Cloud communications provider RingCentral Inc. announced today announced it’s acquiring CommunityWFM, a workforce management provider.

CommunityWFM will be integrated into RingCentral’s homegrown contact center solution, RingCX. No purchase price was given and CommunityWFM took in no funding, but its revenue is believed to be somewhere in the $5 million to $10 million range. WFM provider Verint Systems Inc. was acquired late last month by Thoma Bravo for a little over two times revenue. Applying the same multiple, I would expect this acquisition to be under $20 million.

The motivation behind this is for RingCentral to have its own WFM solution. For those not familiar with the category, WFM is a critical component of contact operations and includes functions to, as the name suggests, manage the workforce. This includes forecasting interactions, scheduling, agent tracking, time off management and more.

Historically, contact center providers offered core communications capabilities, such as calling, messaging and email, and partnered with WFM providers. In 2016, WFM provider NiCE Ltd. showed tremendous vision when it acquired inContact to be the first provider to offer a fully integrated WFM-contact center offering.

Since then, other providers, such as Amazon.com Inc. and Zoom Communications Inc. have followed this trend by building their own WFM. One could make the argument that a decade ago, having a unified solution was a “nice to have,” but in the artificial intelligence era, where data drives the quality of AI, it will be critical to have an all-in-one offering.

I asked Juanita Coley from Solid Rock Consulting, whom I consider the industry’s most foremost authority on WFM, for her reaction. “I’m not surprised by this move as the industry is starting to understand how important the management of the workforce is,” she told me. “The problem with the CX space is that vendors have been trying to separate work from the actual customer experience but they’re two sides of the same coin.”

She added that “if you look out in the future, most interactions will be partially handled by an AI and by a human and businesses need to understand how to plan for that. People say AI will automate work, and it will, but organizations need to know how to orchestrate that with people, and that’s what WFM does.”

RingCentral came to market as a unified-communications-as-a-service provider and has maintained a leadership position in Gartner’s Magic Quadrant for over a decade, but growing RingCX has been a top priority for the company. On a prebriefing, Jim Dvorkin, senior vice president of CX products at RingCentral, talked about RingCX momentum: “As of the end of Q2 we have over 1,200 RingCX customers. Looking at our million-dollar-plus total contract value deals, RingCX is attached to over 50% of them.” Adding CommunityWFM will certainly help with this.

There are several interesting implications of this deal:

Impact to existing CommunityWFM partners

Like most WFM providers, CommunityWFM works with many contact-center-as-a-service providers, including many RingCentral competitors such as Five9 Inc. and Talkdesk Inc. On the analyst call, RingCentral was proactive in addressing this and said CommunityWFM will continue to provide a standalone solution and that support for partners will remain unchanged.

Not all providers would take this approach, but it’s my belief that if you do what’s in the best interest of the customer, that’s generally the right thing. And enabling CommunityWFM to continue to work with other companies, even competitors, is the best thing for customers. Over time, I expect RingCentral will create a “1+1=3” value proposition with CommunityWFM, but there will be no impact to existing partners.

Implications for other RingCentral partners

In the area of contact center, RingCentral has a long list of partners. The company partners with NiCE for advanced and large contact center use cases. It also has partnerships with WFM providers, Verint and Calabrio Inc., which was acquired by Thoma Bravo in 2021. On the call, the company discussed this and said it will continue these partnerships. With NiCE, which is sold under the brand, RingCentral Contact Center, understanding the differences is straightforward. NiCE is sold into large enterprises or where customers have a complex environment. RingCX is for small to midmarket customers with more basic use cases.

Verint and Calabrio both have a broader set of features, so if a customer wants RingCX with an enterprise-grade WEM offering, it should use them. If the customer requires and integrated offering without the large number of bells and whistles, CommunityWFM would fit the bill. Again, over time, I would expect RingCentral’s integration to create some unique capabilities lessening the reliance of Verint and Calabrio.

Also, this provides and excellent hedge against Thoma Bravo’s recent takeover of Verint and planned integration with Calabrio. Though Thoma Bravo has an excellent track record, PE firms are motivated by profitability, and there’s more than a puncher’s chance that innovation at Verint slows down. By owning CommunityWFM, RingCentral can better control its own destiny.

The complex mesh of offerings and partners will require RingCentral to be crystal-clear that its sales force and reseller community understand how to position which offering. The company has done a good job of this historically, but it can’t take this for granted.

Will RingCentral continue to make acquisitions in markets adjacent to CCaaS?

As mentioned before, growing RingCX is a top priority for the company and its normally a lead talking point on investor calls. Though CommunityWFM adds to RingCX, it certainly isn’t as broad as a company such as Verint. It offers all the core WFM capabilities such as forecasting and scheduling intraday but does offer many of the workforce engagement management or WEM adjacencies such as quality monitoring, performance management and speech analytics.

Obviously, RingCentral could not address this on the call, but it’s my expectation this is an area we should expect to see the company and its competitors focus on. There’s a handful of WEM pure plays such as Centrical that come to mind.

Final thoughts

This is an excellent acquisition for RingCentral because it gives it more data with which to apply its AI to and enables it to offer customers a more complete customer experience solution. In the area of customer experience, the contact center industry has way too many silos, and silos of data invariably lead to fragmented insights, since the AI engines do not have an end-to-end view of the customer journey. Though this acquisition doesn’t completely do that for RingCentral, it certainly moves the ball forward.

I asked Joe Rittenhouse, chief executive of Converged Technology Professionals, one of RingCentral’s largest resellers, about this deal and he was extremely bullish. “This acquisition adds strength to the RingCX platform, creating a unified solution that unlocks critical data and paves the way for future AI ambitions,” he said. “It also now levels up offerings available to the middle market CC giving RingCentral a significant competitive advantage.”

It’s a strong move for RingCentral but I’m sure not its last.

Zeus Kerravala is a principal analyst at ZK Research, a division of Kerravala Consulting. He wrote this article for SiliconANGLE.

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