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What Will Genesys Roll Up Into Its Business Next?

Posted on Monday, Feb 26th 2018

According to a report published last year, the global CRM applications market was worth $24.3 billion in 2016. The market has been dominated by Salesforce.com, which accounts for 26% market share, followed by Oracle, SAP, Adobe, and Genesys. Analysts estimate the industry to grow 2% annually over the next few years to $26.6 billion by the year 2021. 

Genesys’ History

Genesys is one of the older vendors in the space that has had quite a ride so far. The company was founded in 1990 by Alec Miloslavsky and Greg Shenkman to cater to the call center era that was emerging in those days. By 1997, Genesys had established itself as a leading provider of enterprise-wide platform and applications software that helped organizations integrate critical business information and computing resources with telephony and other media. Its communications tools allowed organizations to manage customer interactions and employee communications to increase productivity, lower costs, and achieve greater customer satisfaction. It was offering a suite of open, scaleable, enterprise-wide platform and applications software solutions that could allow organizations to manage communication through features such as intelligent call routing, outbound/blended dialing and campaign management, real-time and historical management reporting, and Web-based telephony fulfillment.

In 1997, Genesys also filed to go public by raising $45 million. Since being founded, Genesys has grown significantly through acquisitions. Post the listing, it continued down that path. It added companies like Adante – an e-mail management software company and Next Age Technologies – a workforce management software provider to its repertoire. It continued to grow as an enterprise-focused organization. Two years later though, Genesys agreed to be sold to Alcatel-Lucent for $1.5 billion.

It stayed under Alcatel’s umbrella for the next thirteen years. During this period too, its acquisition spree did not slow down — it now focused on telephony. It bought computer telephony integration assets from IBM’s CallPath and Interactive Voice Response (IVR) capabilities from Telera, VoiceGenie, and GMK, to name a few.

In 2012, European private equity firm Permira announced plans to acquire Genesys’s contact center technology software business from Alcatel-Lucent for $1.5 billion. Alcatel held onto the Enterprise segment of Genesys’s business. This segment catered to the telecom services needed by corporate customers. Its contact center products and solutions were now being held by Permira.

Since the acquisition, Genesys has continued to acquire and develop its customer service product portfolio through enhancements focused on cloud software, data analytics systems, and language processing.

Genesys’ Financials

Since Genesys is privately held, it does not disclose its detailed financials. At the time of the sale from Alcatel-Lucent, the company was highly profitable and was generating annual revenues of $565 million. Its revenues were pegged at $900 million in 2016, with cloud services accounting for 20% of that number. In July 2016, Genesys added Hellman & Friedman as a minority investor. The private equity firm invested $900 million in Genesys at a valuation of $3.8 billion.

Genesys has continued its acquisition spree post the funding as well. Soon after the minority investment, it announced the $1.4 billion acquisition of Interactive Intelligence, a global leader of cloud and on-premise solutions for customer engagement, communications, and collaboration. The integration has helped Genesys enhance its ability to execute call center solutions in the cloud.

Questions for Genesys’s Board

Genesys is making a reasonably successful transition from a traditional communications platform to one that is focused on the cloud. In the coming years, the industry is expected to continue to transform to include additional services such as chat bots, personal assistants, and machine learning in its quest to meeting consumer expectations. Like every where else, the CRM sector is also witnessing unprecedented opportunity within SaaS.  Genesys has done well so far to enhance its SaaS services. I would like to know what other SaaS focused acquisitions does Genesys have on its radar to expand its expansion in these upcoming technology dimensions?

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