Barak Eilam, CEO of NICE, has shrugged off Microsoft’s entrance into the CCaaS space.
The CEO did so during an earnings call on Friday, where NICE reported another successful quarter of double-digit revenue growth.
During the call, a financial analyst questioned Eilam on whether NICE is already battling for deals against Microsoft on CCaaS shortlists.
The answer was a resounding “no”, with Eilam seemingly unimpressed with the tech giant’s entrance into the already crowded CCaaS market last month.
“With respect to Microsoft, I know it got a lot of headlines, [but] I must say, we see zero activity in the field,” he said.
We don’t see their go-to-market effective [and] they do not have the domain expertise to speak about CX.
“I think a great example is they have a CRM offering Dynamics with barely five percent or less than that market share.
“So if they were not successful with Dynamics, I’m not sure that they can be successful with what we do, which is way more complicated and requires way more domain expertise.”
While some may nod their heads at this, there are three critical points to consider.
First, while Dynamics does only account for 5.9 percent of the CRM market – as per a 2023 IDC study – that still makes Microsoft the second largest vendor in the space.
Indeed, while Salesforce has a much larger presence, Microsoft still has a greater market share than the likes of Adobe, SAP, and Oracle.
So, perhaps it’s unfair to say that Microsoft has been unsuccessful, given the diverse nature of the CRM market, which includes some of the biggest names in enterprise tech.
Moreover, Microsoft does have many in-house contact center experts, thanks to its 2022 roll-up of Nuance, which was a massive $19.7BN acquisition.
As such, in-house CCaaS domain expertise is unlikely a problem, although building out comprehensive global CCaaS support services will take time.
Additionally, the assessment of Microsoft’s go-to-market as “ineffective” is debatable.
After all, the overarching objective for Microsoft is to deliver a CCaaS platform that layers over a CRM to augment it with specialist capabilities.
Since 55 percent of IT and CX leaders think CRM will replace contact center platforms by the close of 2027, this vision of the supplementary CCaaS solution that strengthens any third-party CRM seems smart – especially with a voice component.
After all, 99 percent of those CRM vendors aren’t going to build and maintain their own global voice networks. It’s just not cost-effective.
Where Eilam’s concerns do seem more reasonable, however, is in his assessment of the “complicated” nature of contact centers.
In the contact center space, a “throw it at the wall” solution – which customers may view as a veiled attempt to lure more companies onto its Azure Cloud – just won’t cut the mustard.
Unfortunately, some have accused Microsoft of building such solutions before. For instance, Zeus Kerravala, Founder and Principal Analyst at ZK Research, told CX Today last year:
If you look at Microsoft’s strategy overall, it tends to build apps that are good enough in nature, and then they do a license bundle… I don’t believe the strategy will fly in the contact center, as it’s the lifeblood of most organizations.
Moreover, Eilam can speak from a position of authority on the competitors popping up on enterprise CCaaS shortlists. After all, NICE will be on most.
So, while Microsoft announced some early wins during its latest earnings call – including 1-800-Flowers, Mediterranean Shipping, and Synoptek – it’ll be fascinating to see if Microsoft can land some bigger fish moving forward.
To do so, showcasing its vision and building confidence in its ability to execute will be crucial.
As for NICE, any threats to its position at the forefront of the CCaaS market are long-term, not short-term. Let’s just hope that this assessment of Microsoft’s “ineffective” go-to-market won’t come back to bite them, much like Slack’s infamous “Dear Microsoft” letter in 2016.
