The Real-Time Contact Center Newsletter

May 2005

Our focus this month is on the growing hosted contact center market. Hosted contact center solutions are beginning to change the dynamics of the contact center market. Companies and departments of all sizes - small, medium and large - can now acquire feature-rich contact center services that are competitive with the premise-based systems that only larger organizations could afford in the past. These vendors are leveling the playing field by eliminating the need for a capital investment, lowering start up costs, reducing onsite support needs, minimizing implementation burdens and providing high quality offerings.

What is Hosted Contact Center?

In a hosted contact center model, a service provider (often referred to as a network service provider or NSP) offers its customers multi-media and multi-site capabilities, such as automatic call distribution (ACD, call routing and queuing), skill-based routing, interactive voice response (IVR), computer telephony integration (CTI), email response management (ERMs), outbound dialing, recording and many other features through its carrier network and the Web. The only equipment investments required by end users are Internet Protocol (IP) or circuit-based telephones, a PC with a web browser and possibly a headset. Some of the hosted solutions also require gateway software at the end user's site, to support the applications.

Hosted Contact Center ≠ Outsourcing

Hosted contact center solutions are not the same as outsourcing, although outsourcers are increasingly offering these services. In a hosted contact center model, end users handle their own transactions at their own sites using third-party technology. While there are many outsourcing business models, outsourcers generally provide the staff and often the hardware and software to respond to customer inquiries/transactions. Hosting eliminates the need for on-site technology support while giving end users full control and responsibility for managing customers and relationships.

Hosted Contact Center Market

The hosted contact center market has been grown quietly during the past 9-plus years, built mostly by low profile companies such as Cincom, Contactual (previously known as White Pajama), CosmoCom, Five9 and Telephony@Work. The recent entry of high-profile Avaya, in addition to CISCO, which has been a player in this market for a few years, will increase the visibility of this developing market and speed up product adoption.

There are two primary vendor categories in the hosted contact center market. The first consists of the technology providers that build the systems. In the second category are NSPs and outsourcing companies that sell hosted contact center capabilities to end users. There is also a hybrid group that builds its own technology and sells directly to end users. The market is expanding rapidly, with the most significant growth among the NSPs around the world.

Technology Benefits

Hosted contact center solutions package many contact center applications, such as ACD, IVR, CTI, ERMs and outbound dialing, in one platform. Users can select any number of options to customize their contact center, without the cost and difficulty of integrating multiple disparate systems. However, integration is still required when users want to tie internal operating systems, such as a customer relationship management (CRM) suite, to a hosted contact center.

A technological differentiator of the hosted contact center offerings that offers many advantages is the multi-tenancy capability. While this feature varies by vendor, the most advanced multi-tenant applications allow many companies or departments to run on the same server simultaneously, securely and totally independent of each other. This means that end users can finally centralize management of multiple, geographically dispersed contact centers. It's already proven beneficial to government agencies, educational institutions and private enterprise. Multi-tenancy allows NSPs to offer services at a price end users can afford, because a single server can be used for many customers.

Outlook for Hosted Contact Center Solutions

Hosted contact centers offerings are not new; what is new is that many of these solutions are now as feature-rich as products from the leading premise-based contact center infrastructure providers. As of Q4 2004, hosted solutions are now being offered by leading contact center infrastructure providers, in addition to less well-known "start-ups." The hosted contact center market is past its infancy and is starting to mature. DMG Consulting predicts that by 2007, 20% to 30% of all new contact center seats will be hosted.

Regards,

Donna Fluss

Principal, DMG Consulting LLC

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05/17/2005	Don't Let Marketing Own the Contact Center (CRMGuru.com)
05/08/2005	Hosted Contact Centers are Ready for Prime Time (Whitepaper)
05/04/2005	What's Hot in Contact Center Workforce Management (SearchCRM.com)
04/20/2005	The Next Frontier in Contact Centers? Reining in 'Unstructured' Data (CRMGuru.com)
04/12/2005	Benefits of IP Contact Centers - The Hard and Soft Benefits of IP-Based Contact Centers (GreaterChinaCRM)

Thank you for your article telling us "What’s Hot in Contact Center Workforce Management" (ICCM Weekly, May 6, 2005). Could you elaborate on the performance management part? I appreciate systems that are able to look at activity and the actions/state of agents, but I was wondering about the performance of the non-people systems that affect performance. Such as, are ACDs being utilized or are users hanging up before completing their tasks? What about other abandoned situations and how do they get rolled into performance management?

It will be interesting to see how the different vendors in the WFM area open their architecture to take into consideration ACD, CTI, IVR, Web chat and email, to name a few.

David Sandoval
Sales
Strategic Computer Support

When I discuss performance management, I am referencing contact center performance management. Because of its many benefits, contact center performance management is expected to become a primary component of contact center operating environments in the next three to five years. Today, most contact center managers say they do contact center performance management, but the majority of these activities are manual.

Contact center performance management, also known as employee performance management, aligns corporate objectives with the tactical and strategic goals of all operating areas, including sales, marketing and the contact center. Performance management is intended to broaden the focus of the contact center from strictly departmental goals to an enterprise-oriented set of objectives. It provides tools, processes, and a means for sharing time-sensitive, vital customer information with the rest of the company. It also features automated data collection and reporting technology that frees up contact center managers to work toward achieving corporate goals.