ISG Software Research Analyst Perspectives (69)

When we speak of the “customer experience,” we are really referring to the results of a broad spectrum of activities that collectively we describe as a journey or a lifecycle. In the past, how we spoke about customers was largely determined by the limited view of what transpired during short, contact center interactions. Customer experience (CX) evolved as a way to incorporate more facets of behavior into an assessment of the customer’s ultimate value and intent than is possible by looking only at an isolated interaction. But taking a longer view requires more complex software tools to muster an organizational response to customers. Contact center agents need to know what has happened earlier in the relationship, and planners need a way to predict what is likely to happen in the future. Everyone involved needs complete and accurate data identifying the person, and details about the connections that have already occurred. And organizations need a way to build processes that tie together the functions of all the departments that are either customer-facing or customer-adjacent, across the journey of engagement. Ventana Research asserts that by 2023, one-half of organizations will have developed initiatives to map and manage customer journeys by integrating sales, service and marketing processes. This raises the stakes in the software applications those organizations need. Instead of departments working separately to procure and deploy solutions for narrowly defined problems, organizations need integration tools that morph to serve varied personas but provide synchronized views of the overall experience. There are many such tools available in the marketplace. Software in the CX stack is often developed as niche products aimed at solving a particular problem encountered by a single set of users. This is especially true for tools aimed at marketers, where the landscape is notably fragmented. It is also true for service-related tools used in contact centers that, for example, add a new contact channel to the communications mix, or that collect certain types of feedback to measure satisfaction. The modern view of CX requires a more centralized approach based on integrations between applications, processes and teams. When transitioning from a view based on interaction handling (CC) to one based on customer lifecycles (CX), there is no choice but to throw these tools together, and vendors have responded by packaging them into suites to gain market share and box out competitors. This has led to the development of what are sometimes called Customer Experience Management (CEM) solutions, which can perhaps be best described as CX suites. Vendors across the industry are collecting niche software tools into aggregations either through acquisition, development or partnership. It now appears clear that in order to prosper, vendors in the CX space need to own, or be part of, a more complete suite that manages processes across departments and user roles. There is no consensus on what specific software elements should be found within CX suites. This uncertainty stems from the fact that CX suites are being built by vendors that come from very different legacy origin points, and the components a particular vendor might include show the bias of those origins. For example, a company like NICE that comes from the contact-center market will offer a suite heavy on interaction handling and workforce optimization. One like Adobe, coming from a marketing background, will emphasize analytics or content management. Others come from a legacy in sales or even from the data-management world, as evidenced by moves made by SugarCRM, Teradata and Informatica to offer branded CX suites. No two suites cover exactly the same set of users and use cases, but they all overlap by purporting to control (or optimize) related segments of the customer journey and the processes underlying that journey. Ventana Research asserts that by 2023, three-quarters of organizations will have expanded the stakeholders influencing customer experience software buying decisions, resulting in greater accountability and better resource allocation. Integrating the software requires integrating and diversifying the buying teams as well. These developments are having interesting effects on the market dynamics. For buyers, it is something of a mixed blessing: it simplifies operations somewhat by providing a one-stop shop for many applications needs that span departments, often allowing them to cherry pick the niche tools they need from within large portfolios, secure in knowing that they will integrate and share data. It also gives buyers “one throat to choke” when it comes to holding vendors accountable for issues related to integration and silos. And it allows buyers to select a suite vendor that shares the same general orientation: marketing technology (martech) vendors for marketing-centric organizations, communications vendors for those that revolve around contact centers, and so on. But it can be confusing for buyers to see what parts of the tech stack might be missing from a particular suite, or to evaluate what kind of CX approach might be optimal for them. It also puts vendors into fierce and direct competition, often pitting them against completely new and different vendors. It is highly unusual, for example, for contact-center vendors like NICE or Avaya to perceive themselves as competing against the likes of Teradata or Adobe. The fact that vendor sales reps do not see some of these competitors on deals at street level does not mean that the ground is not being laid for them to be suddenly disrupted. An example of this is the way Amazon Connect and Salesforce Voice turned into serious players in the CX communications market almost overnight. Established vendors may have no playbook to compete in this way for more complex buying communities with deeper enterprise-software needs. In addition, when vendors take a wider look at how CX operates, they are often seeing that, from the enterprise point of view, they have huge gaps in their portfolios. That forces consequential decisions about how to proceed, notably whether to buy, build or partner to fill out the contours of a broader CX suite. Organizations should prepare for this coming shift in several ways. First, they need to understand which users (in which roles) are involved or relevant to managing the customer experience, across the front, middle and back offices. Then, they need to put that knowledge side by side with the roster of applications that are already in use. Doing so may reveal the existence of components from one or more vendors that are already coalescing into suites through integrations or partnerships. There may be pieces of multiple, overlapping suites already present in-house. Organizations should take the processes in managing customer experiences very seriously and realize there is not one vendor that will meet every requirement for an entire enterprise and interaction. It would be wise to Identify specific areas for improvement that are likely to lead to the need for new software applications, and examine whether those opportunities are inherent to the business, or result from lack of communication, collaboration, or process to data flows. The next several years will see significant vendor shifts, including consolidation and new directions, and new players emerging while some older ones will be forced to change course. For organizations, this will be a confusing but ultimately rewarding process, as they compare many new and different approaches to the age-old practice of engaging with customers. For more reading, see this Analyst Perspective on the changing buying community for CX, or this Analyst Perspective on CDPs, one of the technologies at the nexus of the new kind of competition across CX vendors. For more information on Customer Experience overall, visit Ventana Research’s CX Expertise Area. Regards, Keith Dawson

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