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Contact Centers Begin the Switch to IP
A recent report states that there's an increasing tendency toward using VoIP, and they suggest that a major turning point may have arrived.
Posted Jun 8, 2004
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The use of data networks to carry voice could be set to revolutionize the contact center industry, if signs are any indication. Despite the clucking that those networks, relying on the IP standard, have been carrying voice for years--unsatisfactorily--industry experts are beginning to see an increasing tendency toward using VoIP, and they suggest that a major turning point may have arrived. One factor is the coming increase in the overall use of corporate VoIP, and not solely in the contact center. According to a recent report from the Radicati Group, the share of corporate telephone lines that use VoIP will rocket from 4 percent to 44 percent by 2008. The study, entitled "Corporate VoIP Market, 2004-2008," specifically excludes contact centers from its parameters, but predicts overall corporate spending on VoIP technology to rise from an estimated $1 billion this year to $5.5 billion by 2008. That growth will be driven in part by the increased faith in VoIP's quality of service. "There's no comparison between the first generation of [IP] products that came out three or four years ago, and what's out today," says Joe McFadden, director of marketing at Nuasis Corp., a maker of contact center software. McFadden says that early technology "didn't serve the contact center in terms of quality and reliability. Those issues have been resolved." As a result, McFadden says, "The contact center is the killer application for IP systems." "IP telephony has the ability to lower [the] cost barrier," says Keith Barr, vice president of engineering and development at CRM vendor FrontRange Solutions. The technology can "expose [increased] functionality to the mainstream contact center market." But lower-cost equipment doesn't mean overall spending is going to fall away. According to a recent study by industry research group Datamonitor, the global market for contact center component technology will grow to $5.1 billion by 2008, up from $3.6 billion in 2003. The report, entitled "Contact Center Component Technology to 2008," notes that "over the next five years...IP will overtake [time-division multiplexing] in the contact center."
As a result, the expansion of the "virtual contact center" may be the new vanguard. "Contact centers are virtualizing their workforce," says John Kim, founder of Five9, a start-up that provides solutions to the hosted contact center market. FrontRange's Barr adds, "IP telephony gives you the opportunity to reach some smaller centers and aggregate remote locations to a larger infrastructure." Some practitioners are even positioning VoIP as a way to stem the flow of contact center jobs overseas. Kim says that IP is "allowing them to be price-competitive with the offshore movement." One Five9 customer, Sharon Grossman, president of XAct TeleSolutions, an outsourced contact center company, says her firm was able to combine several of its five contact centers, and now has 100 agents doing the level of work that formerly required 175. Given that kind of efficiency--and the attendant cost savings--the question becomes, why isn't every contact center moving to IP? FrontRange's Barr has some theories. "There's still a knowledge curve," he says. "The [IP] feature sets, and the understanding of what features are available, are still maturing. There's a gap between what's in the market and what people know about it." There are two current approaches to IP systems: an "IP-enabled" (or hybrid) approach, which carries voice over the existing corporate data network, and sometimes involves existing telephone switches; and what some vendors are calling a "pure IP" approach, built on a single network and a single dedicated platform. We may not see universal deployment of pure IP on the global stage soon. "The fact that we have a significant number of [phone] carriers [that] don't support IP means we'll always have some level of hybrids," Barr says. "But the ones that are wrapped around conventional switches are going to have a tough time." Existing deployments are also in the way. "Five to seven years ago there was a huge investment in contact center and CTI technology," Barr says. "And most of that stuff's depreciated by now. People have a pretty big investment in those [systems]. We're just getting to the point where those are being amortized. The pain threshold is disappearing." Related article: Hosting Hits Call Centers
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