.  In that article I said that WFM was inherently difficult for plenty of good reasons not the least of which is the fact that the solution attempts to simulate a complex, dynamic environment that involves peoples’ work preferences while meeting stringent performance criteria.  An analogy, I wrote, is the game of chess. 

Each of two players starts with 16 pieces: one king, one queen, two rooks, two knights, two bishops, eight pawns and they all move in different ways.  It has been estimated that there are millions of discreet games that can be played.  That said, there is a way to make chess very simple: have only one type of piece and have them all move the same.  Of course, the game wouldn’t be chess anymore.  It would be checkers.  My point was and remains that WFM is inherently difficult.

Fluss writes that innovative WFO vendors will expand from pure contact center solutions to solutions that span the enterprise to include back-office and branch operations.  Let’s be clear about this: there is no way WFM solutions will get simpler if they need to solve scheduling problems in three very different environments.  They will only become even more complex.

Fluss also says that users will adopt analytic solutions in greater numbers when the expertise needed to produce a return on investment migrates from the vendor ranks into the end user ranks.  On this note, I think she’s right.  Analytics has largely been oversold by vendors.  For example, they suggest that applying speech analytics to all the conversations recorded in the contact center will unearth actionable customer dissatisfaction issues.  They imply that all you need to do is pour all those recording through the speech analytic software and out pops issues.

But the reality is that customers do not speak with a single voice.  Given a product experience or a company policy, it is likely that some customers will be pleased and some will be unhappy.  How is that in any way actionable?

Analytics is a tool.  And like any other tool the user needs some degree of skill in order to use it to purpose and advantage.  In a sense, this is much like the early days of WFM when finding skilled people was difficult.  It took many years for WFM to become main-stream.  I expect the same will be true for analytics.

For what it’s worth here’s my take on the WFO market.  It’s going to continue to contract.  Why?  For the simple reason that the number of employees in the contact center, back office and branches will continue to shrink because of brilliant self-service applications using smart phones, artificial intelligence and robotics.  Less humans working means less WFO revenue.  Nothing lasts forever.  Ask the buggy whip maker.