IP Technology Could Lead To Call-Center Revolution

June 25, 2001

By Contributing Editor Stacy Notaras

It has been almost impossible to avoid hearing about the promise of voice over Internet protocol (VoIP). The reason for the hype is the technology’s promise to connect users across space and time at a lower cost than traditional telephony.

But this discussion has been raging for a few years now, and we have yet to witness widespread VoIP adoption, aside from some highly motivated college students wanting to shave their long distance calling charges.

Meanwhile, those watching the call center space are eagerly anticipating IP technology’s deployment behind the scenes. Thus, they have created a chicken-and-egg conundrum for analysts and developers, not to mention their confused customers.

Must VoIP precede the IP-enabling of other call center technologies? Or is there an easier, more attractive way to test the IP waters before chucking phones in favor of PC connections?

According to developers, the answer is yes and the key is spelled IP-ACD. For the past few years, automatic call distribution (ACD) technology has dominated the call center scene, promising to deliver an enhanced customer experience by using efficient call routing. Customer questions are directed to the appropriate agent before the conversation even starts. ACD technology has become the hot commodity for individual companies’ internal call centers as well as larger call center service providers.

But these systems are expensive and often require costly computer-telephony integration. When ACD developers started hearing rumors about IP technology’s ability to deliver multiple applications over a single pipe, it’s no surprise they took notice.

In telecommunications, IP-ACD’s appeal runs the gamut from incumbent giants to small start-ups. Providers of all sizes salivate at the thought of lowering customer service costs, especially as they add new services that require more call center agent help. IP technology is the Holy Grail in this area, according to Datamonitor analyst Brian Huff.

“You have all the switching and the data coming through the same line or in the same way over the network, instead of having a box sitting on site and directing all your calls,” Mr. Huff told LMTR. Internet protocol can “route calls, but additionally, it can route Web inquiries so you can have e-mails, Web chat, and messaging flowing through the same network or pipe.”

This technology makes good on the telecom promise of multimedia customer contact, he explained. “You have call center managers who can not only route calls to the best person to manage that inquiry, but you can also route e-mails, Web chat—any interaction that you want—to the right agent,” he said.

Still a New Concept

But don’t get worried about the systems selling out at your local IP-ACD store just yet. According to Datamonitor research, this is an extremely immature market so far, with just 160 IP-architected contact centers in the U.S. today. IP-ACD revenues barely reached $13 million last year. But the future is bright. Datamonitor predicts a surge in the market by 2005 with more than 14,000 contact centers in operation and industry revenues of around $911 million.

“There’s not a lot of penetration so far,” Mr. Huff said. “A lot of people have actually made large investments in their call center technology, including ACD, in recent years. And to go from their ACD box to an IP [box] is really throwing out your entire investment—you are going to a completely new format. People are very wary of doing that, so they don’t want to switch over right now.”

But beyond their recent investments in circuit-based ACD systems, many potential IP-ACD customers still are waiting out the technology, Mr. Huff added. “Until now, it’s really been an unproven technology. I think that now, most are realizing that it really does work, but it’s very new, very ‘Star Treky,’ if you will, to move all of that to the nebulous network and not having the old reliable box in the back corner. It’s somewhat scary for people,” he said.

“I think it does save money and just makes things simpler, [because] there aren’t as many support components with IP-ACD,” OVUM senior consultant David James told LMTR. “But at the same time that they are changing the type of network, they are broadening the range of media that they handle. They are able to bundle voice, e-mail and Web interaction all from the same call center, which we are now more appropriately calling a ‘contact center.’”

Mr. James was wary of predicted adoption rates by telco-run contact centers, noting that incumbent telco call centers “tend to be very large and lumbering” when it comes to adding new technology, compared to their new-entrant counterparts. He added that it “takes a fair amount of time to replace [telco legacy] systems while some of the newer, non-telco organizations—the Lands’ Ends and Amazons, the e-commerce sites—may go for the new technology faster and push the overall market.”

Internal and External Appeal

But the vendors are convinced that the market is about to pop. And with so many telcos coming on the scene wanting to add to their revenue streams, IP-enabled contact center features are a hard avenue to ignore.

Take Leap Wireless International, Inc., a digital wireless carrier based in San Diego. The company defines new entrant as it is launching both data and voice services under an interactive entertainment model. Leap has deployed Avaya, Inc.’s IP systems for routing on its internal network and is testing Avaya’s IP hard phones. For Leap, deploying IP technology internally improves efficiency and cuts operational costs.

Meanwhile, other service providers are taking advantage of IP-ACD in order add to their revenue streams. Northern New York’s Nicholville Telephone Co., a century-old independent local exchange carrier (ILEC) that had added Internet services to its roster in the 1990s, decided to spin out its internal help desk operations as its own entity, Fused Solutions, and provide technical support services to other ISPs.

Working under the application service provider (ASP) model, Fused Solutions needed an ACD system that would route incoming service inquiries to the agents who were trained to provide branded support for multiple ISPs. After a search, the company went with CosmoCom, Inc.’s “Universe” product, an entirely IP-based system that dynamically routes inquiries and provides branded contact to ISP customers.

Steve Kaish, CosmoCom director-product management, told LMTR that such technology has a variety of benefits. “For one thing, you don’t have to maintain two separate networks: the telephone network and the data network. The agents already have a data network. . .in an IP environment, location of the agent doesn’t have to be the location of the telephone switch because agents can be sitting anywhere as long as they have a connection,” he said.

“This allows call centers and enterprises to set up small, remote satellite sites or home agents and tie them all together in a virtual system as if all those agents were sitting in the same room, tied to the ACD. This is much more efficient than having multiple centers and trying to balance the load between them.”

While there are still few adopting the technology, the idea of the virtual call center isn’t too far away, Mr. Huff noted. “That’s one of the best uses of IP-ACD, to be able to have the virtual call center and use remote and at-home agents. Of course, that’s an issue that people are still waiting to see—the question of whether at-home and remote agents will be used because of these new technologies, or is that giving [agents] too much freedom and [companies] lack of control?” he asked. “But telcos will definitely go there.”

But who will go there first? Are incumbents more likely to have the funds to make this sort of investment or are new entrants more likely to deploy cutting-edge functions? Mr. Huff said there were possibilities on both sides.

Mr. Huff offered the example of Jet Blue Airways, a start-up airline based in New York. Using IP-ACD technology from Avaya, Jet Blue has been able to spread its agents out around the country using a single router. “If someone calls in to New York, [Jet Blue’s] agents are in Dallas or other cities. This is a remote call center where you can have remote agents or even home agents working. This is what IP ACD can do for you—it creates a network. That way Jet Blue can save costs and have access to a labor pool that it wouldn’t have had access to,” he said.

Larger companies are just as interested in tapping into new labor pools for their call center operations, Mr. Huff added. But for them, the interest in IP-ACD also may be driven by the ability for it to improve their hosted service offerings.

Mr. Kaish couldn’t agree more. Before joining CosmoCom, he worked on call center technologies for AT&T Corp.’s toll-free “800” services. “We were constantly looking for new ways to add value to that service to retain customers,” he explained. “A network-based ACD allows them to provide the end-to-end service, not just the network routing, but the full call center service out of their network. It’s a tremendous opportunity to offer high-value, high-margin service that augments their business.

“Secondly, it’s totally synergistic with their existing toll-free service, so they have stickiness here. If you can marry the ‘800’-service network with this call center service and bundle them as a package, you are locking them in more to your telephone service, which is also someplace where you’re getting a lot of money. If it’s delivered over a data network, as opposed to a telephone network, then your customer is going to need some data service like frame-relay to deliver the call to their location, and that’s another thing a carrier would sell. They can marry these three services together and have a very sticky bundle,” Mr. Kaish said.

Proceeding with Caution

Still, Mr. Huff is careful not to speculate about the speed at which telcos can be expected to adopt IP-ACD systems. “What we are seeing is that every single ACD vendor is moving toward IP-ACD. They see it definitely as the next step, and we really do as well. It makes sense to have everything coming over the same pipe into the call center. IP-basing it is really the way to do it,” he said.

As was the case with VoIP, vendors say the move to IP-ACD is inevitable but will require a few brave souls to jump in first. “The ACD vendors. . .liken it to being able to speak over the Internet. The technology is there, but who is actually using it? In these times, they hype definitely precedes the reality, and with IP-ACD it’s that way as well. People aren’t using it yet—those who are have quite a bit of funding behind them,” Mr. Huff said.

“As soon as the uptake of VoIP becomes more pervasive, you will see that call centers will be better able to handle calls that come over the Internet that are IP-enabled. VoIP will happen, but it will take a while. People are still worried about the quality of it. . .Today it works over private networks, but over the public network it’s slow. There are some kinks to work out.”

TR's Last-Mile Telecom Report, June 25, 2001

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