What’s New in the IVR World
What’s New in the IVR World
By Donna Fluss
Every August, SpeechTek holds its annual conference in New York City. For many years, this has been the largest gathering of IVR and speech vendors and a great opportunity to see what’s new and happening in the industry. 2006, thought not a year for market breatkthroughs, has seen steady advancements.
Traditional IVR has been a commoditized market for years now, but there are still some pockets of innovation. IP IVR is developing nicely and presenting end users with real cost savings opportunities. Speech recognition is finally being recognized as a customer necessity and many enterprises are in the process of determining the best approach for migrating their traditional environments to the new standards-based solutions. Additionally, voice portals and unified communications continue to drive change in the dynamics of the IVR market.
The most excitement in the industry right now is coming from merger and acquisition activity, which is to be expected in a maturing market. For years we’ve been seeing classic market share acquisitions to build scale. More recently we’ve seen two other types of acquisitions – the first to acquire technology to fill competitive product gaps, and the second to enable IVR vendors to create product suites that extended beyond IVR into contact center infrastructure.
Developments in three areas of the market are especially noteworthy: technology, adoption of speech and mergers and acquisitions.
Many of the innovations in the IVR world are being driven by advances in speech technology, as this is the growth segment of the market. Progress in this area includes the maturation of standards such as VoiceXML and SALT, investments in multi-modal offerings to expand the benefits and uses of self-service, improvements in underlying speech recognition algorithms that enhance the IVR’s ability to provide a more natural language-like experience, and IP/SIP-based systems. (The delivery of standards, although painfully slow, still promises a great improvement over proprietary solutions.) Services Oriented Architecture (SOA) is also making its way into the world of IVR and will ultimately be a requirement for these systems.
The newer IVR servers provide a complete range of transaction processing capabilities and are able to handle calls, video, email and IM. Leading enterprises have found very creative ways to use these systems to extend their value beyond basic IVR capabilities. The leading solution providers have also introduced significant enhancements and now generally provide standards-based tools and development environments to facilitate the delivery of new multi-modal applications.
The market has recently seen the introduction of hybrid IVRs. These solutions incorporate live agents to facilitate IVR sessions. Agents listen to conversations and step in when customers need assistance. This practical innovation will attract companies that were previously hesitant to use IVR, as it was not considered responsive enough to customer needs.
Adoption of Speech
Vendors are still waiting for speech recognition to “take off” and dominate the market. This hasn’t yet happened in the market’s 20-year history and is not likely to happen in the near future. DMG Consulting predicts in the next three to five years, more than 55% of end-user organizations will migrate from classic IVR platforms to open standards-based systems, driving strong growth in the speech market. Many enterprises have invested millions of dollars in their incumbent IVR platforms and are in no hurry to do a complete system replacement, even if they’ve had their current solution for 5 to 10 years – their existing applications work well and get the job done. Sure, speech is a user-friendly technology that can do more than a classic touch tone IVR application, but end users are faced with many technology needs and limited resources competing for their attention and investment dollars. The IVR vendors who come out ahead will be those who provide:
- Compelling and flexible standards-based offerings that include tools to facilitate and speed up the delivery of scripts and a voice user interface (VUI)
- Standard integration set-ups for common systems and standards-based integration capabilities for custom integrations
- Multi-modal capabilities
- Highly effective algorithms that enable the use of natural language-like applications
- Cost effective offerings
- Professional services
Another challenge for the IVR and speech market is that these applications are increasingly viewed as a component of a much bigger suite. The decision to upgrade an IVR is often secondary, dependent upon other systems that are viewed as more critical for the enterprise’s success. Ironically, because many enterprises handle between 60% and 90% of all incoming calls on their IVRs, these systems really are mission critical, as contact centers would not be able to handle existing call volume without their help.
Mergers and Acquisitions
As is common in all mature and commoditized markets, there are a lot of mergers and acquisitions among the IVR vendors. Nuance has purchased quite a number of speech vendors, including its leading competitor. Intervoice has purchased Edify and, very recently, Nuasis, an IP contact center provider. Syntellect has purchased Apropos, a contact center/computer telephony integration (CTI) vendor. Genesys purchased VoiceGenie to enhance its voice portal business. Cisco purchased Audium, a provider of application development tools for the self-service market. More mergers are expected as vendors in the IVR/speech market continue to strengthen their portfolios and market positioning. While mergers and acquisitions often strengthen a market in the long-term, they frequently present challenges to end-user organizations that have to survive the upheaval in the aftermath of merger activity.
2006 has not delivered any disruptive technology to the IVR/speech market. What we’ve seen is ongoing technology and product improvements, continued migration to standards and mergers and acquisitions. IVR is a necessity in most leading contact centers, even if many of these implementations still need significant improvement. (See article How to Fix Your Hated IVR). The adoption rate of speech recognition technology is expected to realize a slight increase, driven by the replacement cycle for IVR applications. (Most companies with a sizable contact center already have an IVR.) End users will continue to invest only in technology that adds value well in excess of the cost and pain of its implementation. The IVR/speech vendors have to develop ways to communicate the value and benefits of their latest offerings in this age of analytically-oriented contact centers.