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Special Report: Wes Hayden Interview

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2nd Jun 2005
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It was good news all the way at the Genesys G-Force user conference in Miami last week, reports Colin Barker in Miami. For starters, attendance was up to a record 1,400 attendees – close to double the previous year. What was the big attraction? Genesys? Perhaps the venue?

Let’s not ask, but there was no denying the buzz at the conference as the hosts revealed some seriously good news, boasting 20 per cent growth in a year when the sector as a whole was struggling somewhere between 6 and 8 per cent, along with strengthening partnerships – IBM and Microsoft were just two of the bigger names who had come to sing their praises – and major new initiatives with four star customers like Verizon.

No wonder Genesys’ president and CEO, Wes Hayden, was looking relaxed and pleased with life when CMC spoke to him. For Hayden, the future now is IP – Genesys announced a vendor-independent SIP solution at the show – but it is not going to be the only story. Maturing speech-recognition based systems are a major area of growth for Genesys and IBM has been doing particularly well for them here. In fact, the multi-vendor, platform independent approach appears to have yielded dividends for the company in attracting multiples of high-profile partners. How many companies can boast Microsoft, IBM and Sun Microsystems on their customer list?

And the limiters for Genesys? Hayden will honestly admit that the heavy hand of parent Alcatel means that sometimes – like this past year – he is forced to deliver growth and profit when he might like to consolidate. But when being good to the parents means getting presents later (such as a couple of acquisitions) then maybe the price is worth paying. We talked to Hayden about these and other subjects.

CMC: How’s business shaping up for you this year?

Wes Hayden: Everybody seems to be asking me, do we expect to grow 20 per cent this year again and I have already told Paris that the answer is no, and I am sticking to is. We would be very, very happy with any double-digit growth this year. We see this as a transition year, so we are still continuing to make investments but we are not betting on 20 per cent growth.

The emphasis will be on helping our customers take full advantage of some of the capabilities they have with our platform and to make that transition to IP. Because we know that is happening and we know they are concerned about IP and we know that in many cases they have got a lot of questions as to what is the right move here, how do they start with IP, where do they get a return on investment?

It’s perhaps even more difficult for some of our customers to answer that question than it is for some other people who are not our customers. You see, some of our customers have already experienced a number of the benefits of IP, like virtualisation, without having to wait for the IP technology to be enabled.

What we are suggesting to them is, look at the areas you haven’t tapped yet. Look at how IP can take this technology into other parts of your organisation, like you branch offices, like integrating your contact centres with your middle office or your other customer-facing offices. We think those are the most logical places to start.

CMC: So do you see this as the year when IP becomes truly established?

WH: I think is has become established. But that doesn’t mean that it is going to be rolled out everywhere and the world is going to become fully IP in two years. It’s not going to happen. Is it going to happen in ten years? Probably, but the range is somewhere between two and ten years and nobody can say exactly when that is going to take place.

CMC: Assuming you are not going to have 20 per cent growth but will grow at a still healthy low rate, do you see your market continuing at those rates?

WH: The market is growing but where people are spending their money is less clear. I would say that what is clear, is that our expectations are that the voice, self-service platform market is growing at a much faster rate. But if you put that in the context of the broader IVR market the IVR market isn’t growing but the replacement market - replacing the legacy systems with new technology - is very hot right now. People are seeing the value of the speech-enabled applications. Our voice self-service business grew by about 50 per cent last year.

CMC: So, is voice self-service a maturing technology?

WH I would say, advancing. I wouldn’t say it was mature. I am choosing my words carefully there because the amount of development that we are seeing there, particularly with our platform, which I would say is leading the market... the amount of development that is required, particularly from customers, is significant. We are making that investment, to deliver that. I also think our strategy is a little different. We are very focused on building the application eco-system for voice applications. We are not building it all ourselves. We are trying to build the eco-system.

CMC: Who are your key partners in that area?

WH: Well there’s a lot. Clearly ScanSoft and IBM on the speech side. On the tools side there are companies like TuVox, Artera, Voice Objects and there are others.

CMC: IBM is a very close partner to you but isn’t that something that has happened recently?

WH: It is a relationship that has developed. They have just received the award for partner of the year for the Americas because they have achieved such huge growth for our products. Last year was the first really big year, but we have been in partnership for the last five years.

CMC: What is it that IBM like about you?

WH: We fit in very nicely with IBM’s strategy around business process optimisation (BPO). As they go into large customers, they are really trying to optimize and transform the customer experience for those companies. But they touch more things than just the contact centre. They get involved with the back-office, the front-office and multiple technologies and multiple systems. They are involved with Siebel or SAP on the CRM side, us, the database vendors and so on.

CMC: Microsoft seems to be another key partner for you. That relationship seems to be growing.

WH: This year Microsoft is emerging as another key partner. We have multiple activities with Microsoft. We are the partner for their BPO (which we announced at this conference) and we are also integrated into their contact-centre, framework blueprint. So when Microsoft goes into a customer to talk about contact-centres and CTI, they talk about Genesys. When they talk about the voice portal, they talk about Genesys. Then clearly our third activity is our activity around GETS (Genesys Enterprise Telephony Server).

CMC: How do you intend to carry the GETS project forward with Microsoft as a partner?

WH: This is very exciting, because we have been talking about it for three years and it really took Microsoft coming out with Live Communications Services to help define the market for us. We believe the collaboration market has significant potential and that Microsoft is going to be a winner there, based on sheer size. The fact that they want to integrate telephony and telephony presence capabilities into their collaboration product is big for us.
What we don’t know is enough about that market. We don’t know how customers are going to buy. We don’t know how they are going to evaluate the ROI. We are kind of counting on Microsoft to have thought through a lot of those things and if they are right, then we tag along very nicely.

CMC: As a company you don’t split out your figures, but where do you see yourself in three years time?

WH: As a company, I would like to see us grow about 60 per cent over the course of the next two years with a combination of organic growth and acquisition. That would put us into the class of medium to large-sized software company, not as big as the billion dollar software companies, but right under that. In order to do that we have to make a couple of acquisitions that consolidate the market and I think those opportunities are clearly there. Consolidation has taken place in the past year faster than any place in our market. Davox and Rockwell have merged, ScanSoft and Nuance have merged and there have been others and so there has been a lot of activity and I know this will continue. Genesys is in a good position to be a consolidator but we are looking, really, at value-based opportunities.

CMC: But you are a private company?

WH: We are, of course, a wholly-owned subsidiary of Alcatel which means that I don’t have any money to do acquisitions. I have to convince Alcatel to give me the money, otherwise we would be doing things faster.

CMC: Do you find Alcatel being quite constraining in that respect?

WH: I would never say they are constraining but I would say they are maybe a little more disciplined about some of these things than we would be and that can be helpful to us. My point is that if we were a public company with our own stock, our sources for funding would be maybe more flexible and broader. Now funding means going to one place and convincing Paris that the investments that we want to make are better than any others that Alcatel may be considering. So in that sense you could say that is a bit more challenging.

CMC: But you have said that Alcatel have put the emphasis on profitability when perhaps you would rather see the emphasis on investment. Would you like to see that change?

WH: Let me say this. In one sense it is a relief that I don’t have to worry too much about where the best place to invest is. The fact that I am asking for the money from Alcatel, causes me to really think about the investments very, very carefully and to be very sure that I am able to produce a return. So maybe it is a good governor for the CEO.

CMC: You must be pretty happy with things?

WH: I am happy because we have moved the company solidly in one direction and we have internally been able to improve communication and get better alignment, cross-functionally towards our strategy. We were able to make a tremendous amount of change and still deliver really good financial results. I think that prepares us for the future,

CMC: Partnerships are crucial to you as well and you see that strategy continuing?

WH: Yes. We will go through and in conjunction with out partners. I choose those words carefully because the model that we believe works is having strong partnerships but still with a Genesys ‘high touch’ with the end-user customer.

Different markets are different but, for example, in the US they demand a presence from the manufacturer or primary vendor. But, at the same time, I can’t deliver all the services that they need and I need partners to engage with them.

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