July 2003

By Brian Anderson, Aspect Communications

The word 'virtual' got a lot of attention in the 1990s. There was talk about virtual reality, virtual storefronts, virtual workgroups, virtual classrooms and even virtual corporations. Vendors of business communications systems put a lot of effort into promoting a concept called 'the virtual contact center.'

The idea was simple: PSTN lines would connect a network of geographically distributed automatic call distributors (ACDs). Carrier-routing applications would handle cross-site routing, or calls would arrive at a headquarters site, which would cross-flow them over T1 lines. To customers calling in, there would seem to be only one contact center, with one entry point and one brand identity.

The industry dialog on the topic focused on big benefits for companies implementing virtual contact centers. They could use 'follow the sun' strategies to increase service hours and extend business reach. They could take advantage of low-cost labor pools. They could get more out of their staffing expenditures because when agents at one site were idle, they could accept overflow calls from busier sites. They could offer better customer service because calls would be answered more quickly and skills-based routing would get customer requests to the best resource to handle them.

Another flavor of the virtual contact center was based on the use of remote agents working from home offices. This even-more-virtual model would greatly reduce facility costs and enable businesses to attract skilled agents by offering the incentive of working at home. It would also offer greater flexibility to handle sudden spikes in call traffic, because at-home agents wouldn't have to drive in to the contact center to work emergency shifts: you could just call them at home, and ask if they could work an extra hour or two.

Has the virtual contact center become reality?
It sounded awfully good, and contact center industry analysts got on the bandwagon, hailing the virtual contact center as the wave of the future. The concept caught on and benefited large businesses in customer-centric industries such as healthcare, finance, home shopping and telecommunications. Many of these businesses already had multiple sites, and networking them was a logical step.

In spite of this, the virtual contact center wasn't exactly a runaway success. According to a recent survey of 112 contact centers conducted by Gartner Dataquest, 52 percent indicated that they had ACD systems in two or more locations. Of those with multiple ACD systems, 69 percent indicated that calls could either be automatically transferred between systems or queued at multiple sites. Seventy-eight percent indicated they did not support work-from-home agents or satellite contact centers.

Does this indicate that vendor claims were overstated? Did businesses that built virtual contact centers fail to see the promised return on investment (ROI)? Or was there another cause for mediocre adoption rates?

Evidence points to the other cause. Large businesses that implemented virtual contact centers have in fact seen the results that vendors promised. But another factor must be taken into consideration, a factor no one predicted in the early 1990s when the vision of the virtual contact center first came into sight on the business horizon ' the economic downturn that has plagued businesses in the opening years of the 21st century.

As it was originally conceived, the virtual contact center was PSTN-based. It had hardware-intensive ACDs at each site, and it required copper T1 lines as links between sites. All the traffic that traveled through the virtual contact center was subject to PSTN toll charges. Businesses paid extra for the carrier routing applications offered by their network providers.

In terms of both infrastructure and toll costs, the virtual contact center was a pricey investment that would take time to yield all the benefits. Then when the dot.com bubble popped and the economy started to tank, businesses became much more reluctant to make capital expenditures of the sort needed to build virtual contact centers. This may, in fact, be the primary reason for the relatively limited deployment of remote agents, since early remote agent solutions required PSTN lines to connect the home offices to the contact center.

So, companies that already had virtual contact centers in place continued to realize the benefits. But with budgets shrinking rapidly, companies faced with the prospect of expanding the PSTN infrastructure couldn't justify the expenditure.

Does this mean that the virtual contact center, like the dot.com boom that accompanied it onto the business stage, is a thing of the past? Not at all. The concept is still viable, but only if two major factors are taken into consideration. One is a continuation of the economic downturn. The other is a change in the technology landscape.

Together, these factors will change the concept of the virtual contact center, shifting the focus from multiple networked sites to centrally administered remote agents and to the extension of the contact center within the enterprise.

The Downturn Cools Off Spending
Until the economic climate gets better ' a lot better ' don't expect to see businesses undertaking major initiatives to expand their contact center infrastructure. The focus will continue to be on cost savings, and companies are already beginning to apply some of the principles of the virtual contact center as cost-saving measures. The concept of a network of full-up sites with high-end ACDs at each site is being replaced by remote solutions that extend business reach cost-effectively: smaller, low-capacity ACDs, branch-office-sized call routing applications running on desktop platforms, or inexpensive switching shelves that connect to the main contact center and use the main center's software.

In this business climate, many companies are reconsidering the value of deploying remote agents. Some businesses are growing in spite of the downturn, and need to bring more customer service agents online, but even successful companies have to watch the bottom line. So instead of putting out the money required to open and wire a new facility with hundreds of agent seats, many companies are using remote agent connectivity to expand their CRM capabilities without expanding their physical plants.

VoIP Technology Turns Up The Heat
Another good reason for taking another look at remote agents is the fact that voice over IP (VoIP) technology makes it much less expensive to deploy them. The quality of VoIP is now equal to or better than PSTN voice, and the cost of implementing remote VoIP connections is much less than the cost of extending the PSTN network, both for at-home agents and for remote agents working in satellite offices.

According to Gartner Dataquest, 'IP-based networking is poised to become the dominant networking method in the future because of its benefits of superior routing, reporting, monitoring and administration capabilities whether supporting multisite networks, satellite centers or work-at-home agents.'

Furthermore, the convergence of voice and data onto the IP network promises to alter the entire contact center landscape in ways that will cost-effectively deliver all the benefits vendors originally promised from the virtual contact center, and more besides.

The geographic independence that is the central principle of the virtual contact center is greatly enhanced on the IP network. Agents can be located anywhere there is an Internet connection, with no PSTN costs for the voice and data that travel between agents and the contact center. Contact center outsourcers in North America, in fact, are already taking advantage of IP remote agent technology to locate large groups of agents offshore, in countries where labor costs are much lower, and manage them centrally from the home office.

Another advantage that IP connectivity offers is mobility for agents. The universal addressing scheme of the IP network makes it possible for businesses to relocate agents quickly and easily. Onsite agents can move from place to place within a facility, and at-home agents can move their offices without having to be reconnected. IP also reduces the costs of building and running the virtual contact center, because it makes it possible for developers to have a single development interface for all applications, reducing development time and cost. It also gives agents a unified desktop for all the applications they use to serve customers ' VoIP, e-mail, Web collaboration and Web chat ' making them more productive. The openness and scalability of the IP network will reduce the cost of expanding as the business grows and needs change.

Another intriguing possibility is the extension of the contact center into the enterprise. In an IP-based operation, businesses are no longer limited to routing incoming contacts to a group of agents in a room where copper wires terminate. With universal addressing and complete freedom of mobility, everyone in the company has the potential to be a service representative. Contact centers will still be staffed with sales or service or support specialists, but contacts can be routed to knowledge workers outside the contact center as well, if the situation calls for it. Some companies, in fact, are accomplishing this today by integrating contact center applications with enterprise IP-PBXs. The net result of VoIP is a virtual contact center that is actually more of a virtual enterprise ' a contact center that cost-effectively delivers improved customer service. Where cost is the driving factor, expect businesses to explore pure-IP solutions. In businesses where the contact center is mission-critical, hybrid solutions that use IP networks to connect remote agents to a PSTN contact center or that integrate the contact center with IP-PBXs are more likely to be the choice.

IP Basics
The IP-based virtual contact center is no futuristic concept. It is here today, but businesses need to know the requirements for implementing it successfully. Gartner Dataquest says, 'Enterprises considering some form of networked implementation should evaluate the readiness of their existing networks to support these implementations and consider initial technology trials.'

Some of the things to look for:
A managed network. The first requirement is a managed IP network. 'Managed' means that the company's administrators control every point in the network and can set the priorities for the traffic that travels on it. Data travels over IP networks as packets. A single data transfer is broken up into packets that are sent individually. They don't necessarily all arrive at the same time. This is OK for transferring a graphic file or a text file, because they can be reassembled and displayed at the receiving end whether they arrive simultaneously or separately. If packets are lost, they can be resent.

If the packets are digitized voice, it becomes extremely important that all the packets reach their destination promptly so that they can be translated into high-quality, real-time voice transmission. This in turn means that administrators have to be able to prioritize data traffic and give digitized voice first priority. Otherwise, there will be 'jitter,' or delay.

Standard industry protocols. The next requirement is industry-standard protocols. Protocols such as G.711 ensure that digitized voice traffic is compatible with networks and devices, and compression protocols such as G.723 and G.729 have the additional advantage of compressing voice packets to conserve network bandwidth. Adhering to industry-standard messaging protocols is equally important. Planners evaluating a VoIP solution should be sure that it supports H.323 and SIP, which are de facto industry standards. Without these standards, the solution is likely to be highly proprietary and expensive, and will cancel out some of the cost benefits of VoIP.

Adequate bandwidth. An IP-based virtual contact center must also have sufficient bandwidth over both the LAN and WAN portions of the managed IP network. Even with voice compression protocols, planners need to compare projected traffic volumes with available bandwidth to be sure the network can keep the traffic moving.

Security. IP networks are more exposed than traditional PSTN networks, so it is important to have security devices in place to protect all the endpoints in the managed network.

Applications built to fit the concept. As important as network considerations are, it is the contact center applications that control the virtual contact center. According to Gartner Dataquest, ''while most contact center vendors offer some form of IP-based networking, many offerings are not fully developed and implementation of these networks has yet to reach mainstream adoption.' iv
Technology evaluators should look for contact center applications built to fit the concept. Software for remote agent connectivity should give supervisors in the main center access to all statistics related to the remote agent transactions and should give agents complete access to all the functions of the central contact center and to screen pops from customer databases.

The core software for the contact center should have:

• CTI capability, to link all agents, local and remote, to enterprise databases,
• A universal queue to blend multiple contact channels, and
• A rules engine that allows contacts to be routed across the entire virtual contact center based on easily developed and easily modified business rules.

Will It Really Happen This Time?
The economic climate will continue to influence the adoption rate of the virtual contact center. In the near term, companies will use traditional remote solutions to extend business reach cost-effectively or to cut costs by consolidating their operations. Others will implement hybrid solutions that use IP connectivity to link remote agents to traditional PSTN contact centers or integrate contact center applications with IP PBXs. Ultimately, though, the success of the virtual contact center is virtually assured. Even as economic woes continue to put on the brakes, VoIP technology is driving forward the concept of the virtual contact center.

Brian Anderson is a product-marketing manager at Aspect Communications (www.aspect.com), and is responsible for product marketing strategy and marketing programs implementation for Aspect's IP Contact Suite. Aspect Communications Corporation is a provider of business communications solutions designed to help companies improve customer satisfaction, reduce operating costs, gather market intelligence and increase revenue.

i 'Multisite Contact Centers: Today and Tomorrow' by Drew Kraus, Gartner Dataquest Research Brief, June 27, 2002, p. 3.
ii Kraus, p. 4.
iii Kraus, p. 4.
iv Kraus, p. 4.

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