2020 has been an exciting year for the contact center solutions industry and it looks like 2021 will be no different. The industry was shaken by the news announced a few days ago that Enghouse Systems acquired Altitude Software. The deal marks the first major acquisition of 2021 in the contact center solutions industry and could be a sign of further consolidation to come, driven by other global suppliers.
A favorable scenario for new mergers and acquisitions (M&A)
After many years of focusing on achieving cost efficiency, companies have turned their strategic attention to improving CX and empowering the workforce. Contact center solution providers have mainly taken advantage of favorable market trends in recent years; cloud migration is gaining momentum and growth rates are high. However, suppliers are also challenged by a difficult business environment.
As highlighted in Frost & Sullivan’s Contact Center Solutions as a Service (CCaaS) report, Energize the European Customer Experience Space 2020, the market is extremely fragmented and not a single CCaaS provider reaches a double-digit market share. There is considerable overlap between solutions in terms of functionality and providers must continually adapt to new compliance requirements and competitive pressures that result from increasing globalization and unstable customer expectations. Consequently, suppliers must constantly innovate business strategies and product portfolios.
Mergers and acquisitions can allow more established suppliers to consolidate their market positions, increase revenues and enhance their ability to help organizations innovate and grow.
The acquisition increases Enghouse’s offer to be a leading global CX player
This acquisition is a clear sign that traditional local providers are responding to the emergence of the cloud and the emergence of new global and innovative competitors. Enghouse and Altitude have been competent competitors in the market for many years, and most of their revenue still comes from local deployments. Altitude is slowly transitioning from a regional provider of local solutions to a global provider of a cloud-based CX platform. Enghouse System’s global presence and strong financial support will provide the support Altitude needs to complete this transition and accelerate growth.
Strategic Winning / Winning for Both Companies
Although few details have been released and it is not clear whether Altitude will be fully incorporated into Enghouse, there is no doubt that the partnership will be a strategic advantage for Enghouse and Altitude:
- Altitude offers high quality training, certification and value-added services. We believe that Enghouse can improve and reinforce its customer services based on Altitude’s experience and best practices.
- Enghouse is highly experienced in M&A processes. This know-how will almost certainly accelerate the integration of Altitude’s assets, including its human resources, and develop synergies quickly. Since 2010, Enghouse has made more than 21 major acquisitions. Only in 2019, it acquired ProOpti (technology expense management software), Espial (video services), Vydio (video conferencing solution) and Eptica (customer engagement software).
- Enghouse’s marketing strategy in the contact center field is somewhat outdated and needs to innovate in terms of platform branding. The acquisition of Altitude may strengthen Enghouse’s image, as Altitude’s marketing resources have improved enormously in recent years. Altitude has become a much more professional organization, better at articulating the story of how its offerings lead to positive results for the customer. It is, in fact, one of the best suppliers in Europe to publish use cases for its products and is highly regarded by client organizations and competitors in its main markets.
- Enghouse offers almost unmatched scalability, backed by long-standing experience and a large ecosystem of partners, including relevant telecom operators. These scalability features will benefit Altitude’s current customers enormously, especially large BPOs.
- In our opinion, this acquisition will strengthen Enghouse’s position as one of the main global CX players.
- The partnership will certainly create new revenue streams and opportunities for Enghouse and its channel ecosystem, as Altitude fills some gaps in its customer base. Altitude Software is one of the most experienced providers in dealing with BPOs and debt collectors in the European market.
- This acquisition will enable Enghouse to expand its market share in regions with a low presence such as the Iberian Peninsula or Latin America (especially Brazil and Mexico). Altitude’s connection with industries in southern Europe and Latin America and its understanding of the specifics of the market can help Enghouse boost demand in these regions and capture additional opportunities.
- We have no doubts; this partnership will enable Enghouse to obtain new resources for its contact center solutions and expand its product portfolio. Altitude recently developed a new CCaaS product (ie Altitude Xperience in a Box) and an advanced CRM module that is built into its CCaaS platforms. CRM includes powerful visual scripts and customizable dashboards and reports, providing superior integrated CX tools to users.
The last word
With Altitude, Enghouse was able to bite into an extremely competent and experienced European supplier, whose qualities are highly complementary to those of Enghouse. Enghouse becomes more relevant to European organizations and strengthens its market position and participation. If the integration of the two companies is carried out successfully, it should propel Enghouse to the European top-3 of CCaaS.
At Frost & Sullivan, we expect other global suppliers to follow a similar approach during 2021 and, given the particular dynamism of the European CCaaS market, many innovative European suppliers are likely to become targets for mergers and acquisitions. The potential synergies in the portfolio are extraordinary.