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Contact Center Market Absorbs IP Telephony
The current IP telephony standard, known as H.323, will need to be replaced for the real uptake to begin.
Posted Aug 9, 2004
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Telephony running on Internet protocol (IP) may be the wave of the future for contact centers, but the future isn't here yet.

Only 11 percent of today's contact centers have installed IP telephony equipment, according to new research released by consultancy Frost & Sullivan--and only a minority of these is running what's known as pure IP. The rest of the IP-capable shops are hybrid models, using some measure of existing time division multiplexing (TDM) systems. But even these are reaping benefits from the switch to IP.

The research, which combines responses from both vendors and end users, highlights several factors that are driving and restraining the expansion of IP telephony across the contact center industry.

One key driver for both pure IP and the hybrid model, according to Alpa Shah, vice president of the communications applications group at Frost & Sullivan, is "the enablement of virtual and distributed contact centers." TDM systems can achieve the same result, she says, but "it is too complex and expensive."

Even at a lower price point some call center managers are still wary of IP deployments. "Currently, the value of IP lies in the toll-bypass capabilities," Shah says, referring to savings generated by reduced local and long-distance charges. By comparison, what TDM systems continue to offer is a sense of reliability. "Since customer service is essential, and contact center functions are quite complex, contact centers choose to stay primarily with the known and trusted TDM structure as much as possible," she says.

But the benefits can be compelling, and Shah says that the companies that stand to gain the most are the first movers. "Contact centers are expected to be much more effective at meeting customer needs," she says. "The first to deploy such technologies and reap the benefits are likely to gain a competitive advantage with customer loyalty and/or optimal pricing." In particular, she says, globalized contact centers "reap cost benefits" from installing IP systems.

IP systems will continue to make inroads, however, as the potential cost benefits become increasingly compelling. "We expect total cost of ownership and centralized administration to have greater value in the next few years, encouraging increased deployments of IP seats," Shah says, adding that equipment sales are likely to pick up as replacements for hardware purchased to comply with Y2K requirements.

Shah also points out that "the key vertical markets have embraced IP," including outsourcing, telecommunications, and airlines.

But the current IP telephony standard, known as H.323, will need to be replaced for the real uptake to begin, according to Shah. The next generation, known as session initiation protocol (SIP), will raise the bar dramatically, but it may not be ready for prime time just yet. SIP is "still evolving as a standard...[and] is based on a peer-to-peer architecture, which is contrary to the current contact center architectures, which are centralized." In other words, SIP will demand yet another wave of equipment upgrades.

But Shah says the switch to SIP is inevitable. "SIP is expected to change over the next few years to overcome these obstacles, and because it is easier to implement and allows for faster product development, it is expected to overtake H.323."


Additional reporting by Coreen Bailor.
Related articles:
Contact Centers Begin the Switch to IP
2004: The Year of VoIP
Advancements In VoIP

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