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April 1, 2004
By Khali Henderson
While the ASP model suffered a false start, it is re-emerging with vigor in the customer relationship management segment, offering enterprises large and small a contact center utility on an outsourced basis. Some of the offers naturally are coming from entrenched CRM players like Siebel Systems Inc. and IBM Corp., which jointly released Siebel OnDemand CRM in October 2003, while others are from startup service providers like Echopass Corp. However, there is a logical business case for telcos to offer contact center solutions as a managed service to their existing customers. Several call center platform vendors and some service bureaus are enabling telcos to do just that.
Shifting customers’ CPE expenditures to service expenditures presents a lucrative opportunity for telcos. Ovum forecasts the number of contact center seats using at least one service from a service provider will grow from 700,000 in 2000 to 2.7 million in 2005, or from 11 percent of all contact center seats to 26 percent. The research firm projects the total global market for outsourced contact center services is growing 25 percent annually, from $675 million in 2000 to $2.8 billion in 2006.
Hosted contact center solutions, obviously, focus on automating customer contact with automatic call distribution, interactive voice response, speech-recognition, predictive dialing, e-mail response, computer-telephony integration and other technologies. Each requires configuration and customization for the clients and may require integration with the CRM, workforce management or other enterprise IT applications.
Telcos can offer services on a dedicated platform akin to an IT outsourcing arrangement or on a shared platform operated internally or via service bureau.
Genesys Telecommunications Laboratories Inc., a market leader in the call center space, enables carriers like BT to offer services to large enterprises from the Genesys platform. In this scenario, the telco operates and manages the platform at its facilities on behalf of the enterprise customer, tying into the PBX, contact center and PCs that are on the customer’s premises. It can also tie into a third-party, remote or after-hours call center if requested. (Incidentally, this could be an additional revenue generator for telcos that offer telemarketing services.)
“When a telco becomes a managed services customer, they are a partner,” says Matthew Kresch, senior director of managed services for Genesys, noting some telcos have opted to leverage the Genesys reputation in the space by cobranding their offers. “We help them put together packages that are resalable.”
Kresch says he spent six months working on pricing models that fit the carrier’s minutes of use model. “They want to offer customers a fixed fee per month plus transport fees per minute and service fees per minute,” he says. Carriers license the platform from Genesys based on seats; some have also engaged in revenue sharing with the software vendor. On one service feature offered through the Genesys platform, service providers have recorded an ROI of around 10 months.
BT, which has been a Genesys customer for about seven years, augmented in June 2003 a four-year-old hosted contact center solution based on Cisco Systems Inc.’s Intelligent Call Management software with the Genesys platform. Paul Brett, head of call center product management for the carrier, says while Cisco ICM allow for virtualization, Genesys extends features to the agent level. Extensive integration and customization requirements are keeping BT’s target market on large-volume clients. “We need to be able to turn the handle to go down market,” Brett says. Brett notes BT and Genesys are working on best practices for integrating with various onpremises equipment in an effort to speed deployment.
The Genesys platform already is used in a shared customer environment by service bureau Echopass to serve smaller clientele, including midtier enterprises, departments and branches of large enterprises, and outsourcers worldwide.
Cisco also rolled out its own shared platform in late February. The Cisco IP Contact Center (IPCC) Hosted Edition is hosted by the service provider and shared by multiple midsize business customers. Subscribers can have IP infrastructures, TDM infrastructures or a combination of the two.
According to Cisco, the application represents a departure from TDM-based approaches because a service provider can grant administrative control of network-based resources to subscribing customers. For example, the customer can modify its business rules on demand via a Web-based interface, accessing the system that resides at the service provider’s location. Customer control of network-based resources reduces costs and saves time for the service provider and its customer, according to Cisco product literature, which also notes, this type of network intelligence provides an incentive for customers to migrate from TDM to IP and, thus, become prospects for a telco’s other value-added services.
The IPCC Hosted Edition also supports third-party contact center applications such as CRM, workforce management, monitoring and recording, message boards and multimedia customer interactions.
For telcos that don’t want to get into the IT outsourcing business, there also are opportunities to sell hosted contact solutions through an ASP. XO Communications Inc., for example, announced in fall 2003 that it will work with Echopass to provide XO customers with a suite of telephone and Web-based contact interaction/call center solutions delivered over the XO network and offered on a monthly cost-perseat basis. These services include call handling and e-media features, such as universal queuing, skills-based routing, synchronized screen delivery, CRM integrations, e-mail response, Web-chat and Web callbacks. Management features include real-time views of contact center traffic, consolidated historical reporting, centralized administration, predefined servicelevel objectives and contact escalation features.
Echopass says some of the advantages to the customer of a hosted service over premise-based systems include:
low capital expenditure as customer-side requirements are a PC, a browser and a network;
fast deployment because the infrastructure already exists; and
scalability to increase or decrease capacity by adjusting the subscription parameters.
Because it is a telco, XO can facilitate the quick deployment of virtual centers and remote agents using its broadband communications options.
CosmoCom also is promoting its white-label shared platform to telcos, and claims about a dozen service providers, such as France Telecom, Korea Telecom and NTT, on board. Steve Kowarsky, executive vice president of CosmoCom, says that the benefit to the service provider of the shared model is somewhat analogous to that of the end customer in that all the costs are shared for the operation and maintenance of the software. Taking the analogy a step further, in January, CosmoCom launched utility pricing for its service provider customers.
The utility pricing program includes two basic modes - metered and unmetered. Under the metered plan, platform usage is measured by the minute. With metered usage, the number of concurrent agents or IVR ports is irrelevant; only the total minutes of use matters. Under the unmetered plan, agent positions and IVR sessions are licensed for unlimited use during a month. The peak number of concurrent unmetered agents and IVR ports during a month determines the cost for that month.
Datamonitor CRM analyst Peter Ryan predicts organizations will demand more “pay per use” pricing, and utility pricing from CosmoCom will help service providers respond to this demand and demonstrate a compelling ROI for “contact center on demand” without risk to their own financial well being.
Startup Contact Solutions Inc., which debuted last September, also is targeting resellers as a potential distribution channel for its customer contact automation solutions. Contact Solutions founders are from Price Interactive, which was sold to iBasis Inc. in 2000 and to Convergys Corp. in 2002. CEO Paul Logan says that Price Interactive had success with the resale model, pointing to its platform’s use by AT&T’s InfoWorks. What will be done differently at Contact Solutions, however, is that the company has based its technology on a non-proprietary platform made by InterVoice Inc. in an effort to overcome what Logan says is a common objection to outsourcing. “Why enterprises won’t outsource is that if it’s proprietary and they don’t like the service, they can’t take it in house or to another provider,” he says. “They simply don’t want to be stuck.”
Logan adds that the resale approach makes sense for carriers that are necessarily unable to focus on the ins and outs of a contact center operation. At the same time, he contends that the offer can aid customer retention. “It makes them stickier if they have million of dollars of applications tied to you,” he says, emphasizing the value of portability. “Even if they port the applications elsewhere or internalize them, the sticky part is the carrier network.”
Contact Solutions offers a wholesale per-minute rate to its resellers. Logan says carriers can mark up the service 25 percent to 50 percent and remain competitive with market pricing. Development work, which can run in the low tens of thousands of dollars to high six figures - usually is paid up front, but can be built into the customer’s subscription pricing.
Datex, a CRM and billing provider serving the telecom and other vertical markets, also is enabling carriers to offer their customers a hosted CRM service. It also has A/R and trouble-ticket applications that can be automatically integrated into the offer. The Canadian company has an ongoing white-label agreement with Sprint Canada. While Datex does not yet have a U.S. customer, CEO Jim Dawson says that one advantage of the hosted model is “it doesn’t matter where the host is.”
He adds it’s not necessary to identify the exact requirements of the call center up front, because it’s scalable. “New agents can be up and running the same day,” he says. He notes that in the case of Sprint Canada, it handles overflow calling for an enterprise customer. Datex also has relationships with third-party call centers for outsourcing the live operator function as well. “The advantage of our solution is it offers the same information for both call centers; with a server solution, that’s problematic,” he says.
Datex resellers can expect to make a 25 percent to 50 percent margin.
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