NICE Analyst Summit Takeaways: Windmills, Profitability Rules, Termites and WorkflowsNICE Analyst Summit Takeaways: Windmills, Profitability Rules, Termites and Workflows

The NICE 2024 Analyst Summit may have just passed, but given the way the company does things, it’s no surprise that the vibe is very much alive. Going to Zambia is a bucket list destination for just about everybody, but this was also the last event for outgoing CEO Barak Eilam; and as analysts, we were privileged to be the audience for his final keynote.

I’m going to share my overall takeaways here, along with some of my photos. In the spirit of being an independent analyst, I’ve framed them into three perhaps unconventional themes that resonated most for me.

Theme #1: Windmills, Not Walls

The sub-theme here is “Go fast, follow Newton,” and I’ll explain both now.

Eilam opened his keynote with a variation on a classic Chinese proverb, “Some people build walls, others build windmills.” When closing out his keynote, he came full circle with the same message. He didn’t elaborate much on the meaning, but when he says something twice, it’s for a good reason. The mark of a good speaker is to leave some things unsaid, and am not sure if most folks picked up on this, but that message carries a lot of weight.

The essence of this proverb is the wisdom in seeing two approaches to managing change. Those who build walls want to keep change out and maintain a specific status quo. There can be lots of good reasons for trying to maintain things as-is; contact center vendors hear this common refrain from customers who think they can manage in today’s fast-changing environment.

Conversely, windmill builders accept and welcome change, and this maps to the growing cadre of contact centers that want to benefit from all the innovation that’s coming with cloud and AI. NICE has never been about perpetuating the status quo, and throughout the event, we learned more about how it’s bringing value to contact centers looking to build their own windmills.

Change management is not a trivial thing, and brings me to the sub-theme about going fast. Eilam’s message is that windmills matter more than ever because the nature of change that is coming with AI is unprecedented. More importantly, he said rather than asking “What’s the next big thing?” the better question is “How fast is it coming?” With AI being so new, it’s easy for contact centers to underestimate the impact, and they need change management expertise to navigate the ongoing transformations in their industry.

To illustrate why this is so important, Eilam cited Newton’s second law of motion in the context of the contact center. The basic equation is force = mass times acceleration, and for contact centers, he defined mass in terms of familiar criteria – data, knowledge, interactions, channels, and applications.

For each of these, Eilam cited statistics showing just how quickly they are evolving – such as data, where 90% of the world’s data has been created in the last two years. Taken together, all the metrics he shared lead to only one conclusion – the mass element of this equation is rapidly growing by orders of magnitude we’ve never seen.

Eilam provided similar data points for acceleration, so not only is the scale of change massive, but so it the rate of change. Taken together, the outcome is force at a scale we’ve never seen before, and there’s no way a contact center that builds walls is going to adapt. Eilam frames this as “exponential change” and “exponential impact,” and however you choose to define these terms, big changes are coming.

He said, “We’ve reached the end of human faculty” and that comment may be a bit dramatic, but as the world hurtles towards AI, legacy models of customer service and contact center operations will fall far short of what’s needed to meet today’s customer expectations. To mitigate against this doomsday scenario, NICE is the white knight, bringing “the fastest path to the future,” with “exponential innovation.” While every contact center vendor has an AI story – and it’s not my place to say which is the best – Barak made his case to support that claim.

Setting that aside, he made an even stronger case to show how NICE has evolved as an organization, largely in anticipation of where these exponential changes are headed. The visual below tells that story quite well, with the main message being that NICE is clearly about windmills and not walls, and this is the kind of tech partner you need to do the same by giving your contact centers windmills, not walls.

Theme #2: It Pays to be Profitable

It’s hard to understate how profitability separates NICE from the pack. Whereas most players in this space are modestly profitable at best, NICE has been highly profitable for some time.

My old school values place a premium on profitability, and given how growth was prized over profits when interest rates were low, the aftermath of today’s higher rates has kept a lot of companies underwater profit-wise. Posting profits is still one of the best metrics for how companies are performing overall, and that’s exactly the case with NICE. The company is well-run from top to bottom, but there’s a bigger story beyond simply having revenues in excess of expenses.

Tying back to the windmill analogy, being profitable – and debt-free – means that NICE can take a longer view on innovation and keep ahead of the curve for what’s coming. As CX division president Barry Cooper discussed during his keynote, NICE can just “keep executing on the plan,” rather than pivoting and reacting to changing market conditions. This is more than just investing in R&D to get ahead of the competition – it’s about staying ahead and pulling away so that nobody else can catch them.

This is easier said than done, but the metrics indicate they are well-positioned to do this. The road to profitability starts with margins, and gross margins with NICE keep getting higher, with current levels sitting at 70.5% - which they say are 10+ points higher than the closest competition.

Profits lead to healthy cash flow, which they report at being over $800 million, and a total cash position of $1.65 billion. Aside from not being subject to the whims of investors or bankers, this puts them in a great position to make acquisitions. As strong as their innovation engine is, whatever they can’t build internally, they have the luxury of adding outside pieces without impacting operations.

Speaking of innovation, over 30% of employees work in this area, with almost 3,000 working in R&D roles. With an R&D spend just shy of $400 million, they have the means to stay ahead of the pack, and in such a competitive space, this may be the best payoff of all for being profitable.

Theme #3: Termites and Workflows

As strong as the messages were from the NICE event, they pale compared to the land where the elephants roam. Being immersed in the Zambian experience during the event, nature’s power makes all of us feel small in a hurry.

This world couldn’t be further removed from the modern-day wonders of the Internet, mobility and AI, and you can’t help but reflect on where all this man-made technology is going. Nature has a way of creating balance and self regulating, and while our tech-centric world has its own sense of these things, we could learn from what’s out there in the wild.

What struck me more than anything else from our safaris were the humble, yet impressive termite mounds that seem to be everywhere. The Big Five for South African game hunting are certainly impressive – lions, elephants, cape buffalo, rhinos and leopards – but in terms of how nature reflects the messaging NICE is trying to convey, the seemingly primitive termite was the strongest connection for me.

From the outside, these conical mounds may look like an amateur pottery project, but they are the product of a highly sophisticated, ongoing effort to create, nurture, and protect a colony of termites. Every species has a survival mechanism, and this structure has served termites well for who knows how long.

The relevance to NICE is about their vision to create “human-free workflows” so enterprises can scale in the era of AI. For both contact centers and enterprises at large, AI is largely used to automate workflows, especially for operational efficiency. The more these can be automated, the more efficient they can be, along with freeing humans up for higher value forms of work.

While termites will never have the benefit of AI to automate their workflows, their system of doing things is highly automated in the sense that all tasks are performed by termites as dictated by their caste and place in the hierarchy of the colony. There are three main groups, each with a very specific division of labor. The reproductives serve to keep producing more termites and starting new colonies, the workers gather food and build the mound, and the soldiers defend the colony (even though they are blind).

Although the intelligence that orchestrates all of this isn’t fully understood, it’s very real – there’s nothing artificial about how these workflows are managed. Furthermore, they occur on a massive scale, given how small termites are, and that their mounds – like the one pictured – can easily reach 10 feet or higher. To coordinate all this, they communicate in distinct ways, namely via antennation (exchanging information by touching each other’s antennae), scent via pheromones, and vibration to alert others to pending danger.

One could argue this orchestration of workflows is no less sophisticated than what NICE is doing with CXone, and even with the Hyper Platform, their next-level “system of everything” - a fully integrated platform that orchestrates workflows, knowledge, and agents. In this regard, workflow automation is nothing new, and if NICE can deliver on their Hyper Platform vision, then the promise AI will start to approximate what termites figured out with their mounds thousands, if not millions of years ago.

As a way of concluding, we all can – and should – take inspiration from nature. While it’s not clear just exactly how the Hyper Platform will come to market, it shows NICE’s commitment to keep pushing the boundaries past the contact center and how we think about customer service.

Call that evolution if you like, but it also comes back to where we started with windmills. Adapting to change is the ultimate survival mechanism, and no amount of technology will save the day without a windmill mindset. NICE has certainly taken that path, and that will likely be Eilam’s legacy, as he leaves the colony with a solid foundation to build the mound ever higher, and then help NICE’s customers do the same with their mounds.

This post is written on behalf of BCStrategies, an industry resource for enterprises, vendors, system integrators, and anyone interested in the growing business communications arena. A supplier of objective information on business communications, BCStrategies is supported by an alliance of leading communication industry advisors, analysts, and consultants who have worked in the various segments of the dynamic business communications market.