January 2005

2005: The Year Of The Hosted Solutions

By Rich Tehrani, 
Group Editor-In-Chief, Technology Marketing Corporation

For those companies looking for first-rate customer interaction solutions but don’t want to spend a fortune on equipment, hosting is making a major comeback. In 2004, there were relatively few IPOs, but one of the most successful was that of hosted customer interaction solutions provider, Salesforce.com. The company is currently worth close to $2 billion. Only a few years ago, many “industry visionaries” said that hosted providers were all doomed. (Is there any industry in which writers, editors and analysts have to eat their words more often than the technology industry?)

I, for one, was a bit concerned by these dire predications, as I have been a champion of the hosted model for years. Hosting makes great sense for many organizations. At our Internet Telephony events, we have frequently had general sessions that focus on helping attendees decide if hosting makes sense for them. We call this session the “IP-PBX Shoot-out.” The most recent event, held last October in Los Angeles, had a standing room-only crowd and an audience truly thirsty for knowledge about this important technology.

Because I see hosted customer interactions as positioned for a tremendous amount of growth in 2005, I decided to write about a few of the companies worth watching in the hosted space.

The first is White Pajama, a company created in the height of the dotcom area when a name like White Pajama made a bit more sense. You know, Yahoo, Google, White Pajama. Somehow we are all comfortable e-mailing or searching the Web with a company named Yahoo or Google, but we just don’t want to have our contact center running on software from a company with such a name. Actually, this is not quite true, as White Pajama has been successful with its unusual name, having weathered the bust and now thriving in the boom. The company is getting ready to take it up a notch, and by changing the company name to Contactual (www.contactual.com), they believe they are ready to do so.

I spent a good deal of time testing the Contactual system and found it to be quite robust and useful. The menus are simple to navigate, and the GUI is easy on the eyes. Where Salesforce.com is more of a system designed for CRM/sales-type applications, Contactual is more contact center-oriented and, in fact, the two systems can work together.

With today’s Web services, the ability to connect various hosted products to achieve an integrated hosted solution makes applications extremely powerful. In many cases, the openness of Web technology allows software based on the Internet to be more flexible and, subsequently, more powerful.

So is hosted technology right for you? The answer: It depends on what your needs are. If you feel you must have ultimate control over everything, then hosting probably isn’t for you. If you feel like you would prefer to focus on your core competency and leave the details of contact center development to someone else, then it’s worth looking at. Still, as much of a hosting advocate as I am, the downside is very real and I have witnessed dozens of these vendors disappearing almost overnight during the bursting of the dotcom bubble. I don’t see a scenario in which this will be repeated, but as a responsible journalist, it is essential that I put the risks out on the table and let you decide. One thing is for sure: If a hosted vendor is four years old or more, it probably won’t see worse times than it has already experienced, and is therefore about as stable as it can be.

Hosting In Credit And Collections
Fairfield County, Connecticut is home to TMC, the parent of Customer Interaction Solutions® magazine. If there is one thing this area produces a lot of (aside from a very high cost of living), it is trade show and publishing companies. I’m not sure why. Perhaps the weather is so cold here that many of us launch trade shows so we can get away to a warmer destination in the winter. Perhaps this is the reason that Internet Telephony Conference & Expo will be in Miami this February.
When we see a company that is in our field, our county and, more amazing, in our own hometown of Norwalk (population 78,331), we want to get to know them. Don’t get me wrong. Close proximity is great, but this company does have a unique technology worth your time to learn about.

Before I go further, there is an important point worth making. Technology is decimating contact center jobs at a rapid clip, and soon we may worry less about offshoring and more about technology taking away contact center seats. Of course, technology is a double-edged sword: for every advancement that is made to displace jobs, the same advancement makes it less expensive for smaller companies to come and compete in the market. Desktop publishing leveled the playing field in publishing back in 1982. As a result of technology, thousands of new magazine titles, newsletters and brochures were self-launched. In the process, however, some of the people involved in typesetting print publications lost their jobs.

Having set the story up, I would like to introduce Adeptra to you. The company is a pioneer in helping credit card companies combat fraud. Using its technology, you can do so much more than battle fraud, but the company decided to pick this niche and dominate it. They are a major presence in the credit card space. In a typical credit card business, for every 100 calls to customers that may have incurred fraudulent charges, only a few of them are actual fraud.

Using a hosted model and speech technology, when a credit card company detects fraud, the information goes to Adeptra, who then place a call to the customer and, using text-to-speech technology, it communicates with the cardholder to decide whether the suspect transactions are in fact valid. Just as a fraud analyst does, the system can read up to five transactions to a cardholder to ensure they are all valid.

Adeptra is venturing into new markets, such as collections, and the company has proven that its technology achieves better results than live collection agents. Furthermore, the technology has allowed some companies to call customers with smaller balances. These customers were not contacted in the past, as their balances were too low to warrant the call.

In one scenario, a company was going to take its collections functions offshore. After evaluation, the company realized it would be less expensive to use Adeptra technology and keep 10 percent of the staff to take payment information when necessary. So here is a scenario in which technology saved American jobs.

Whatever your thoughts on Adeptra and what they do, one thing is for sure: This type of technology will change the way all contact centers work. It has not only the ability to save corporations massive amounts of money, it can be used to upsell customers or to get them thinking about shopping and buying. I would welcome a call from Amazon.com reminding me in November to start my holiday shopping.

What about a system that can call all of our Customer Interaction Solutions® readers, offering them an incentive to come to the next TMC-sponsored conference? Then there are the obvious applications: a customer satisfaction survey, or the ability for an airline to call and tell you about a delayed flight and offer to have the automated system rebook you on the next flight during the same call. Again, the solutions are infinite, and you can likely come up with a better example of how to use it in your business than I can.

Hosting seems destined to change the way contact centers operate. We can thank Salesforce.com, Contactual and Adeptra for standing as solid examples of how companies can make a good living from providing hosted solutions. Better yet, these companies are stable examples of why you should consider using hosted solutions in your business.

Sincerely,

Rich Tehrani
Group Publisher, Group Editor-in-Chief
rtehrani@tmcnet.com

[ Return To The January 2005 Table Of Contents ]