NiCE CEO Scott Russell: 80% of Customer Service Will Be AI & What Actually Happens Next

I love it.

Okay.

And it was deliberate speed, not reckless speed.

Yes.

Yeah.

So, first of all, speed is a choice. I actually had one client say to me because I use that all the time and we use that as a thoughtful way of saying how we are going to operate and act as a company both individually and collectively. And they said, 'What do you mean to choose about speed?' And I said, 'No, it means that you have to choose to be fast.' Not reckless to your point, but why it's important is it was always important in any company to be agile and look at trends and things, but as you point out, Katherine, this market is changing so quickly and so dynamically. When you think about a customer and their expectations, they're looking for a partner that can help them see around corners. Now to see around a corner, you've got to be quick enough and agile enough and thoughtful enough about what is coming. What are the new AI trends? How is that going to impact the CX space? How does it interoperate? So we're very thoughtful about and we do a lot. I personally research every morning I wake up, look at the latest news, latest insights, reach out. So that networking and understanding and then how quickly we can manifest that into product that is real and capable, distinguishing from the headlines versus the reality and then making it a durable asset for our customers because let's face it, enterprise technology companies have created durable platforms. It's now evolved in the AI world where speed allows you to innovate quickly but you still want durability. What companies don't want is they have to swap over 10 things. So they want that consistency but get the benefit of the innovation agenda and the speed of innovation. That's what we do. That's what we try to bring together.

And back onto the AI world, what we see with customers is they're experimenting, which is understandable. You know, we think about we experiment with AI technology inside of our business in HR, in finance, in engineering all the time. But then when we choose a partner, we're thinking of somebody who can give us enterprise scale. Now, there is a very big difference. Okay, what can the technology do? Who do I work with? How do I get that at scale that's durable? That might be a different organization. And that's where we believe that we have a real strength if we're able to give them that innovation at a durable scale.

They have. They have. So, if you go back to the core of the SaaS apocalypse, the real question that's being asked is the durable value that SaaS companies were delivering. How is that? How is the disruption? And it really comes down to do they believe the durable revenue models and the terminal value of these companies? They're putting it into question, which let's face it, hasn't really happened for 25 years, right? I embrace the fact that we need to prove in an AI world how we're able to adapt and leverage that with the strengths that we do. As I said earlier today, AI technology has democratized an AI company, a SaaS company or an individual, you can vibe code your way. The access to technology has been completely democratized. So there is no competitive advantage there. You also can't think of the speed to innovation as a competitive advantage. So those moats are brought down, not removed completely. What I do believe however, if companies focus on the innovation and the AI capability embedded with this inherent strength, enterprise scale, data at a scale and an operational leverage that you can then use into a CXA platform, then you have got a competitive edge and it's a tailwind. So at our Q4 earnings I shared the results and it was a reflection of that tailwind. So whilst I understand the question I think what's going to happen Katherine for all of your viewers is the market will go from a market-based view to a company-based view. Companies that can prove that they're transitioning, leveraging it, embedding it into the enterprise and getting durable growth at the right economic cost, they will end up being the winners. Whether they are an AI native or a SaaS company, it's going to be a combination of both.

I must admit I knew I needed to do it from day one. I am so pleased that we chose Cogni. Just such a great company, great people, but they've also got the same vision. They're hungry for that future, which we really need, right?

So, we're proud of our history, our enterprise strength, delivering in the CX world for a long period of time, but it's also a recognition back to that conversation we've just had, the innovation agenda, the way that technologies are able to deliver great CX outcomes. They've pioneered some really impressive results with really large customers, and we want to embrace that as a part of the way we run all of our business. So how is that manifested? Well, the way we're using AI is not just in our AI products that we go to market with Cogni. They are spearheading the way we're doing the engineering of all of our products. There is not a single engineer that isn't leveraging AI capabilities even if it's for existing product portfolio such as workforce management or our ACD. The second is a little bit of a cultural element as well. The NICEs knew our current world. Cogni was built on where the world was going and we wanted to accelerate that journey and that transition. So to answer your question, how's it going 6 months later? You always worry because you've got this combining two different cultures, different thoughts, different ways of looking at this market. How quickly we met in the middle of the future is what Cogni were driving but they needed the enterprise scale of NICE to be able to get there and a unique proposition of an agentic CXAI platform that no one else can offer. We've all embraced on the combined. So it's not we're going to where Cogni was going. We're going to this unified state that we couldn't have done independently but we can only do it collectively. So as a result of that, the product roadmap becomes fast. The way we collaborate with our teams, Phil's team quadrupled in size overnight, which is exciting, but also a little bit daunting. But look, it's been really really great. What we now need to do is give it in customer terms so they get the value out of what we've been doing.

Yes.

A couple of thoughts. First of all, the move of the AI into the interaction volume right now, you can speculate but it's around 3 to 5% of the total interactions are delivered by AI agents. But as you rightly point out we think we can deliver up to 80%. Right? All of us agree that last 20% is still going to be human-based. And even if it's not, it doesn't have to be. Consumer behavior and enterprise behavior will want human in the loop especially on those complex scenarios. That actually helps us because we've got that combined value proposition. So the first thought process is we cannot afford to be in revenue protection mode and I think a lot of SaaS, back to the SaaS apocalypse question, any SaaS company is saying I'm trying to protect that and bolt-on AI on the top, they're not going to work. What we're looking for is whether it be an AI agent, a digital, a voice, human in the loop combined, how do we deliver that outcome in a way that not only is predictable in cost for our customers but a combined proposition. And I think what it will be is a combined. It will use outcome-based pricing, consumption pricing and user-based pricing in a combined. What we do already is we give our customers flexibility. So we have a single agreement that says you can swap in and out. So as you're going on the journey, you have a thousand agents and you're monetizing 10%, you're doing 10% of your work on AI, you move to 30% and so you reduce this. You can swap in and out within a single agreement with zero adjustments and we can keep that contract simple, easy and effective. I think what you'll see is more and more predictability built into that. The good news for us is with that transition, we still grow.

We're still growing because the interaction volume still rises. We have other ways of being able to create value for our customers. I know there's a lot of questions because the traditional model was user-based but we now are able to, we're payable pricing for every interaction that's actually an opportunity for us. The beauty for our customers is they can attribute value in every one of those. So it's still better for them and they reduce their agents. They're able to reinvest that back into tech stack.

Yes, it is. No doubt.

Yeah. First of all, we do paint that vision. The vision is not one or the other. It's both, right? And that actually lowers the temperature in the room a little bit because they're sitting there not only about the human workforce aspect, but they look at it and they're like, I'm human only right now. How do I get there? So the first is look, you don't have to change it overnight. You want a platform that allows you to shift that at your pace on your terms, but seamlessly. And most importantly, what they then go to is well, how is it going to interoperate? You don't want fragmented platforms. You want the data, the interaction, the handoffs. So what they then ask for is well how easily can I manage my human and AI agents? Can they talk to each other? How do I know when can I still step into a call like I used to? Supervisors used to do that all the time. So they're now looking at well what is it going to take on an agentic human platform that analyzes a workforce of human and AI, an interaction that is human and AI, and give a better customer experience. And this is the thing that we all, I know that you focus on this Katherine, but customers are obsessed about giving great experiences. This isn't just about the economic benefit of having a lower cost of operate. If they're going to make this change, it's got to be valuable for their clients, increasing customer satisfaction, reducing handling times, increasing their containment rates, delivering the orchestration better. So ultimately, once they realize that they can leverage all of their knowledge that they've built up over decades in this area, apply that in the AI world and transition seamlessly, I think they're now like, 'All right, where do I start? How do I step into the journey? What are the first use cases? What are the things that I should do first?' So it goes away from oh my goodness I'm worried about this future.

Yes.

I smile. It's such a great question, Katherine, because I smile because I think enterprises are like humans and they're creatures of habit. We wake up and we have habits and we gain comfort in those habits. So I'm a morning runner. You know, that was my exercise during the and I was running this morning and it's a great habit for starting my day. If you said to me now I've got to do gym at 3:00 p.m. in the afternoon, I would reject it. So what do we now need to do for the enterprises when they have that resistance about I've got my predictable world? First of all is helping them acknowledge that the world is changing whether they like it or not and seizing the advantage on their terms rather than trying to resist. And I think that's why the market has been in trial, pilot, proof of concept mode for a while and it didn't work too well. Let's face it, two years ago, all of those pilots didn't give a lot of enterprise return because they hadn't yet delivered enterprise scale.

What we now see is they've done that. What they're really saying is, look, I know we need to leverage these tools. We know customer experience is a great use case and we know with NICE Cogni and with your platform now, Scott, we've got this. You've got something that can really help us deliver a better customer outcome, better customer experience. How do I go from where I am to where I want to be? What companies are very used to is going on transformation journeys. They do it all the time. So, what we're helping with is let's partner on your transformation journey. Some like to do it really fast. Others are more measured. No matter how the speed of journey, we've got a single platform and a partnership model that allows them to do so. So, that resistance is still there. I do believe that they're and you would hear it with your conversations with companies all the time as well. They're not skeptical that they could get there, they're more worried about how to get there. And I think that's the onus on companies like us to help them on the journey, not just what the technology can do.

Yeah, you've got this cost emphasis. How do I minimize cost but at the same time improve customer satisfaction? In fact, our COO now who previously was at Disney, Ranchandra, who is just a remarkable leader, but he talks a lot about incremental change at the lowest economic cost because that's what you're trying to do. So first of all acknowledging that that still exists, right? AI obviously is a capability that helps you be able to deflect, contain and manage your interaction volume in a more cost-effective way but not at the absence of delivering great customer satisfaction. You actually want to improve the quality rates, improve the outcomes. So I think what they're, it's now transitioned to is well how do I have ROI quantifiable benefits? I spoke in our earnings in Q4 about customers have now having much more ROI. They've learned. Now they're like all right you say you can reduce my handling time by this, how do I go do that and holding me accountable in our business which we're happy to do or price based on outcome. The other thing that I have also seen is customer experience or customer service is definitely moving to be customer experience because we've seen a lot of companies say what a privilege it is that someone's contacting us. Now they might initially contact us for a need, a problem, a service to be delivered. But now that I've got them, how I can use that capability in the human side to be able to then upsell, cross-sell, revenue generate. So it's interesting what we've seen is consolidation of what were historically separate departments inside of enterprises brought together which were limited by skill and volume and capacity constraint. Those constraints go away. So we're not seeing a reduction of seats. We're just seeing more valuated activities and then businesses they're smart reducing cost. I'm increasing revenue and I can do it into the same platform. Yeah, we're excited about our ability to be even more compelling than we were before.

Yes.

Yeah, back to your earlier question about SaaS apocalypse and what's happening there. This is one of the advantages that I believe more broadly in the market, SaaS companies and if I take us in our space, we know scale. We deal with tens of thousands of calls and you have to be able to handle that volume, deliver a high quality outcome. Let's face it, availability, reliability, scalability of the platform, things that we innately do every day. We're applying those same concepts in an AI world because when you are handing over that workload to AI, you've got to build the same resilience. So you heard about what we're launching, we've done with NICE Cogni about observability, simulators, being able to scenario. That's what customers are expecting because what they're looking for is okay, you can functionally deliver what I'm looking for. Now can you scale deliver? Because the worst scenario for them is it functionally looks great but can't hit my workloads and in the end I'm in a worse world because I am expecting my contact center to do certain things and they're having to do something else. So this is actually an advantage for proven SaaS companies like us. Having said that it requires focus. I believe AI's capability is immense and you look at the agentic layer and what we're doing with it's fantastic, but we've got to have every one of those scenarios being able to do it at enterprise volume. That's what they're evaluating. That's why they're now turning more to us to say, 'All right, I've proven the technology can work. I've played around with it. I've vibe coded. I understand all that. I want someone to deliver to me at the scale that I operate and you can prove it.' And the beauty of with NICE Cogni and NICE overall is we know how to do that and we can prove it now.

Yes.

Yes.

Thank you. Thank you.

I have to come back to your first question. It was the speed to pivot to where the market not only was going but is at. And we were able to do so in a way that is consumable for our customers. So we sat there at the beginning of last year knowing where the market was going and we're trying to figure out how to move. We made the move with Cogni. We innovated ourselves in our platform. We did so fast. We were very decisive. And what customers then saw was in the second half of the year is that they said, 'Wow, that's where we want to go. I now have a partner that can give me the full stack of capabilities.' And yes, they've got roadmap items that they're expecting. I'll come back to that. But I now have a partner that can take me on that journey. And that's why our win rates were up, our booking rates were at record levels, our backlog's growing really well because it was a recognition that you've got a capability that I want and I'm ready to step into it. So that's the good news. I think as we step into 26, what do we need? We need to continue to go even faster. Speed of innovation is not slowing down. Being able to then embed those, as you asked me before, embed those trends that are durable into the platform. So that agentic layer being able to help organizations seamlessly interoperate between human and AI agents, that's a great concept. We're months away, literally months away from having a single platform that you can decide how you interoperate because that's the sort of challenges CX departments are thinking about. Well, how's this all going to work? Is it one or the other? Well, it's going to be both. So I think that speed of innovation, being decisive about the vision, and ultimately for us being clear that we are striving to be the digital front door for the enterprise. Whether you want to be voice, whether you want to be digital, whether you want to be AI, or most importantly, you want a combination of all of those things, we are that digital front door and helping them navigate and orchestrate those experiences for their customers in the best possible way. So, we've sort of really centered on that's what we are. That's what we're great at. That's what we empower our company to do. And I think customers like that clarity.

Thank you, Katherine. Really appreciate it.