Contact: Scott Denne
The transition to consumer VoIP and other Internet Protocol communications is well under way, though at the largest enterprises the market for IP-based communications still has plenty of room to grow. Capturing more of that opportunity led BroadSoft to today’s purchase of Transera, a maker of call-center software and analytics. BroadSoft sells software and SaaS that enables telcos to replace their customers’ hardware-based PBX systems with IP-based unified communications services. By expanding its call-center offering, BroadSoft hopes to make its software more appealing to the largest consumers of communications services.
BroadSoft is a frequent acquirer of modest-sized companies. Since the start of 2015, it has inked four acquisitions of such firms to expand internationally and add new products to its portfolio. It hasn’t spent more than $40m in cash annually on M&A in each of the past few years. The pickup of Transera seems to be a similar scale – BroadSoft expects the target to add $7- 8m in revenue for 2016 and to be mildly dilutive to earnings.
As businesses march toward more hosted and IP-based communications systems, vendors and service providers in this space are looking for ways to differentiate beyond basic phone services and give larger organizations a more compelling reason than cost to embrace cloud communications. That was the rationale behind RingCentral’s reach for collaboration platform Glip last year, as well as BroadSoft’s own internal collaboration effort, Project Tempo. Moving beyond calls and call routing has also spurred a push for greater call-center capabilities, a move that’s been reflected in deals from BroadSoft’s rivals: ShoreTel closed the acquisition of Corvisa earlier this year to expand its presence in this sector and 8×8 snagged a pair of call-center companies last year.
For BroadSoft, offering improved call-center analytics isn’t just about winning cloud communications business from competitors – it’s also about getting large businesses onto the cloud to begin with. According to one of 451 Research’s Voice of the Enterprise surveys , 81% of IT departments that had recently deployed unified communications (voice, video and messaging) did so on-premises. That was the highest level of on-premises deployments of any application category in the survey and suggests to us that BroadSoft and its peers will need to find more applications that are unique to the cloud if it wants to entice the largest companies onto it (55% of the respondents to the survey come from enterprises with more than 10,000 employees).
For more real-time information on tech M&A, follow us on Twitter @451TechMnA.