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2020 was a thrilling year for the contact center solutions industry, and it seems that 2021 will be no different. The industry was rocked by the news announced a few days ago that Enghouse Systems has acquired Altitude Software.  The deal marks the first major acquisition of 2021 in the contact center solutions industry and could be a sign of more consolidation to come, driven by other global vendors.

A favorable scenario for new mergers and acquisitions (M&A) 

After many years of focusing on achieving cost efficiency, businesses turned their strategic attention to improving the CX and enabling the workforce. Contact center solution vendors have mostly enjoyed favorable market trends in the last years; cloud migration is gaining momentum, and growth rates are high. Yet, vendors are also challenged by a difficult business environment.

As highlighted in Frost & Sullivan’s Contact Center as a Service (CCaaS) Solutions Energize the European Customer Experience Space 2020 report, the market is extremely fragmented and not a single CCaaS vendor achieves double-digit market share. There is considerable overlap between solutions in terms of functionality, and providers must continuously adapt to new compliance and competitive pressures that result from increasing globalization and fickle customer expectations. Consequently, vendors must constantly innovate business strategies and product portfolios.

M&A can allow more established vendors to consolidate their market positions, increase revenues, and enhance their ability to help organizations innovate and grow.

The acquisition boosts Enghouse’s bid to be a leading, global CX player

This acquisition is a clear sign that traditional on-premise providers are reacting to the rise of the cloud and the emergence of new innovative, global competitors. Enghouse and Altitude have been competent players in the market for many years, and most of their revenue still comes from on-premises deployments. Altitude is slowly making the transition from a regional on-premises solution vendor to a global vendor of a cloud-based CX platform. Enghouse System’s global presence and strong financial backing will provide the support Altitude needs to complete that transition and accelerate growth.

Strategic Win-win for both Companies

While few details have been released and it is not clear whether Altitude will be fully merged into Enghouse, there is no doubt that the partnership will be a strategic win-win 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 with M&A processes. This know-how will almost certainly speed up the integration of Altitude’s assets including its human resources and quickly develop synergies. Since 2010, Enghouse has made over 21 major acquisitions. In 2019 alone, it acquired ProOpti (technology expense management software), Espial (video services), Vydio (video conferencing solution), and Eptica (customer engagement software).
  • The Enghouse marketing strategy in the contact center field is slightly outdated, and it needs to innovate in terms of platform branding. The Altitude acquisition might strengthen the Enghouse image, as Altitude’s marketing capabilities have improved tremendously in the last years. Altitude has become a much more professional organization, better at articulating the story of how its offerings lead to positive customer outcomes. It is, in fact, one of the best vendors in Europe to publish use cases for its products and it is highly regarded by the customer organizations and competitors in its core markets.
  • Enghouse offers almost unmatched scalability, supported by long-time experience and a large partner ecosystem, which includes relevant telecom operators. These scalability capabilities will greatly benefit existing Altitude customers, particularly, large BPOs.
  • In our opinion, this acquisition will strengthen Enghouse’s position as one of the leading global CX players.
  • The partnership will almost certainly create new revenue streams and opportunities for Enghouse and its channel ecosystem, as Altitude fills some gaps in its client base. Altitude Software is one of the most experienced vendors in dealing with BPOs and debt collectors in the European market.
  • This acquisition will enable Enghouse to expand its market share in regions with low presence such as the Iberian Peninsula or Latin America (especially Brazil and Mexico). Altitude’s connection with Southern European and Latin American industries and its understanding of market specificities can help Enghouse drive the demand in these regions and capture additional opportunities.
  • We have no doubt; this tie-up will enable Enghouse to gain new capabilities for its contact center solutions and expand its product portfolio. Altitude recently developed a new CCaaS product (i.e., Altitude Xperience in a Box) and an advanced CRM module that is embedded into its CCaaS platforms. The CRM includes powerful visual scripting and customizable dashboards and reports, providing superior CX integrated tools to users.

The Last Word

With Altitude, Enghouse has managed to snap up an extremely competent, experienced European vendor whose strengths are highly complementary to Enghouses’s own. Enghouse becomes more relevant to European organizations and strengthens its market position and share. If the integration of the two companies is executed successfully, it should propel Enghouse into the European CCaaS top-3.

At Frost & Sullivan, we expect other global vendors to follow a similar approach during 2021, and given the particular dynamism of the European CCaaS market, many European innovative vendors are likely to become M&A targets. The potential portfolio synergies are extraordinary.

About Alexander Michael

Alexander MichaelBased in London, Alexander Michael heads up Frost & Sullivan’s Digital Transformation consulting business in Europe. He has been with Frost & Sullivan for 11 years and holds a Master’s Degree in European Management from ESCP-EAP in Paris. Alex has 25 years of industry and corporate strategy consulting experience, specialising in strategic partnering, business transformation and value proposition development. In recent years, Alex has focussed on helping clients optimise their customer experience using game-changing technology. He currently spearheads Frost & Sullivan’s research initiative into practical use cases for (and how to make money with) artificial intelligence.

Alexander MichaelAlexander Michael

Based in London, Alexander Michael heads up Frost & Sullivan’s Digital Transformation consulting business in Europe. He has been with Frost & Sullivan for 11 years and holds a Master’s Degree in European Management from ESCP-EAP in Paris. Alex has 25 years of industry and corporate strategy consulting experience, specialising in strategic partnering, business transformation and value proposition development. In recent years, Alex has focussed on helping clients optimise their customer experience using game-changing technology. He currently spearheads Frost & Sullivan’s research initiative into practical use cases for (and how to make money with) artificial intelligence.

Federico TevelesFederico Teveles

Federico Teveles is an ICT and customer experience analyst for Frost & Sullivan, with over 7 years of experience in project management, market research, and strategic planning in the IT and communications technology industries. Federico specializes in monitoring emerging trends, technologies, and market dynamics, and his expertise spans both the private and public sectors.

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