Analyst summits are not where software providers go to make news, it’s where they seek to clarify and validate what they’ve already done and lay out strategies for the future. October’s NiCE summit in Vienna was an opportunity to take stock of the enormous changes artificial intelligence (AI) has wrought in the service industry and put NiCE’s recent moves into context.
It’s no exaggeration to say that the service industry (especially the CCaaS component) is at a crossroads. AI has descended so rapidly that it has upended decades of conventional wisdom among both software providers and buyers. It’s created a scramble among providers to remain competitive and (if possible) leap ahead into new markets, however uncertain. NiCE used the summit as a forum to explain the logic behind its ongoing evolution from a traditional routing- and WEM-focused company into an AI-centric platform provider focused largely on enterprises.
To that very point, ISG Research believes that by 2028, AI-based customer experience (CX) application suites on a common platform will have superseded traditional, voice-based ACD
NiCE has excelled as a contact center provider. Its core platform, CXone, has been repeatedly recognized as a leader in the ISG Research Contact Centers Buyers Guide. It has all the essential components needed to operate a center at high levels of performance and most of the “nice to have” components as well. But as NiCE has grown, the industry around it evolved to render much of traditional CCaaS tech into a commodity. The quest for growth, then, moved into areas like analytics, customer experience management and, most recently, AI/automation.
And so, NiCE acquired Cognigy earlier this year, which was known for its conversational AI for CX offering. It’s not too early to see that this addition is as essential to NiCE’s trajectory as the purchase of inContact was 10 years ago. Just as inContact transformed NiCE from a niche supplier of WEM into a full-blown CCaaS, Cognigy will likely transform that contact center toolset into one that extends NiCE’s automation expertise into the back and middle offices of the enterprise.
I have been somewhat skeptical of the transition in the industry from generative AI (GenAI) applications to the more amorphous “agentic” offerings. It has been poorly defined, and just as poorly rationalized for buyers who still have trouble getting their heads around things like ROI, operational changes needed, long-term pricing and other key decision inputs. While those cautions and concerns are valid, I’ve come to think that—at least from the contact center point of view—agentic tools represent an opportunity to take what the contact center does well and extend that value to the rest of the enterprise. In other words, when you have an entity (the center) that already operates at massive scale, with efficiency and lots of automation, the first iteration of agentic tools are being built to capitalize on that expertise. Conduct complex transactions in a chat conversation? Process claims faster by moving work product around and automating routine functions? Coach humans in real time based on the detection of customer sentiment? These are all successful use cases for squeezing more efficiency out of already efficient systems. And they move us past the thorny question of whether automation leads to headcount reduction and customer dissatisfaction because when you solve problems properly, with minimal effort, customers respond well.
All of this is to say, NiCE has made a big bet on the ability of AI to create automations that make sense to buyers and that demonstrate use cases that augment (rather than replace) existing processes. And further, on the idea that the contact center will be the execution engine behind enterprise CX.
Cognigy is a way of bringing the essential technology in-house to remove NiCE’s dependence on external partners and its own AI capabilities, including what it has already introduced for conversational and AI agents. It provides NiCE with a fully integrated tech stack that knits communication, data and AI execution into unified products. It also helps that Cognigy will remain viable for connecting into competitive CCaaS products, providing NiCE with alternative revenue and growth pathways derived from this acquisition.
NiCE and the rest of the legacy contact center industry are bumping up against the activities of the hyperscalers, who are already changing the landscape for core CCaaS and many of its derivative tools. For NiCE and its peers, the danger is that contact center functionality becomes just another cloud feature, eroding differentiation and pricing power. To avoid that, NiCE itself has to become embedded within those ecosystems, with capabilities that are derived less from the ability to route interactions and schedule agents and more from deriving insights and building complex automations.
To that end, much of the discussion at the summit focused on how NiCE is pivoting from interaction handling to orchestrating outcomes. I would have dismissed this distinction as optimistic talk just a few years ago, but now it appears that the technology pieces are in place, and the company has the plan and expertise to execute on that pivot. The Cognigy team described in some detail how they are working to knit their firm’s AI fabric into the CXone portfolio.
NiCE also discussed how it has changed its approach to partnerships in light of the changing marketplace. Previous efforts focused on certifying third-party tools for CXone and on bundling and OEM deals rather than shared AI development or data integrations. Earlier this year, NiCE announced partnerships with Snowflake and ServiceNow, indicating an effort to embed its platform more deeply into the operational cores of data providers and workflow platforms. NiCE is positioning itself as an intelligence layer that unifies the pieces of complex interactions across systems and provides a ready-made automation logic that benefits both parties in the partnership. This posture suggests that NiCE understands that success in the CX market won’t come from owning every function but from orchestrating connected intelligence across an expanding ecosystem. (An ecosystem that they may not fully control but will play an essential role in.)
All of this should leave potential buyers optimistic about NiCE’s ability to support customers in transitioning from siloed contact center operations to more expansive enterprise CX projects. They are talking about the right things: how to demonstrate value; how to maximize the use of existing resources alongside advanced new tools; how to position service operations within a larger outcome-based context.
Buyers should view NiCE as a strategic partner for enterprise growth at the same time that it remains a viable traditional solution provider. Any midsize or larger organization should be evaluating how it is going to build an automation backbone for its customer processes; now it is clear that NiCE has the strategy, technology and market viability to remain a leader in the space.
Regards,
Keith Dawson