Five9, a leading cloud-based contact center solutions provider is acquiring Inference Solutions, a fifteen-year-old company whose cloud-based offerings provide businesses of all sizes with a platform for creating Intelligent Virtual Agents (IVAs) quickly and relatively affordably. The purchase price is $172 million, starting with $148 million in cash and an additional $24 million when certain targets are met. Inference claims to be “the most widely deployed Intelligent Virtual Agent (IVA) platform” in the world with “6,000+ IVAs sold” to 550+ customers.

Inference Solutions spun out of Telstra Labs in 2005 and built its formidable installed base through resale arrangements and partnerships with telcos and communications service providers. In addition to Telstra, its list of resellers includes Evolve IT, Broadsoft (now part of Cisco) and AT&T. It also has agreements with some of Five9’s direct CCaaS competitors 8×8 and Vonage. Its not-so-secret sauce is simple packaging and attractive pricing, which starts with a monthly fee of $400 per virtual agent.

The two companies are well-acquainted with one another. Five9 began reselling Inference Solutions’ IVA roughly two years ago and have found their cloud-based, API-driven approach to be highly compatible. During that time, they grew a joint customer base that includes Chick-fil-A (QSR), Health Care Advantage (a Medicare patient acquisition specialist), IQVIA (A health sciences service provider), and Windham Hotels, among others. Each turned to Five9 for tools from Inference to support speedy “no code” or “low code” development of IVAs. In this on-demand Webcast (produced in August 2020) I was joined by Inference’s CEO Callan Schebella and Five9’s EVP of Product Management Anand Chandrasekaran. They described how their joint approach overcame the major barriers to adoption of IVAs, namely high-costs, reliance on professional services and protracted time to deploy.

Fulfilling on the Promise of “Practical AI”

For Five9, the acquisition represents the realization of the “Practical AI” strategy spelled out by CTO Jonathan Rosenberg when he took on the role of CTO in January 2019 (I discussed it here). Openness is a core tenet of the company’s approach. While acquisition of a core partner appears antithetical to the spirit of an open approach, Schebella was quick to point out that Inference’s development tools allow enterprise customers to start with resources that automate frequently invoked activities, such as appointment setting, package tracking, payments, and others, while enabling them to integrate popular natural language understanding and machine learning APIs from Google, Amazon, Microsoft or others.

The impact of the purchase is a significant increase in Five9’s total accessible market (TAM). Consensus assessment of  Contact Center as a Service (CCaaS) spending is in the $25 billion range. Yet management believes such a modest assessment overlooks the $210 billion that companies around the world are spending in labor costs for contact center agents. This implies that they are looking at business cases that replace live agents and their attendant costs with automated virtual agents. Yet the use cases that are mentioned fulfill on the idea of replacing agents for frequently invoked but ultimately boring tasks while, at the same time providing prompts or screen pops to make their live agents more productive and consistent in the assistance they provide customers.

The Inference Solutions brand will live on and the company will continue to support existing clients who are not deploying on Five9’s cloud. We also expect to see deeper integrations of Inference Solutions tools with those brought into the Five9 cloud with the acquisition of Whendu. The focus of all this acquisition activity is to make it simple for the so-called citizen developers and departmental employees to bring IVAs and Conversational AI into their mainstream activities.

Categories: Conversational Intelligence, Intelligent Assistants, Articles