A Look at What’s Driving Zoom’s $14.7B Acquisition of Five9?


Zoom’s $14.7 billion acquisition of contact center software provider Five9 in July closes the gap between unified enterprise cloud communications and cloud contact center service deployments and vaults Zoom into new territory: converting traditional customer service into omnichannel cloud contact centers.

Industry pundits shared those thoughts with CMSWire on the heels of one of the software world’s all-time largest acquisitions. Zoom’s acquisition of Five9 is 13th all-time, sandwiched between Intel-MobileEye ($15 billion) and Amazon-Whole Foods ($13.7 billion).

“The message to the industry is clear: the moat between UCaaS and CCaaS (Contact Center as a Service) is closing in,” said David Sudbey, president and chief customer officer at contact center software provider Cogito. “For example, while enterprise voice and contact center voice are often separate, customers still prefer a single contract to leverage pricing, support, infosecurity and integrated efficiencies such as potential access to video collaboration in the contact center. The ability to have the option to procure an all-in-one solution, while still having the choice to choose the best of breed, will be appealing to all customer types.”

Why Contact Centers and Why Now?

But how do you make the leap from household business and consumer name for video conferencing to contact center provider? Zoom went from $9.2 billion company valuation at its IPO in April 2019 to $103.25 billion market cap as of this week. We all know the story: the business world shut down in-person offices due to COVID-19 in early 2020, sending employees home needing ways to communicate with colleagues. Schools and consumers had needs, too, and voila, Zoom became the Zoom we know.

So why double down on customer experience vs. booming enterprise collaboration? Well, for starters., the CCaaS software market was valued at $24.8 billion in 2018 and is projected to reach $35.1 billion by 2026, according to Verified Market Research.

Zoom CEO Eric Yuan said the acquisition will allow Zoom to build the “customer engagement platform of the future.” Five9’s contact center cloud software complements Zoom Phone, a cloud phone system that offers a digital alternative to legacy phone offerings, according to Yuan.

Gregg Johnson, CEO of conversation intelligence provider Invoca, said the lines between employee experience and customer experience have blurred and consumers can complete basic interactions, like executing a trade or checking an account balance, on their own. The blurred lines have been showcased for a few years now. And, lest we forget, collaboration met CX and marketing in notable acquisitions from Adobe (Workfront) and Salesforce (Slack) over the past year.

“So when they reach out for live assistance via video, phone, email or Twitter, it’s typically for a more complex problem that requires deeper knowledge and often a team of people to resolve,” Johnson said. “Tighter integration of the technology where customer data resides, like in Salesforce or Five9, with the collaboration software to solve complex problems, like in a Slack channel or via Zoom, means employees can collaborate more effectively and in turn deliver a better customer experience. The notion of ‘Slack swarming’ on a Service Cloud case is a perfect example.”

The strategic partnerships and consolidation in the communications space is being driven by a clear market desire to merge internal collaboration with external customer experiences, according to Tarun Loomba, chief product officer for Mitel, which provides business phone systems and VoIP. “Businesses have evolved so much as a result of the pandemic and therefore see very clearly that unifying their communications tools with customer-centric functionality is the key to operate more effectively, gain competitive advantage and win,” Loomba said.

Related Article: Why Zoom Apps Won’t Eliminate Zoom Fatigue

Where Zoom, Five9 Customers Potentially Benefit

The demand for all-in-one solutions will not go away once companies begin to return to the office as flexibility becomes the new norm, according to Sudbey, who added the option to work from anywhere is no longer a nice to have. “On top of this, there will be a bigger push for digital-first customer acquisitions, services and cross selling,” Sudbey said. “The combination of UCaaS and CCaaS is an enabling factor.”

Further, Sydney added, Zoom’s Five9 acquisition offers powerful and bi-directional benefits:

  • For Zoom and its customers: the acquisition opens the door to more customers, talented engineering expertise and high-performing sales and marketing teams.
  • For Five9 and its customers: it gains access to one of today’s most well-known collaboration and UCaaS platforms, new customer growth opportunities and a global communications platform positioning it for accelerated international expansion.

“More specifically, the immediate access to thousands of contact center customers that have fully embraced the cloud will prove to be an advantage for Zoom,” Sudbey added. “It’s likely that these customers viewed unified communications as a disparate solution to the contact center — and now, Zoom can embrace video in contact centers at scale, blurring the traditional lines between UCaaS and CCaaS.”

Has the Contact Center Become ‘Value Creator’?

Contact centers have traditionally been perceived as a necessary cost drain, according to Thomas Randall, research analyst at Info-Tech Research Group. However, more recently, following advances in omnichannel and AI-driven customer service functionality, the contact center is now being positioned as a value creator. It’s a means to retain customer loyalty and a medium for targeted marketing campaigns, Randall added.

“Following Zoom taking advantage of its high stock price, its acquisition of Five9 will enable Zoom to hit the market quickly in the contact center space,” Randall said. “Zoom can now offer not only internal (UCaaS) functionality but a means to convert traditional customer service into omnichannel contact centers that engage, retain and satisfy customers.” The acquisition of Five9 is expected to close the first half of next year, according to Zoom’s Yuan.

What’s Next for Zoom and It’s Competitors?

All eyes are on Microsoft to see how they respond to Zoom’s acquisition, Randall added. Microsoft is still maturing in voice functionality and currently does not have any native contact center capabilities. “Following Microsoft’s recent partnership with Avaya, we might wonder whether Microsoft is considering an industry-shaking acquisition of their own — either with Avaya, or another CCaaS market leader, like Genesys,” Randall said.

The UCaaS market is very competitive with the likes of Microsoft and others, according to Dhaval Moogimane, partner of high-tech and software at business and technology consultancy West Monroe.

“The integration of the UCaaS solutions with CCaaS into a broader customer engagement platform has the potential to drive greater value for customers and stickiness for the Zoom enterprise accounts,” Moogimane said. “With the greater shift to digital workflows, there is going to be interest to combine contact center, communication and collaboration platforms, and customer journey and workflow and analytics platforms to deliver an integrated end-to-end engagement. In the short term, Zoom and Five9 will see some immediate benefits of cross-selling to their install base.”

The Slack, Workfront and Five9 acquisitions are a start, Moogimane said, and there will continue to be integration plays across these platforms either as acquisitions or partnerships.

“The challenge for the companies will be to actually integrate the different product portfolios to deliver differentiated customer engagement,” Moogimane added. “We will likely see this play out at the broader level, as well as in niche horizontal or industry vertical customer engagement solutions as well.”

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