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2011 South African Data Centre Green Excellence Award in Technology Innovation Cybernest

© 2011 Frost & Sullivan 1 “We Accelerate Growth”

2012 North American Cloud Contact Center Solutions

Company of the Year Award

2012

BEST PRACTICES RESEARCH


Company of the Year Award

Cloud Contact Center Solutions

North America, 2012

Frost & Sullivan’s Global Research Platform

Frost & Sullivan has over fifty years of experience as a global research organization.

Today, its 1,800 analysts and consultants monitor more than 300 industries and 250,000

companies. The company’s research philosophy originates with the CEO’s 360-Degree

Perspective™, which serves as the foundation of its TEAM Research™ methodology. This

unique approach enables us to determine how best-in-class companies worldwide manage

growth, innovation, and leadership. Based on the findings of this Best Practices research,

Frost & Sullivan is proud to present the 2012 North American Company of the Year Award

in Cloud Contact Center Solutions to inContact.

Key Industry Challenges

Frost & Sullivan recognizes that customer contact organizations are facing a set of vexing

dynamics in improving their quality, performance, productivity, and growth prospects:

• The Great Recession. A slow-growth and maturing North American

economy that adversely impacts companies and the consumer alike.

• Cost pressures. Cost-cutting pressures from the C-suite have been

renewed in light of challenging times.

• Product/services commoditization. When prices are roughly equal,

service is the key, if not the only, competitive differentiator.

• A shrinking middle class. As buying power shifts upward, product/service

offerings and marketing is based increasingly on income.

• Customers as influencers. Today’s consumers know their value to

companies, have greater expectations; with social media, they have more

influence over others’ buying decisions than they had in the past.

• High maintenance consumers. More than ever, customers are insisting

on doing business on their terms. These terms include multichannel

availability, minimal or no queues, and outbound contacts that accord with

their preferences.

• Changes in modes of communication. There is an ongoing shift from

landlines to wireless, and from live agent voice to text and video+ voice.



• The need for seamless channels. In many cases, consumers now seem

to prefer to begin interactions via the web, including mobile app self-service.

If their needs are not met, consumers will demand immediate, expert

service from live agents.

• Paying heed to core customers. Marketing and sales is shifting focus

from acquiring new customers to retaining and growing wallet share from

existing buyers, and looking to win over competitors’ clientele.

• An ever changing business landscape. Mergers and acquisitions seem

common, a means to grow market share and profits, acquire new

technology, and reduce product development costs.

• Regulations. Strengthened legislation, regulations, and standards covering

data security, fraud, privacy, and abusive collections and telemarketing

practices are commonplace.

Organizations also face a field of obstacles in the way of responding to these dynamics:

• Legacy systems. Aging and obsolete inbound and outbound contact

routing technology present considerable challenges.

• Rapidly changing organizations. Today’s common vendor mergers risk

product supportability and phase-outs.

• Technology’s evolution. The shift from time-division-multiplex (TDM)

voice technology to Voice over Internet Protocol (VoIP) continues. Some

existing solutions may not work on VoIP.

• Remote working. There is a need to cost-effectively support growing

ranks of home-based- and mobile agents and supervisors.

• Increased need for flexibility and scalability. Demand spikes, plus

business continuity/disaster response (BC/DR), mean that flexible, scalable

capabilities have become a necessity.

At the same time, there have been new tools that have been developed and refined that

improve customer satisfaction and retention, enhance productivity and performance.

Among them are proactive customer contact (PCC); customer chat; speech, screen and

text analytics; eLearning, workforce management (WFM); and enterprise feedback

management (EFM).

Cloud/hosted software delivery, also known as software-as-a-service (SaaS) has emerged

as a viable alternative to traditional premise-license software installations. It is growing

faster than premise solution sales. Frost & Sullivan estimates that cloud/hosting revenues



will surpass that for premise contact center solutions in 2013. It estimates too that the

hosted market will reach $2,981.2 billion by 2017, at an 11.8% compound annual growth

rate (CAGR).

Cloud/hosted delivery have several advantages:

• Lower total cost of ownership (TCO). Frost & Sullivan calculates the savings

as high as 58 percent for a large (500-seat) contact center over premise-

installed over a three year period.

• Little or no upfront capital costs.

• Rapid time to deployment.

• Flexibility, including the ability to affordably support agent and supervisors

at home, mobile, or in satellite offices.

• Ease of provisioning and managing multisite operations.

• More affordable access to the latest technology.

• Minimal technology changeover issues when companies merge.

• BC/DR functionality.

Most suppliers initially offered cloud/hosting for discrete purposes, such as IVR-based call

direction, directory assistance, and BC/DR. Its application has expanded to ACD, outbound

(including PCC), chat, and to analytics, call recording, and WFM (categorized as agent

performance optimization [APO] solutions). Hosted delivery is also used in many customer

relationship management (CRM) applications.

Vendors typically offered hosted versions as an option to premise-licensed products, often

as stripped-down versions. These were mainly aimed at small/midsized businesses (SMBs)

that could not afford or justify the licensing, installation, and server resources of premises

products.

This is now changing. More hosted solutions have the same capabilities as premises

offerings, and are equally scalable to enterprises. Moreover, most new market entrants

have eschewed premise licenses in favor of hosted. Many newer products like chat, EFM,

and eLearning are predominantly-hosted or hosted-only. Frost & Sullivan research

indicates that in the next three to seven years more and larger firms will become aware of

and adopt hosted solutions.

Nonetheless, cloud/hosted delivery faces several issues. The key ones are:

• Corporate resistance to change, particularly during difficult economic times.



Many IT departments are concerned about hosting reliability and security,

but they may also fear job losses.

• Belief that hosting is suitable only for SMBs.

• Instituting and maintaining hybrid environments that satisfy IT concerns.

Meanwhile, there are several waves of technology changes that are prompting companies

to look again at their customer solutions, among them:

• Growing demand for analytics to boost performance and to identify and

capture sales opportunities. Hosting makes these solutions more affordable.

• Support for the new mobile, social, and visual channels.

As a result, the hosted market has attracted interest from vendors. Consider:

• Customer preference is shifting from standalone best-of-breed applications

to all-in-one suites. There also is a preference for customer contact solutions

bundled in with CRM and voice/data services.

• More original equipment manufacturers (OEMs) are now offering hosted

versions of their applications.

• Communications service providers are flexing their muscle by expanding

their hosted solutions.

• CRM vendors are eyeing the hosted contact center market.

• Resellers and systems integrators are now offering cloud/hosted solutions.

Impact of Company of the Year Award on Key Stakeholders

The Company of the Year Award is a prestigious recognition of inContact’s

accomplishments in the Cloud Contact Center Solutions sector. An unbiased, third-party

recognition can enhance brand value and accelerate inContact’s growth. As captured in

Chart 1 below, by researching, ranking, and recognizing companies that deliver excellence

and best practices in their respective endeavors, Frost & Sullivan hopes to inspire,

influence, and impact three specific constituencies:

• Investors

Investors and shareholders always welcome unbiased and impartial third-party

recognition. Similarly, prospective investors and shareholders are drawn to companies

with a well-established reputation for excellence. Unbiased validation is the best and

most credible way to showcase an organization worthy of investment.



• Customers

Third-party industry recognition has proven to be the most effective way to assure

customers that they are partnering with an organization that is leading in its field.

• Employees

This Award represents the creativity and dedication of inContact’s executive team and

employees. Such public recognition can boost morale and inspire your team to

continue its best-in-class pursuit of a strong competitive position for inContact.

Chart 1: Best Practices Leverage for Growth Acceleration

Key Benchmarking Criteria for Company of the Year Award

For the Company of the Year Award, the following criteria were used to benchmark

inContact’s performance against key competitors:

• Growth Strategy Excellence

• Growth Implementation Excellence

• Degree of Innovation with Products and Technologies

• Leadership in Customer Value

• Leadership in Market Penetration



Decision Support Matrix and Measurement Criteria

To support its evaluation of best practices across multiple business performance

categories, Frost & Sullivan employs a customized Decision Support Matrix (DSM). The

DSM is an analytical tool that compares companies’ performance relative to each other

with an integration of quantitative and qualitative metrics. The DSM features criteria

unique to each Award category and ranks importance by assigning weights to each

criterion. The relative weighting reflects current market conditions and illustrates the

associated importance of each criterion according to Frost & Sullivan. Fundamentally, each

DSM is distinct for each market and Award category. The DSM allows our research and

consulting teams to objectively analyze each company's performance on each criterion

relative to its top competitors and assign performance ratings on that basis. The DSM

follows a 10-point scale that allows for nuances in performance evaluation; ratings

guidelines are shown in Chart 2.

Chart 2: Performance-Based Ratings for Decision Support Matrix

This exercise encompasses all criteria, leading to a weighted average ranking of each

company. Researchers can then easily identify the company with the highest ranking. As a

final step, the research team confirms the veracity of the model by ensuring that small

changes to the ratings for a specific criterion do not lead to a significant change in the

overall relative rankings of the companies.

Chart 3: Frost & Sull ivan’s 10-Step Process for Identifying Award Recipients



Best Practice Award Analysis for inContact

The Decision Support Matrix, shown in Chart 4, illustrates the relative importance of each

criterion for the Company of the Year Award and the ratings for each company under

evaluation. To remain unbiased while also protecting the interests of the other

organizations reviewed, we have chosen to refer to the other key players as Competitor 1

and Competitor 2.

Chart 4: Decision Support Matrix for Company of the Year Award

Measurement of 1–10 (1 = lowest; 10 = highest) Award Criteria

Growth Strategy Excellence

Growth Implementation

Excellence

Degree of Innovation with

Products and Technologies

Leadership in Customer

Value

Leadership in Market

Penetration

Weighted Rating

Relative Weight (%) 20% 20% 20% 20% 20% 100%

inContact 10 10 9 10 8 9.4

Competitor 1 8 9 8 9 10 8.8

Competitor 2 8 8 9 9 9 8.6

Criterion 1: Growth Strategy Excellence

inContact’s goal is to become a principal participant in the global cloud contact center

services market. The company, which is publicly-traded (NASDAQ:SAAS), has won

shareholder support for its vision.

inContact, which began as a voice communications reseller in 1997, entered the hosted

market in 2005. The firm began supplying IVR and call routing, and then added outbound,

chat and APO, EFM, eLearning, training, and hiring solutions. It also has integrations with

several popular CRM applications. The firm uses OEM’ed and internally-developed

applications. Its offerings can be and are integrated with clients’ other applications and

channels, including social media.

inContact also recognized that flexibility, scalability, and reliability are key to gaining and

keeping cloud/hosted customers. Its applications have been installed on secure

multitenant-architected platforms. They reside on servers located in hardened geo-

redundant locations. inContact is certified with PCI, SOX, FCC, and CPNI, and as a Safe

Harbor Partner. The firm promotes its flexibility and scalability as being of interest to

companies looking to institute or expand home-based agent programs.



Frost & Sullivan’s independent research shows that this blend of all-in-one cloud/hosted

services coupled with communications services allows inContact to make a competitive,

compelling, seamless single-provider offer. The communications segment also provides it

with a strong revenue stream.

inContact has developed its strategy as market acceptance of hosting has grown. It first

focused on midsized companies and the North America market but has widened its focus

to enterprises and global and non U.S.-located businesses (it has servers in other

countries). It expanded from direct sales to partnerships to reach prospects in new

markets. It is also seeking BPO clients that could leverage its platform for their customers.

Frost & Sullivan’s competitive benchmarking confirms that this combination of unique and

diverse offerings and marketplace agility separates inContact from its competitors. One of

its chief rivals has a straight but narrow plan which has left it vulnerable should market

forces change. The other principal competing firm has achieved some success. Currently,

however, it is trying to figure out its future strategy.

Criterion 2: Growth Implementation Excellence

inContact has achieved success implementing its growth strategy. Its core Hosted ACD

market share grew to 7.2% in 2011, from 6.1% in 2010.

Total revenues grew to $89 million in 2011 from $82 million in 2010, benefitting mostly

from its hosted contact center solutions. This segment, which includes professional

services, reached $39.9 million from $33.7 million in 2010, an 18% increase. The

communications segment comprises a majority of sales; it reached $49 million in 2011

from $48.5 million.

inContact has found particular success in the finance, public sector, retail, insurance,

healthcare, and outsourcing industries. It now has over 800 contact center deployments,

used by over 60,000 agents globally. It handles over 1 billion calls annually.

inContact made several bold moves in 2011 to further implement its strategy:

• Partnership with Siemens Enterprise Communications. Siemens is the

exclusive master distributor for its portfolio in Europe, the Middle East, and Africa. It

is also nonexclusively reselling the inContact portfolio in the U.S. Asia Pacific, and

Latin America. Siemens invested nearly $24 million in inContact to install its servers

outside of the U.S.

• Partnership with Verizon. Verizon offers an advanced suite of cloud-based Virtual

Contact Center services. inContact supplied it with agent desktop tools to help

educate and prepare agents to field customer inquiries and resolve them quickly.



• Addition of new U.S. and offshore BPO contact centers as clients. A prominent

deal in the Philippines includes support for at-home agents (offshore contact centers

are gradually introducing the at-home strategy).

inContact is already seeing the benefits of its strategic moves. Hosted revenues hit a

record $12.3 million in the first quarter 2012, up 32% over the same period a year ago.

Criterion 3: Degree of Innovation with Products and Technologies

Ascertaining and anticipating market needs, and devising and successfully delivering

innovative products and services, is vital for technology company growth. It is even more

critical for cloud/hosted providers because today’s customers can more easily switch

suppliers.

Frost & Sullivan finds that inContact continues to select, develop, and execute a wider

array of hosted contact center solutions in 2011. It came out with inContact Reports 2.0,

which provides an intuitive and actionable dashboard view of contact center results. It also

developed and went live with Plugin Agent, which enables a seamless integration with

leading CRM systems. It partnered with Verint to deliver the OEM’s APO solutions.

This technology momentum continues into 2012. It released a set of platform

enhancements including:

• Enhanced Agent Scripting

• Click to call

• Unified Agent Desktop Tools

• Expanded Blended Dialer

• Branded chat

• Enhanced Reporting

More upgrades are in the works, including: inbound and outbound SMS/text support;

enabling agents to set aside text-based channels for voice calls; and enabling agents to

add key information such as confirmation numbers to texts.

inContact’s competitors also have innovated, but in somewhat different directions. This

reflects their longer time in the market and their having incorporated many of the

solutions that inContact is bringing on board. They have introduced other solutions, such

as social media, that inContact does not yet offer.

inContact is wise to be cautious. It has to balance between anticipating market needs and

in determining application usage to avoid paying for “shelfware”. To illustrate this point,



while there is high visibility for social media solutions, there has been, so far, low demand

for social media response from the contact center. inContact, therefore, is carefully

examining social media before launching its own solution.

Criterion 4: Leadership in Customer Value

Markets for new solutions like cloud/hosted delivery do not just appear and grow by

themselves. They require marketplace evangelism by the companies offering them. They

must educate and excite customers and prospects about the benefits and value these

offerings can provide. They have to supply answers to the asked and unasked questions.

Marketplace evangelism is critical for cloud/hosted providers. While the numbers of

companies accepting the message are growing, many more, particularly at the enterprise

level, need to be sold on it.

inContact is a customer contact cloud/hosting evangelist. It also has been open about

industry challenges and how its solutions can help resolve them. It has advertised

aggressively about the cloud and inContact’s contributions to that space. Frost & Sullivan’s

research confirms that these efforts mean that inContact is better known than many of its

competitors.

Criterion 5: Leadership in Market Penetration

inContact is rising in the cloud/hosted market in terms of both revenues and market

share. Frost & Sullivan firmly believes that it will continue to gain share in 2012. The

Siemens, Verint, and Verizon partnerships had minimal impact in 2011 but are now

bearing results. Hosted revenues hit a record $12.3 million in the first quarter 2012, up

32% over the same period a year ago.

Conclusion

Today, customer contact centers, often with limited resources, urgently need to replace

obsolete applications and incorporate new ones into their infrastructure. And they have to

do that while effectively attracting, serving, and retaining scarcer but more demanding

customers.

More contact centers are sourcing cloud/hosted delivery so as to provide a more cost-

effective and flexible alternative to premise-licensed installations. After all, hosting

provides affordable access to an excellent means of improving service, output, and

performance.

Frost & Sullivan’s independent research clearly shows that inContact has assembled and

refined a versatile and expanding all-in-one cloud/hosted global contact center platform

backed by a communications backbone. It has been a contact center cloud/hosting



evangelist, thereby expanding the market for all participants.

The company aims to become the pre-eminent hosted provider. According to Frost &

Sullivan’s research, rising sales and market share have validated the company’s approach.

Hence, inContact is awarded the 2012 Cloud Contact Center Solutions Company of the

Year.

The CEO 360-Degree PerspectiveTM

- Visionary Platform for Growth

Strategies

The CEO 360-Degree Perspective™ model provides a clear illustration of the complex

business universe in which CEOs and their management teams live today. It represents

the foundation of Frost & Sullivan's global research organization and provides the basis on

which companies can gain a visionary and strategic understanding of the market. The CEO

360-Degree Perspective™ is also a “must-have” requirement for the identification and

analysis of best-practice performance by industry leaders.

The CEO 360-Degree Perspective™ model enables our clients to gain a comprehensive,

action-oriented understanding of market evolution and its implications for their companies’

growth strategies. As illustrated in Chart 5 below, the following six-step process outlines

how our researchers and consultants embed the CEO 360-Degree Perspective™ into their

analyses and recommendations.

CEO's 360-Degree Perspective™ Model



Critical Importance of TEAM Research

Frost & Sullivan’s TEAM Research methodology represents the analytical rigor of our

research process. It offers a 360-degree view of industry challenges, trends, and issues by

integrating all seven of Frost & Sullivan's research methodologies. Our experience has

shown over the years that companies too often make important growth decisions based on

a narrow understanding of their environment, leading to errors of both omission and

commission. Frost & Sullivan contends that successful growth strategies are founded on a

thorough understanding of market, technical, economic, financial, customer, best

practices, and demographic analyses. In that vein, the letters T, E, A and M reflect our

core technical, economic, applied (financial and best practices) and market analyses. The

integration of these research disciplines into the TEAM Research methodology provides an

evaluation platform for benchmarking industry players and for creating high-potential

growth strategies for our clients.

Chart 6: Benchmarking Performance with TEAM Research

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth

and achieve best-in-class positions in growth, innovation and leadership. The company's

Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined

research and best-practice models to drive the generation, evaluation and implementation

of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in

partnering with Global 1000 companies, emerging businesses and the investment

community from more than 40 offices on six continents. To join our Growth Partnership,

please visit http://www.frost.com.

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