The Benefits of a Hosted IVR

By Rick Danos

DMG Consulting estimates that IVR (interactive voice response) systems can automate between 20 to 90 percent of a company’s incoming calls while actually preserving its ability to increase service quality and customer satisfaction. Although some companies have opted to purchase in-house IVR systems to address these challenges, many are outdated, requiring costly hardware and software upgrades and requiring personnel to handle the next generation of customer service. Unfortunately, dedicating the resources to optimize these in-house IVR systems is a challenge for many organizations.

As a result, companies are considering investing in IVR systems delivered through a hosted environment that can help them address current business challenges and meet their future business needs. DMG Consulting estimates that hosted IVR solutions are outpacing in-house IVR technologies among companies across a wide array of vertical markets. There are three key drivers and business benefits for hosted IVR solutions.

Key Benefit #1: Lower Overall Costs: At a time when budgets are tight, businesses are looking to reduce capital expenditures. Hosted IVR systems reduce the traditional costs associated with in-house systems and move costs from a capital expense to an operating expense. Hosted solutions enable businesses to deploy a “pay-as-you-go” cost structure that provides a great degree of budget flexibility and expense control over in-house software solutions.

In a three-year total cost of ownership (TCO) study, the Yankee Group compared an in-house contact center solution with the costs of a hosted offering and found that:

  • The TCO advantage is most substantial in enterprises with over 200 call center agents, but small and medium-sized enterprises can also realize significant cost savings.
  • A fifty-agent call center can realize a savings of 25 percent by deploying a hosted IVR solution over an in-house solution, with savings in hardware and software investments, implementation and maintenance costs, technology upgrades, and IT and telecom staffing. The savings are more significant for larger call centers.
  • Businesses can eliminate capital expenditures and reduce or reassign headcount associated with managing and maintaining in-house software systems.
  • Businesses can more easily use “at home” or remote call center agent models. YankeeGroup points out that this flexibility enables companies to hire the “best and brightest” call center staff and results in higher retention rates among call center agents.

Key Benefit #2: Faster Deployment, Scalability, and Upgrades: In-house solution deployments have become notorious among business decision makers as costly and lengthy ordeals. Delays in implementation – particularly those around mission-critical solutions such as IVR – can cause frustration and result in opportunity costs that sacrifice revenue and customer satisfaction rates.

Scalability is another challenge that organizations utilizing in-house IVR solutions face. Lead times due to telecom network requirements and IT resource allocation needed to add extra voice ports make it difficult to compete with the scalability of hosted IVR solutions. Due to excess capacity being a common platform feature, hosted IVR solution providers are positioned to provide on-demand capacity to meet clients’ unforeseen business requirements and keep business moving forward.

In many cases, businesses using an in-house IVR solution lack expertise in voice user interface design, industry best practices, and other areas of expertise traditionally provided by hosted IVR solution providers. These internal deficiencies often result in additional costs associated by tapping third-party consultants.

Hosted IVR solutions eliminate these headaches. Companies offering hosted solutions have extensive, proven methodologies to optimize the deployment of IVR applications. Other business benefits include:

  • Hosted IVR solutions have no upgrade costs. Companies that offer hosted IVR solutions incorporate upgrades into the solution as a natural evolution of their applications.
  • Hosted IVR services enable businesses to nimbly and rapidly address changes in the marketplace resulting from regulatory or technology shifts.
  • Clients using hosted IVR platforms do not need to dedicate staff for implementation or training, enabling them to focus on core competencies.

Key Benefit #3: Advanced Functionality: Hosted IVR providers can more readily extend a company’s IVR platform by adding complementary, value-added functionality that provides insights into every customer interaction. This knowledge can then be used to predict future customer behavior in order to improve overall results. Two key areas of complementary functionality – advanced speech recognition and customer analytics – require knowledge in specialized areas that does not typically reside within IT departments that support in-house IVR solutions. As a result, businesses seeking to augment in-house IVR systems with speech recognition or analytics tools must invest in additional implementation, integration, and training. Additionally, upgrades to the core IVR platform also require integrations with the other software platforms that touch it.

Hosted IVR providers are positioned to deliver this value-added functionality at a fraction of the cost and with significantly fewer resources than in-house solutions providers for these reasons:

  • By pre-integrating other mission-critical capabilities, hosted IVR providers can deliver faster deployments with much lower up-front costs.
  • As hosted IVR providers upgrade their existing platforms with new functionality, they also ensure that advanced speech and analytics systems are integrated.
  • Because advanced functionality is part of the platform, hosted IVR providers have knowledgeable staff to help clients. These resources give clients the benefit of expertise through a single source.

A Hosted IVR Strategy Is Not a One-Size-Fits-All Approach: The key to developing and deploying IVR can begin with a hosted solution. From there, companies can tailor their strategy to address individual and industry needs. For example:

  • Does the company wish to deploy advanced speech recognition to achieve higher automation rates?
  • What other touch points are critical for customer service satisfaction?
  • Should call center and agent performance be optimized with customized automated customer interaction solutions?
  • How can analytics be used to better understand if retention strategies are effective?

Hosted IVR solutions can help businesses identify and resolve these key customer service challenges, both today and in the future.

Rick Danos is the director of product management for CSG International’s Interactive Messaging Group, which specializes in delivering automated and interactive customer communication solutions via Interactive Voice Response (IVR), SMS, email, and Web services. Danos has over fifteen years of experience working with large-scale telecommunications providers and dot-com companies.

[From Connection Magazine March 2012]

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