Investment in On-Premises Contact Center Systems Continues to Evaporate

In a follow-up to a November 2022 post, the past year has continued to see a decline in revenues and investment in on-premises contact center solutions. According to recent research by UK-based MZA, in 2019, 83% of the global installed base of contact center agents were on-premises, by 2027 they estimate just 43% will remain. Dwindling fortunes directly equate to dwindling research and development budgets by those vendors clinging to on-premises systems.

In May 2022, Genesys announced the end-of-life for the PureConnect premises and hosted offerings acquired from Interactive Intelligence in 2016. Then five months later, Genesys announced the discontinuation of the then two-year-old Multicloud CX platform, originally known as Genesys Engage Cloud which launched in 2013. Many Genesys users in highly complex installations face a time crunch as those systems go offline in mid-2025. Meanwhile, the bulk of their premises customers are on Genesys Engage which the company said they had already ceased development on – but have not announced end-of-sale/support dates for … yet. January 2024’s intent to acquire Radarr is further evidence that Genesys’ future is as a cloud-only company. In concert with these announcements, throughout 2022 and 2023 the company has shed hundreds of staff leaving reported skill gaps felt by customers. 

I cannot speculate as to the private equity and financial pressures, seemingly in the wake of a delayed IPO, which led to Genesys’ decisions. However, over the past year, Five9 has felt the reverberations of these decisions with unprecedented levels of Genesys customers seeking alternatives. 

The past year has similarly not been kind to former market leader Avaya’s customers. Financial improprieties, an abrupt CEO change, a second bankruptcy, and continual layoffs must leave users unsettled. For those wanting to move to the multitenant cloud firms like Five9 offers, there remains little choice at Avaya. In December 2022 SEC filings, Avaya said they didn’t expect measurable cloud contact center revenues before fiscal year 2025. Currently, Avaya’s main offer is multi-instance cloud, a technology that MZA reported would decline from 2% of the market in 2019 to 1% by 2027.  Avaya’s “innovation without disruption” tagline seems to encourage its customers to move as slowly towards the cloud as they are.

Cisco, the other major premises leader, has been slow to move into the cloud throughout its operation except for Webex Meetings (hammered by Zoom during Covid). Within the contact center, a series of acquisitions that went nowhere and unending management changes are settling into a second iteration of Webex Contact Center, underpinned by IMI Mobile, acquired in 2021. But even this option is only viable for their base of small-to-mid-sized users while Cisco’s Contact Center Enterprise users endure pricing and packaging changes. Even Cisco events and announcements have become throwbacks to the days of “Look at our new phone.”

What about the rest of the premises contact center old guard? Mitel bought Unify and Alcatel-Lucent Enterprise now resells Avaya’s “cloud” contact center. It is a rerun of Concerto buying Rockwell and later Aspect and becoming Alvaria in the waning days of the stand-alone ACD. 

The pandemic supercharged the growth of cloud contact centers, but hot on its heels has been the embrace of artificial intelligence (AI). The premises vendors’ reaction has been mostly to form partnerships to cobble together offers for their customers – giving them a taste of the cloud without the option of going all-in. But because AI is purely cloud-based, the cloud contact center vendors are expanding their portfolios by developing their own, fully integrated solutions.

And just as the premises vendors’ staffing recedes, it increases for cloud contact center vendors. The skill gaps experienced on-premises can often be found in the cloud. If you’ve lost key people from your account or professional services teams, look them up on LinkedIn. In many cases, they’re still helping contact center users but from the cloud. It reminds me of a customer many years ago who looked at me point-blank and said, “Why should I trust you?” I responded that ultimately, I was betting my career and livelihood on what I was selling. I got the deal.

Five9 is full of contact center professionals who bet their livelihoods on the transition to cloud applications.  We have been a leader for over 20 years and attract the best talent in the market. When we migrate a contact center to Five9, our implementation and services organization maintains an NPS score over 90. And while our thousands of implementations ensure that we’ve seen it all, every customer is unique. 

Five9’s Liftoff program offers a set of tailored services based on the existing contact center to smooth a migration – whether you’re using Avaya, Cisco, Genesys, or any other premises or cloud solution (yes, cloud-to-cloud migrations are happening more than you might realize). 

Finally, if a contact center move is triggering a corresponding unified communications shift, Five9 has connectors into the leading cloud UCaaS solutions from Microsoft, RingCentral, Zoom, and others. But if the need is to simply connect to an existing premises system, we can do that too.

We get it, change is annoying. But remember, when you bought the solution you have now, it was the best choice at the time. But is that vendor still able to fix today’s business issues while also creating the trust they’ll keep clearing future obstacles? Over 3,000 contact center professionals bet their careers every day that Five9 will.