Aspect Telecommunications Corporation History

Address:

1170 Fox Drive
San Jose, California 95131-2312
U.S.A.

Telephone: (408) 325-2200
Fax: (408) 325-2260

Public Company
Incorporated: 1985
Employees: 1,400
Sales: $309 million (1996)
Stock Exchanges: NASDAQ
SICs: 3661 Telephone & Telegraph Apparatus

Company Perspectives:

In addition to adhering to core values, including satisfying customers, providing quality professional products and service, emphasis on employee integrity on every level, placing value on teamwork, and embracing flexibility in order to expand the scope of product offerings, Aspect Telecommunications Corporation seeks to achieve balance between the interests of all its stakeholders, including the communities in which they live and work. The company supports its communities through the Aspect Community Commitment Fund, which focuses on children and youth-at-risk, in the belief that healthy profitable companies have a stake in the quality of life in the communities where their employees live and work.

Company History:

Aspect Telecommunications Corporation is a global provider of telephone call distribution and information management systems. Aspect's products serve companies with mission-critical call centers that exist to generate revenue, service customers, and handle inquiries. It is the largest manufacturer of big dedicated ACDs (automatic call distributor software). Its products include call distributors, interactive response systems, management information and reporting tools, computer-telephony integration technology, and call center planning and forecasting packages. The company also provides services vital to call center environments, including business applications consulting, systems integration, and training. Aspect customers are service-oriented companies that require the capabilities of a multisystem, multisite, multivendor call center environment. More than 700 companies are served by Aspect products worldwide, including companies in health care, travel and hospitality, retail and catalogue, insurance, utilities, banking and finance, communications, and technologies industries. The Wall Street Journal reported a 1996 rating issued by the brokerage house Drexel Burnham Lambert, ranking Aspect Telecommunications first among large American corporations as the most shareholder-friendly company. Included among Aspect's competitors are AT&T, Northern Telecom, Inc., ROLM, Rockwell International Corporation, and Teknekron Infoswitch Corporation.

Pre-1980s: Callers on "Hold"

Based in the computer technology hub of Silicon Valley, in San Jose, California, Aspect Telecommunications was founded in 1985 by Jim Carreker, a Georgia Tech BSEE and Stanford University MS graduate in electronic engineering whose phone systems expertise grew from his days as a market researcher for Dataquest. His job required that he track the PBX (private branch exchange, or private telephone switchboard) business. After quitting Dataquest he started Aspect Telecommunications to develop software that could handle multiple automatic call-routing features previously unavailable. He adapted an open, programmable switch (Summa Four's SDS-1000), wrote some automatic call distributor software (ACD), and within months the company's flagship product, the Aspect CallCenter, was launched.

The earliest automatic call distributors had been developed in the early 1970s and were used by big airline reservation systems. The automated "receptionists" would simply hold calls in the order in which they were received, while playing music for the waiting caller. Carreker imagined a more efficient system that would allow the intended destination of a call made from a touch-tone telephone to be quickly determined automatically and rerouted to an operator. Since the advent of toll-free 800 numbers, phone lines had been increasingly inundated with calls. Business managers became concerned about keeping customers on hold for long periods of time, fearing that they would tire of waiting and hang up to call a competitor. Carreker's system could handle the traffic by interacting with the caller, distinguishing between types of calls, and then speedily routing each call to its proper destination. Aspect began replacing hundreds of their competitors' systems, and the company grew faster than the market. Aspect systems had the capability of handling more than a million call transactions each day. By handling calls efficiently, companies saved on labor expense: A site taking 10,000 calls per day could reduce its agent expense by as much as $100,000 per year for every ten seconds it saved per call.

1990: Initial Public Offering and Expanding Growth

Aspect made its initial public offering in May of 1990, raising $4 million by selling at 15 cents per share. The company soon was selling at 81 times its 1989 earnings. By 1993, revenues grew to $106 million, up 50 percent over the previous year, and representing a 40 percent growth in installed base systems. Aspect expanded product offerings and introduced Aspect Enterprise Access, an architecture that allows the Aspect CallCenter System to function as a vital information server on a company's local or wide area enterprise-wide data network. The company reported that growth occurred in every channel of distribution and across a broad array of industries, system sizes, and applications.

Company strategy involved the provision of quality products distributed across a broad range of industries, rather than marketing to a narrow concentration in one or a few industry segments. Aspect executives also decided to focus on internal development programs that improved on the company's core products. New to the industry was the introduction of hand-held devices for initiating remote transactions. Cellular and wireless telephones, notebook computers with modems and faxes, and interactive television remote controls contributed further to caller flexibility. The company reports explained that their "system architecture made use of industry-standard building blocks from the outset, including UNIX operating systems, SQL relational databases, TCP/IP networking, and the Microsoft Windows graphical user interface." The Aspect system allows a straightforward physical connection to public and private networks for voice, data, imaging, and other formats. The CallCenter System offers management information features including summary and detailed views of calling volumes, call handling efficiencies, trends, and other important information about each business application. Customers can manipulate detailed CallCenter data in a spreadsheet environment through its graphical capability. The company also introduced Aspect EnterpriseAccess, an open architecture that enables the Aspect CallCenter to be an information server on a corporate network. Each Aspect customer selects a basic system from one of ten standard models, then adds the appropriate interface cards and related equipment to meet their needs. Options may be added, such as the hardware and software to receive calling number Automatic Number Identification (ANI) from the public telephone network or software packages to forecast staffing needs or customize reports.

Increasingly, companies recognized that superior customer service would provide an advantage over competitors, giving customer satisfaction a prominent value in the manufacturing and service industries. The company soon began placing their systems in the banking and credit card industries. They added new technology, health care, and insurance customers. In the cable television and online services industries, Aspect installed systems for TimeWarner, Delphi, and America Online. In 1993 an agreement with the U.S. Government Internal Revenue Service resulted in the placement of a dozen new systems. Repeat customers in the commercial sector included Fidelity Investments, British Airways, DirectLine Insurance, Charles Schwab & Co., and NatWest Bank, all of which added to their initial Aspect CallCenter Systems. The customer base for 1993 grew to include First Union Bank, Mercedes Benz of North America, Chrysler Corporation, and SynOptics Communications. Increasingly, public utilities began using the company's systems in their customer service departments. Aspect adapted to the period of rapid growth by hiring more full-time employees in the areas of sales, support, marketing, finance, development (with approximately 12 percent of revenues set aside for product development), manufacturing, and administration. As part of its development program, the company implemented a strategy of holding application workshops to obtain customer feedback. It borrowed information from successful customers concerning how their businesses worked and how they innovated, and it studied areas that made those companies successful.

In an effort to remain abreast of leading edge technology, the company began a program for investing in promising start-up enterprises in fields related to call transaction processing, which allowed for a venture-style investment in Latitude Communications, a teleconferencing product company. It also decided to expand its focus on federal government sales opportunities. A new wholly owned subsidiary, Aspect Teleservices, was formed in Tucson, Arizona for the purpose of providing technical support services for companies in need of third-party assistance to their end-users--in particular, the company supports infrastructure software such as relational databases, networked operating systems, and other applications software.

Persian Gulf War Signaled Tentative Global Expansion

After intensive industry market studies conducted during the late 1980s and the introduction of toll-free service in England, Scotland, and Wales, Aspect established Aspect Telecommunications Ltd., a London-based subsidiary, formed to distribute and offer support to operations in the United Kingdom. In 1990 the company expanded into Canada and the Netherlands. Despite its success record to date, company officials carefully considered the possible effects of political and economic unrest following the Iraqi invasion of Kuwait. They decided to concentrate on building the business through existing channels rather than risking a too rapid international presence during this period of uncertainty. Instead, they focused on preparations for policies, development, and infrastructure that would accompany a later international expansion phase. By 1994 the company was ready to implement a decentralized, multicultural capacity.

Dirk Speas, a six-year veteran as an Aspect vice-president, moved to Amsterdam to lead in the next phase of European expansion. Aspect Telecommunications GmbH, a Frankfurt-based sales and support subsidiary, was formulated after the parent company's determination that Germany was the next most promising market. The German government approved the connection of the Aspect CallCenter System to their public exchange lines. In an effort to provide its system to customers throughout Germany, the company also entered into a partnership agreement with Controlware GmbH, a 15-year-old German company specializing in data networks and systems integration. In 1995 the geographical market was expanded to include system sales and installations in Belgium, Ireland, and Australia, and the company then began investigating possible marketing channels in the Asia/Pacific region.

By this time Aspect eclipsed Rockwell, the long-time leader in huge automatic call distributors, according to Newton of Computer Telephony. Holding $108 million in cash, Aspect sales for 1995 grew to $199 million, largely reflecting new orders for the company's core system, the Aspect CallCenter, and from its EnterpriseAccess and Agility Product offerings, which had been introduced in 1993 and 1994, respectively. Nearly 40 software applications partners continued to provide complementary products for Aspect customers, allowing the company to maintain a leadership position in the computer-telephony integration market. Aspect continued to focus on manufacturing software integral to the switch. It made improvements in its reliability and capacity, while allowing its partners to write the rest of the applicable software. Aspect assists in testing its parts, and it co-markets with its partners, often recommending customers to one another.

In the area of organizational leadership, James Carreker shifted from his position of company president. Dennis Haar assumed the role of president in conjunction with that of chief operating officer. Carreker stated in a company report that he would serve henceforth as company chairman and chief executive officer, which he said would allow more "time to focus on the longer-term strategic opportunities for Aspect." He added, "That we accomplished this transition during the quarter in which we were able to report our largest sequential revenue growth says a great deal about the wide internal acceptance of this appointment."

The company continued to grow. Revenues in 1996 increased by 55 percent from those in 1995. Aspect's operational base expanded into Austria, Belgium, Switzerland, Denmark, France, Luxembourg, South Africa, and Singapore. Its acquisition of TCS Management Group, Inc., a leading supplier of call center planning and forecasting software, provided the best-in-class tools to managers of mission-critical call centers. All of the senior management from TCS remained with the company after the acquisition. Overall, the company increased its employee count by 40 percent in a single year, while averaging one new CallCenter system installation each business day of the year. Aspect received a significant order from the United States Postal Service for a $20 million multisystem, including products and services--one of the largest single orders for call centers in many years. The company forecast an increase in competition and responded by accelerating efforts toward new technological insight by increasing spending in research and development by 37 percent to $35 million.

Virtual Solutions in the Late 1990s

When asked about subsequent trends, Carreker told reporter Harry Newton that the industry would experience a blending of call centers, blending inbound and outbound calling. He said that companies "will follow the sun," networking call centers around the globe, and would increasingly rely on media other than the telephone to bring in sales, including "video kiosks in shopping malls, CD-ROMs, PC modem entry, PDA sales entry, fax entry, the Internet, interactive cable TV." Recognizing that customers have come to expect rapid service, detailed information, and round-the-clock transaction handling, Aspect continued to develop its virtual call centers to accommodate every aspect of customer contact.

While denying that the company takes a textbook approach to managing growth, Carreker recommended that anyone seeking to understand more about the company should read the mainstream management literature of James C. Collins and Jerry I. Porras, who wrote the book Built to Last, which Carreker feels validates Aspect's corporate philosophy.

Principal Subsidiaries: Aspect Teleservices; Commerce Soft, Inc.; Aspect Telecommunications Ltd. (United Kingdom); Aspect Telecommunications B.V. (The Netherlands); Aspect Telecommunications Gmbh (Germany).

Aspect Telecommunications Corporation History

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