Witness Systems Buys Into Banking

Witness Systems is making its first vertical play with the dual acquisitions of Demos Solutions Consulting Group and Exametric, two companies that provide workforce optimization, productivity and enterprise planning applications for the financial services industry.

The aggregate purchase price for the transactions is US$29 million cash -- to be financed from the company's existing resources -- plus a potential earn-out of up to $18 million based on the growth of the business over the next few years.

The transactions are expected to add $13 million to $15 million to the company's revenue next year.

Demos and Exametric will be combined and operate as Witness Enterprise Solutions, a group focusing initially on workforce optimization applications for retail bank branches and operations.

The Finance Vertical

Vendors tend to look toward the financial sector when expanding into a vertical. Witness Systems is no exception; some 30 percent of the firm's revenues are derived from the financial services industry already. "We've been probing this market for a while and believe it will emerge as a real growth driver for us over the next 18 to 24 months," said CEO Dave Gould.

The two acquisitions will allow Witness Systems to expand its workforce optimization functionality beyond its current core competency of the contact center into the enterprise -- specifically, or at least initially, into the bank branch, noted Ryan Hollenbeck, vice president of corporate marketing .

"A bank could have hundreds of branches in one area," he told CRM Buyer, "which can be a complex scheduling task." One feature of the new application could forecast how many tellers might be needed at a particular branch at a certain time of month, he said.

Another opportunity Witness plans to explore is the VoIP (voice over Internet protocol) infrastructure most banks have implemented. The company would leverage this infrastructure in order to provide recording applications to branches.

Witness expects to be able to bundle or develop such applications within the next three months. "We think this is a $350 million market opportunity," Hollenbeck remarked.

Old Problems, New Opportunities

Witness Systems cited studies by the Bank Administration Institute that show that 70 percent of bank customers view their bank as a commodity service provider, and 30 percent desire a hands-on relationship. One result is that banks are seeking to improve staff skills, such as consultative selling, and to broaden branch technology infrastructure.

There is a lot of potential in marrying these applications to target the financial vertical, Tower Group analyst George Tubin agreed. "Yes, there will be some integration work involved," he told CRM Buyer. "Once, however, Witness leverages the features from each of the applications, it will put forth a single integrated application, allowing financial institutions to go to one source for this functionality."