August 2000

E-Commerce: Been There, Done That 

BY BRIAN STRACHMAN

BUFFY OR BUSINESS?
The problem is that posting a Web page with the rules to a "Buffy The Vampire Slayer Drinking Game," is an order of magnitude less difficult than creating a Web-based sales and customer service portal. Unfortunately the creator of the aforementioned Web page is often the same person tapped to create the sales portal.

There's a lack of solid business experience in many Web enterprises. With the birth of e-commerce and Internet-based customer service, a flood of young companies and older, more familiar names have laid claim to expertise in the area. I believe that there is one industry immensely familiar with the tools and psychology of remote sales -- the IVR industry.

While e-commerce may seem like a frighteningly large hodgepodge of information, perhaps resembling a Rube Goldberg diagram, in reality there is one main function: remote access to data. Whether a consumer is buying a book from Amazon.com, receiving mortgage quotes from an online broker, or checking stock prices online; the procedure is the same. The user is simply querying a database from a remote location to either gather information or complete a transaction. For many people (though not everyone) that remote location is in front of a computer.

Consumers will naturally choose the medium that is most convenient, and more importantly most comfortable. Up until a few years ago, the most popular medium was the telephone, and the access tool was an IVR.

DRAWING FROM LESSONS LEARNED
Consider this, for more than a decade a product has allowed people to access information remotely from anywhere in the world, using the most ubiquitous piece of technology ever invented -- the telephone. This same product allowed the user to conduct sales, gather information, and manage financial accounts, in a completely automated manner. Wouldn't it make sense that the experience and lessons learned from this technology would transition well into an e-commerce environment? Or would the Webmaster of the "Buffy The Vampire Slayer Drinking Game" site be a more appropriate choice as a technical lead?

IVR had its heyday in the early 1990s. It was seen as the technology of the future for obvious reasons, but has been eclipsed in recent years by the Internet. Sales began to level off and attention began to move away from voice. I wouldn't be so foolish as to call the Internet a "flavor of the month," but it has certainly evolved several times in the past five years. What began as a sea of static Web pages with only a few islands of information, has matured into a dynamic entity extending like a spider's web across every industry and geography. During this ongoing transformation of the Internet, many companies thought that voice would go the way of the dinosaur, becoming nothing more than a distant memory in the face of the comet of data.

GROWING OUT OF THE TERM "IVR?"
However, many IVR companies were also undergoing a transformation. Several of them realized that their knowledge about customer behavior and the remote manipulation of data would be invaluable to the new Internet economy. This transformation was part of the birth of CRM (customer relationship management), a technology that integrates islands of customer contact and data, with a particular emphasis on voice. Aspect, for example, who was once a leading IVR vendor, now rarely uses the term "IVR" in their marketing material. Instead, they sell themselves as an experienced software vendor and manipulator of remote data. Edify has also reinvented themselves, marketing their Voice E-Commerce, in lieu of a discrete IVR system. This strategy has been remarkably effective, as both companies had record years in 1999.

In fact, the IVR industry as a whole had an outstanding year in 1999, growing 31 percent in U.S. revenues over 1998. I believe that this trend will continue as more and more IVR companies re-dress themselves to appear more fashionable to the e-commerce market. As this re-positioning continues, many IVR vendors will become e-commerce and system integrators of choice, as they have been working in a very similar environment for over a decade. The same can't be said for the heavily-pierced Webmaster of "buffythevampireslayerdrinkinggame.com."

In the future, expect the term "IVR" to slowly disappear. Interactive voice response refers to a discrete voice interface system, and like many standalone products, IVR will be integrated into a more conjoined solution. It is already becoming difficult to track the market share and size of the IVR industry since increasing numbers of vendors no longer sell it as a unique product. The IVR industry is poised for a change, a mutation for the better. Because they are uniquely experienced in remote customer contact, the IVR industry may well be at the forefront of the next wave of electronic commerce. 

Brian Strachman is industry analyst, Voice and Data Communications, Cahners In-Stat Group. To correspond with the author, please send your comments to [email protected].

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