• September 14, 2010
  • By Donna Fluss, president, DMG Consulting

The Golden Age of WFM

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The contact center workforce management (WFM) market is waking up. Contact center leaders have had a love/hate relationship with WFM for years, but the recession-driven need to accelerate improvements in efficiency and effectiveness made 2009 a relatively good year for this well-established sector. Managers get the need for WFM, which is why 84.4 percent of participants in a recent DMG benchmark study called WFM mission-critical. (See The Winning Staffing Formula at www.dmgconsult.com.) More than 25 percent of respondents, however, chose not to purchase a third-party/packaged WFM solution, citing the systems’ cost, complexity, and often-suboptimal accuracy, as well as the challenges involved in applying their recommendations. 

WFM vendors have been hearing these complaints for years, but have not done enough to address the concerns. This is not because they don’t care what their customers and prospects have to say. Many vendors are well aware of the challenges that customers face when trying to implement and then use these solutions. The problem is that, prior to 2008, the revenue generated from WFM solutions was so modest that it limited vendor research-and-development (R&D) budgets, which are generally based on a percentage of annual revenue.

This situation started to improve in 2008 for two primary reasons. First, workforce optimization vendors that had acquired standalone WFM solutions to integrate into their suites started to make R&D and marketing investments. Second, more contact centers purchased WFM solutions. The two factors are interrelated, of course, but the revenue growth was also a result of fortuitous timing: By 2008, many existing contact center WFM solutions were too old to adequately address emerging business needs. 

WFM solutions are moving in the right direction, but to fulfill their potential must address three major challenges: 

1) Inaccuracy Is Costly—The largest impediment to further adoption of WFM solutions is the inaccuracy of their erlang-based (or modified erlang) core forecasting algorithms. Few in the market believe that erlang is optimal for planning agent requirements; it was not designed to handle either abandoned calls or calls with a lengthy average talk time. Yet erlang is used in most contact center WFM solutions because it’s accepted as the “best” forecasting tool—and because no one has yet introduced a better methodology. Any white knight vendor that can address the need for an improved and much more accurate agent-forecasting tool has a great opportunity to quickly capture a large percentage of the market. Users are aware that their current WFM solutions are better than nothing, but also know that the solutions are not fully optimizing their staffing needs, forcing them to leave money on the table. For small contact centers this may only be a few thousand dollars a month, but could represent millions at large centers.

2) WFM Is Too Hard to Use—The second major challenge is the difficulty in implementing and using WFM solutions. Vendors could eliminate some unnecessary complexity and greatly simplify user interfaces, but some of the complexity is inherent—WFM involves a variety of constantly changing inputs, which is not an easy task. Vendors could cut the system-administration burden by approximately 50 percent by revamping their solutions and properly integrating the handling of multiskill, multisite, multichannel environments, including blended inbound/outbound. This change, however, would require major re-architecting, and would be very costly for the vendors. 

3) WFM Isn’t Meeting Multichannel Needs—Enterprises are finally building blended multichannel contact centers that handle calls, emails, SMS, and, increasingly, social media. Each of these channels requires different treatment by a WFM solution. Most contact center WFM vendors claim to address most channels, but according to DMG’s recent benchmark study, most users are dissatisfied with the effectiveness of the multichannel capabilities of their WFM solutions. 

Despite these challenges, WFM solutions do deliver a proven value. Any single-site contact center with more than 100 agents would benefit from WFM, as would any complex multichannel/multisite environment with more than 50 agents—and the benefits only increase with agent headcount and site complexity. Even if WFM forecasts are not optimal, it would be far more challenging for contact centers to forecast transaction volumes and manage schedules without an automated solution. 

WFM vendors have introduced some innovations, such as agent self-service modules to improve supervisor efficiency and provide agents more control over their schedules. While these modules do not fix the underlying problems in WFM solutions, they have proven highly effective in reducing the management burden and increasing agent satisfaction and retention. This also contributes to an improved customer experience—as happy agents communicate their enthusiasm to customers—and reductions in operating costs. 

Real-time adherence modules provide another valuable capability: They identify and measure when agents are or are not where they are supposed to be. While there are right and wrong ways to handle agent-adherence issues, these modules are necessary for identifying and minimizing shrinkage in agent availability. 

A third important module or function is intraday management, which allows managers to re-forecast staffing requirements during the day as needed. Intraday management is a great concept, but many WFM applications need enhancements to this feature, as reflected in DMG’s benchmark study. Managers require flexible modules that, without requiring many unnecessary steps, can quickly incorporate and report the impact of changing conditions. This is an example of an area where “ease of use” needs to be addressed.

WFM solutions are a necessity for any sizable contact center. They are the most important productivity tools in most contact centers, and will remain so as long as contact centers continue to be people-intensive organizations. For this reason, the market potential for WFM is large, particularly if the known deficiencies are addressed. 

Enterprises want to enhance their WFM practices but need help from vendors. The market needs better forecasting tools and applications that are easier to implement and use. In addition, contact center managers will have to rethink how they apply WFM, and they must deploy it more consistently and fairly. 

But there is more to the WFM story. WFM solutions are often considered the system of record in contact centers, used to keep track of all types of agent-related information and key performance indicators. WFM solutions are, in essence, positioned to be agent performance management applications and/or the primary source for agent-related analytics. This represents a broader mission for WFM, but it’s a natural progression, assuming that fundamental weaknesses in the applications can be addressed. 

Donna Fluss (donna.fluss@dmgconsult.com) is founder and president of DMG Consulting, a leading provider of contact center and analytics research, market analysis, and consulting. To learn more about the contact center WFM market and the functional capabilities of leading and contending competitors, see DMG’s 2010 Workforce Management Report at www.dmgconsult.com. 

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