NT: Please describe Message Technologies' business.

DK: We've been in business longer than many of our competitors — for about 24 years. We began as a call center operation and we remain a call center operation. We still run a 24/7 live agent call center within our building. We have about 40 live agents and we support small to mid-sized businesses: everything from simple call answering to [more complex] problem solving. We have a good foundation and understanding of telephony-based customer service solutions. We've been doing it for many years.

What we began doing about 12 years ago was building IVR solutions. We were one of the early pioneers of hosted IVR solutions. Back then, we worked with what was then WorldCom (now MCI) and we continue to support some of the applications that we brought on board, such as touch-tone IVR applications. Within the last five years, we've been moving more into speech automation — hosted speech automation solutions — and we work primarily with technology partners such as VoiceGenie. In fact, we were one of VoiceGenie's initial customers and certainly one of their first hosters. We recognized that VoiceXML and speech were the way of the future.

We also recently announced a relationship with Microsoft, for two reasons. One, to offer our customers alternative technology options; and two, we're able to be very price-sensitive with the Microsoft solution — they're pricing it very aggressively. For those kinds of applications that don't require the sophistication of VoiceXML, we can provide very cost-effective ways for companies to get speech applications into the customer service front-end. We do both sides of it. We have customers who use our entire facility to bring calls in, we front-end them with an automated solution using speech, and we escalate them to our own agents when necessary, to finish the call. We can be soup to nuts for many types of customers.

We work primarily with partners on the hosted side of the business. We work with speech application development companies like Tuvox. There are voice and speech application developers who need a place to host them, and we do that.

NT: Are you focusing on the SMB (small to medium-sized business) market?

DK: We think the emerging market is in the mainstream. We think speech technology is becoming an accepted customer interface technology. More and more companies are asking, "How do we make that available at a lower cost?" These are the mid-tier companies, $100 million-plus kind of companies, that don't want to spend the kind of money that multibillion dollar companies are willing to spend. So, being able to offer very competitive, cost-effective solutions to that space is what we see as our "sweet spot."

NT: So you would say that speech technologies are a vital part of customer service?

DK: I think it's becoming a vital part. You can always come up with case studies [that conclude that it] may or may not be useful — more of a "nice to have" kind of technology — but I think what speech does is create an interactive capability outside what has typically been just a touch-tone, menu-driven kind of scenario. As the requirements become more complicated in terms of the amount of data that people are able to access and automate, speech becomes more and more important. To be able to interact with a speech application is far more efficient, rather than having multi-tiers or menus that you have to dig through with touch-tone. It really becomes an inefficient exercise. So speech lends itself to solving that problem.

NT: What would you say is your greatest challenge?

DK: Convincing people that hosting is a viable option. A lot of companies have traditionally acquired their call center switches, and now there are more enhancements to that, including speech technologies in-house. They like to manage it themselves. Our biggest challenge is making sure they understand they're limiting their opportunities by bringing [speech] in-house, and hosting is an incredibly viable solution. It's a great way to offset all those up-front costs they would otherwise have to deal with. So, educating the market on hosting [is the greatest challenge]. I think the market is starting to understand the technology and the advances of speech, and companies that recognize that are starting to use it. We as a hosted provider need to make sure they understand that the options of hosting can be very compelling. People don't understand how easy it is for somebody who is embedded in the telephony world to get calls away from their facility and get them routed back. It's an entirely seamless process. Having all the equipment and the redundancy and additional support that allows a data center like ours to run 24/7 in a streamlined way is a big undertaking, and it's more than many companies [are willing to undertake].

NT: If the biggest problem is convincing people that hosting is a viable option, does that mean that we really need to do some more marketing through education?

"Though many companies are doing hosting successfully, I still think that a larger majority don't understand the concept."DK: Yes, I think so. [We need to encourage] understanding of what's involved in hosting and the advantages that hosting offers. Though many companies are doing hosting successfully, I still think that a larger majority don't understand the concept. Maybe they don't even recognize that it's an option. A large part of it is just making sure people understand that a lot of significant companies are sending a lot of telephone calls to hosted partners as opposed to brining them all in house, and it's a great way to save a lot of money. So education is key.

There's two elements to implementing a speech solution. There's actually the development of it, of course; and then there's the running of it. We also offer, either directly or through partners, very cost-effective ways to get the application developed. And as a hoster, we can be very creative in terms of how we absorb the costs associated with that. We can either charge some costs up front and amortize them, or amortize it all, whatever makes sense to allow a customer to recognize benefits. They're just not able to do that with an on-premises solution. They really have to come up with a huge investment: not just equipment, people and services, but also software development. Not everybody likes to do that, some want [those costs to be] amortized. Sure, if you pay everything up front, you're going to pay a little less, but some people want to spread the risk and, as a hoster, you're able to do that more aggressively.

NT: You mentioned education; that people don't know about hosting. How are you prepared to convince people?

DK: Sometimes it's just cold, hard marketing: getting exposure within the space, having case studies that talk about the value that hosting brings, and comparing a hosted solution to an on-premise solution. [It's] understanding why people might pick an on-premise solution rather than a hosted solution and pinpoint the areas where they may not have done a fair comparison. We're spending a lot more time simply marketing the fact that more and more people are hosting. We're talking about successful customers who have made that decision and the reasons why they do it.

NT: In your opinion, what is the greatest need in our industry?

DK: It's still a small industry, and it's still perceived as a specialized industry. I think part of the challenge is that it's still seen as an expensive, "nice to have" thing. Speech is, for many companies, a luxury product. It's not something that you have to have yet. I think that's because it's perceived as a special investment that only certain companies are able [to make], and I think the price point has to come down. The expectations of the application capabilities have to be "Part of the problem is there are [only a few] players who really control the industry."rationalized with the costs associated with it. You've got to be able to offer decent solutions for significantly less cost, otherwise you're not going to get the kind of adoption that people are looking for. Part of the problem is there are [only a few] players who really control the industry. They tend to be locking up controlling costs quite aggressively, and other companies are now starting to emerge and be more aggressive about putting [new] solutions out there. As people adopt those solutions, I think the market will change. So price is a big factor. I go to industry shows, and there's still a few players who hang around and feel good about a few [customer] wins, but they still haven't gotten across the chasm to mainstream acceptance. A lot of that is price, some of that is functionality. I think a lot of people still get irritated talking to a computer. But I think that's rapidly improving, and the technology is definitely getting there. The ability to design good applications is key; there are a lot of bad applications out there that turn people off the whole concept. As companies become smarter about how they design applications and understand how people react to them, I think that'll help drive [acceptance] forward.

What we're trying to do is look at certain verticals — maybe one or two, the ones we feel are the most viable with the most consumer acceptance — and try to build solutions around specific problems and market those to specific companies within that space to try to drive some acceptance and market them at a very aggressive price. That's something we're moving towards over the next 12 to 20 months. We have partners already who do some of that. They pick the market or the industry they really want to go after. We have one partner who sells only to the cable TV market. That's it. We have another partner who sells only to pizza restaurants. They understand the problems in that space, and they're building solutions to work around them. You can't be everything to everybody with a piece of technology…it's got to be geared.

NT: Are you involved in offshore strategies?

DK: We're looking at offshore outsourcing as part of our strategy. There are opportunities where people come to us, and they have call centers offshore, which they want tied to a front-end solution, but they want part of the processing to be done state-side. We are partnering with a number of companies to provide turnkey solutions to meet that requirement.

NT: What are your greatest core competencies?

DK: I think we position ourselves as being extremely flexible when it comes to sorting out hosted solutions. We get people who come to us and say, "We've approached some of your competitors and they don't seem to be able to get our complex telephony requirements worked out" or "Here's our speech application, and here's how we want to route calls to it, and here's what needs to happen afterwards." We're very good at solving those complicated problems. We've done a great job with our customers who want all sorts of strange and exotic telephony solutions, especially around speech applications. [Because we are] a hoster that ties the computer part of the technology with the telephony part of the technology to make it work perfectly all the time, that's what they're looking for from us. So, making complicated solutions seem completely seamless is something we're very good at. "Making complicated solutions seem completely seamless is something we're very good at."

We're able to price out the cost of the hosting piece and [offer] a price point that allows mid-sized companies to start offering speech technologies as part of their customer service solutions. We can pick the right platforms and understand how the technology can scale. Our customers don't have dedicated ports. A lot of people solve the reliability issue by saying, "Only ports for that customer can go there." Well, that costs a lot of money. You really have to get a lot of capital to invest to be able to do that. We know how to segment our customers. We have very strict procedures in-house which allow applications to be staged into our environment in a way that it won't affect other people, but we can still share our environment between all our customers. We can keep our costs down, from that perspective, and pass the savings back to our customers in lower pricing.

NT: What would you say is your positioning statement?

DK: We're the leading provider of speech applications hosting services, providing a cost-effective and incredibly flexible solution for the mid-market company. We understand how speech technology can be integrated fully into a call center cost-effectively while streamlining operation.

NT: How do you differentiate your company from competition?

DK: It goes back to the flexibility. Companies come to us that haven't been successful in finding a solution with our competitors because they don't have the same ability to build in the kind of complex telephony solutions that we're able to put together, or they might be much more expensive. We think we're a price leader in the space, especially with the Microsoft platform which we're now aggressively promoting. That said, our VoiceGenie pricing and our Voice XML pricing are very competitive within this space.

NT: You have a call center background, and you know what call centers need.

DK: Not only do we have the background, we have a 24/7 call center. We know exactly how it works.

NT: Thank you, we appreciate your time.