 Live from Orlando, Florida, it's theCUBE. Covering Enterprise Connect 2019, brought to you by 5ix9ine. Welcome back to Orlando at Enterprise Connect 2019. I'm Lisa Martin with Stu Miniman. It may sound like we're at a party. This is the buzz of the event. This is day one and we have had a great day so far of talking with lots of guests. We're welcoming back to theCUBE an alumni, Jim Lundy. See, applause for you, Jim, CEO of Aragon Research. Welcome back to theCUBE. Great to be here. That was cute, by the way. So I hope we get some credit for that. Yeah, yeah, very cute. So Jim, you have been coming to Enterprise Connect since before it was even branded Enterprise Connect back when it was VoiceCon. Tell us a little bit about your observations about the evolution, not only of the event, but also of all of the collaboration and communication tools that consumers now are expecting and demanding of businesses. So I think my first event was called VoiceCon in 07 and then it was all about phones. There was no software here. There was no video. There was no messaging. There was certainly no AI. And there were a lot of the players were not here. They were not in business then. So if you actually look at some of the bigger players here today, they did not exist in 2007. So when you look at the advent of cloud, that's powered a whole new generation of services and opportunities. And it's great for buyers because there's so much more choice. So I mean, VoiceCon almost died and they rebranded it, but they've had to expand their focus. There's still a lot of voice focused stuff. But as you can see, it's really shifted. We think it's shifting to communications and collaboration. We think Contact Center, particularly cloud is hot. We've got their overall TAM for communication, collaboration, contact center by 2024, about $120 billion, which makes it bigger than enterprise security. Yeah, we just had a great segment with Blair Pleasant and said, you know, Omni-Channel absolutely is where it is, but Voice is still the number one preferred channel. When you talk about Contact Center, there's lots of ways you can get in touch, but when something's wrong, I want to pick up my device and talk to a human eventually. So yeah, cloud and AI and everything else, but there's still people in the center of everything going on here. Well, and I think one of the things for Contact Center, particularly you mentioned is the power of cloud. So when you look at some of the players here, like we're in the five nine booth, they've grown because of their cloud focus and cloud is a lot of what's powering everybody here and buyers want flexibility. So I think that's one of the big things that's changed is there's still a lot of on premise and hybrid cloud, but the power and the demand for, I want to deploy something fast and maybe I'm not even that big of a shop, but cloud gives me that flexibility. So when I look at the market as a whole, there's all those arguments about, it's private cloud, public cloud, hybrid cloud, multi-cloud, but if we think of cloud as an operational model and not a place, I want speed, I want to be able to update to my latest thing, whether that's for security or the cool new feature and if I'm not cloud or cloud-like, then I probably install something and what I do now and what I do a few years from now looks pretty close to what I did when I installed it. No, I mean, does that resonate in this space? Yeah, yeah, and I think, well, I think there's a couple of things also, there's the operational nature of, do I want to be in the server update business? Some people do because of the nature of their business, but a lot of people don't. So then I can focus on the client experience in providing better journeys and I think that's up the game. I think there's an awful lot of competition in this market because really because of cloud, but on-premise or private cloud is not a bad word and like I said, I think the bigger play is to be able to do a combination of things and meet the needs of the customer. And I think the only thing I would say about the show is there's a lot of feature wars at this show and needs to be maybe a little more focused on what the customer needs versus, hey, my box is better than your box. On that front, in terms of focusing on the customer experience, we talk a lot about that. It's a lot of the messaging and branding around the shows you were just pointing out, but something that is always interesting is where does a company balance the customer experience with the agent experience because the customer experience is directly related to the agent being empowered? Well, I mean, you've got to really do both and do both well. If the agent can't do their job, then the customer's not going to have a good experience. So, and I do think that overall, there's been a pretty good focus on the agent because that's where it kind of all started. And if you really look at Contact Center, it's really a heavy duty application. And so you've got to be able to do all those things to service the inbound calls or inbound messages. And you're right, there is a lot of focus on the customer because in some cases, there was so much focus on the agent. Well, like we took the calls, even though a lot of the calls, 10% might have gone to voicemail for some reason. Yeah, well, we serviced it. So, I mean, a little unknown fact is in a lot of enterprises, marketing and the Contact Center group never talk. Interesting opportunity. Yeah, you know, Jim, it's interesting. You talked about in tech, we often get to that feature battle. It's, you know, battle by PowerPoint or by product spec and like, oh, I've got 147 features and they only have 125 features when you look at most customers, they only know how to use three of the features that you've got on there. So what differentiates from a customer standpoint? How do they choose? How do they make sure that they get something that is going to help their overall customer experience and help their products and their marketing? Well, I mean, a couple of things. First of all, you're right, they don't care as much about, I've got this feature, you don't. They want to know, can the provider take care of me if I buy from them? Are they reputable? Do other people? Are they happy with the service? You know, I mean, so we do a lot of vendor evaluations, we call them Aragon Research Globes and we usually spend six months working on understanding where the vendor is this year and we talk to references and things like that. So I think that sometimes, you know, when you, you know, they read a report and they get some insight, they still want to talk to somebody versus just reading a peer review on somebody's consumer website. And really get that insight. And so I think that's one lens. And I think the other lens is that the smarter players are doing those things where they can provide really high touch support. I'd probably say five, nine is pretty good at that because, you know, contact center is really, really complicated. You just don't turn them on sometimes. Like there's things you have to do to make them work. And I think overall in this space, I mean, there's some products you can buy, maybe not contact center where you can spin them up and turn them on, configure phones and go. I've actually deployed some of them. And there's some that would be such a nightmare, like who in the world would ever buy this product? So I think it really varies again. And again, sometimes that doesn't always come out with an online review. And again, sometimes the buyer, still buyer beware in a lot of cases. Some of the things you read online are not true. One of the things we were chatting with a number of the five nine execs about today is they have a five billion recorded customer conversations. Tremendous potential there to really glean actionable insights about retaining that customer, increasing their COV. But there's also the concern of data privacy and security and sharing. When you're talking with customers that might have this massive pool of data from which they can really expand their business and become competitive, where is the security and the privacy concerns there? It's a good question. I mean, you know, there's a lot of focus on GDPR in Europe. There's a lot of focus in California on that, even though that's not been talked about in California. And the rest of the US is kind of behind a little bit what Europe has done. But here's the thing. I mean, they've got ways to mass sensitive data in a recording like credit card data. That's pretty standard stuff. The big thing is data residency. I want my data in a certain country. Canadians do not want their data resident in the United States. Europeans don't either. Germans don't want their data resident in Belgium. So there's a big sensitivity in Europe about that. And even in fact, Microsoft's even gotten in trouble in Germany over that last year because they eliminated a relationship with Deutsche Telekom. And so sometimes you can kind of go overboard on that. But however, what I would say though is some of the big cloud companies have done this, brought this problem onto themselves where they have not respected data privacy. There's even a bill now on facial recognition because of some of the things they've gone on like IBM disclosed that they're doing something. So it is still an issue. It's always going to be an issue. I do think that there needs to be more productivity. Here's the question, who owns your data? Who owns your face or my face? I don't think that because I upload a photo that I should give my rights away. So I think we're going to catch up on that. I do think for the B2B though, a lot of these companies, first of all, they are certified, they have cloud certifications, they have to do certain things relative to privacy. And so they have to pass a lot of tests that are certified by an auditor. So I think there's a lot of things that most of the B2B buyers are not going to have to worry about with a lot of the people here. It's more about the personal side of things, personal cloud like Facebook, but usually not the kind of stuff you're dealing with here. So Jim, when I look at the overall contact center market, the cloud portion of that is still relatively small. If I saw right somewhere 10, 15%, but it's been growing at a steady clip. Where are we in their adoption? Is there a plateau that it will hit that? Is it take a third of a market, half the market? What do you see happening? I would say that, we're on a journey and you're right, there is still a small part which means a large addressable market, not that much different than unified communications where it's mainly on-premise going cloud. But we've got contact center going at about 24 billion and we think a lot of that will be eventually converted to a cloud except for maybe the ultra-large call centers. And I think just like email migration 10 years, I've covered that, 10 years ago, it was all on-premise. Today it's the opposite, it's like 90, 10. So I think that eventually is going to start to happen. It's interesting, I mean a lot of that was Microsoft really turned the lever. It's, you know, Microsoft on email and Microsoft is like, we're going SaaS. You are going SaaS. If you use Office, you are going Office 365. So I'm curious, is there a lever like that in from a licensing standpoint or from a vendor standpoint that would push contact center? Well, if you look at the contact center market, you've got it, I think it was growth rates around 9% overall but then you've got people like 5.9 are growing 31%. All right, so I think when you start looking at that, why is a cloud company growing that much when the overall market, well, because there's demand. So they want the flexibility of cloud. They don't want to run the servers and upgrade the servers. And I think that they've learned lessons from that and you're right, Microsoft did do that but Google forced them to do that. So I think that is fast growing companies like 5.9 forcing some of the bigger players to go more cloud. And I can say absolutely yes, that a lot of the bigger players are looking over their shoulders saying, again, they bought cloud contact center players so they can keep up with some of the young startups and 5.9 is not young, but they would still be considered young in the relative terms of this event. So- So I'm curious, Jim, when you were talking with vendors and the Aragon research that you do, companies of different sizes, whether they're born in the cloud or they're legacy companies, where does cultural transformation come into this conversation about evolving a contact center such that an agent is empowered with the right content to deliver it through the right channel to make a decision that really positively impacts the customer. I can imagine multiple generations, multiple countries. Cultural transformation is hard. Yeah, it is a big issue. I think there's more awareness on both the culture of the agent and the culture of the buyer. And I think there's more stuff going on relative to sentiment analysis. So I do think that that's a bigger issue. I think there's more time being spent on training. The better digital companies are investing tons of money in training. And so I think there's more awareness relative to cultural differences, cultural nuances and being more sensitive to maybe things that they would say, sorry, can't help you with that. Where they would, since they've been trained to be maybe more sensitive, they're going to be more understanding when they're actually on a call. So Jim, in your research, where's the white space? Where's the real opportunity for growth and transformation? We've had some discussions here. It's early days in AI, is it AI or is it not the technology? Is it the cultural changes that Lisa brings up? Where are some of the impediments in room for growth of the industry? So we do think that the enterprise will become more intelligent and that the providers were going to lead that charge where instead of, you say the AI, we call it intelligent contact center. And we think that there's going to be more of a demand for automation and that there will be more assistance that might take care of a customer's problem before it ever gets to a human. So I do think that we're not going to, that's going to be something that's never going to go away. It's just that they're going to get smarter and more supportive. We have helped clients deploy chatbots for help desk internally, for customer-facing help desk. I think it's still early here that people have them, but they're more rules-based than AI-based. AI is coming in the next two years, but there's no doubt that is going to be one of the drivers. And by the way, sometimes people are like, is this the problem we were having? Is this the question you have? Yes, here's this answer. And it's the right answer to the correct answer. That's what people really want. They want the instant gratification. We all kind of grew up. We're used to that with our phone. I need the answer. And I do think that I would probably say that the demand for cloud is going to outstrip everything. And so if somebody that's a non-premise provider doesn't have a cloud option, then I would be worried about that. But I do think AI is not going to go away. We don't think it's going to be an AI or nothing. It's going to be basically intelligent digital systems that can answer questions in telegy and have a conversation with you. There's some tools that do that today, but most of them are very basic question and answer. They're not high-end. It can't be like Jarvis on Iron Man, where yes, yes, Mr. Spark, I will do that for you. They're not quite there yet, but the movies, you know, glamified that whole thing. So people expect, well, why doesn't it talk back to me? Any last question, Jim, are there any industries that you see as going to be early adopters to start creating and actually deploying the Intelligent Contact Center? Well, you know, let's put it this way, the every client we've talked to and in survey work, it said we wish we had more intelligence in our contact center. I think they're a little scared that they want to make sure they do it right. But if you do it and deploy it and test it, you'd be amazed it's for some of the basic Q&A, how rockstar stuff that is, but sometimes people rush too quickly and deploy it when it's not quite ready. And I think a lot of the providers here, including 5.9, are going to try to do AI the right way and not kind of try to rush it. But I would also say this, there's an awful lot of fun here about AI and most of it's not true. All right, Lisa, final, final question for Jim here. This is John Furrier's not here to ask it. 5.9 has gone through a lot of changes here, brought in some pretty high profile executives. Any commentary on our hosts here? Well, look, I know new Rowan and Jonathan Rosenberg at Cisco, they had a rockstar team there. They've even, since they've joined here, brought more talent in. And so, I mean, the 5.9 people I knew have been blown away by the level of talent that has come in. And I think that's just going to help them continue to grow. The question is, when do they declare how big they're going to be? And that's what we're looking for them to do. To be continued. Jim, thanks so much for joining Stu and me on theCUBE this afternoon. Thank you very much. For Stu Miniman, I'm Lisa Martin. You're watching theCUBE.