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Innovative Management Information
July 2001


E-Darwinism: The Evolution Of The Virtual Contact Center


Charles Darwin defined a competitive advantage as an adaptation that affords an organism greater survival probability in a changing environment. Although his theory of natural selection attempted to describe the evolution of humans, his survival of the fittest concept applies just as thoroughly to business. In today's business communications world, the virtual contact center is evolving from a pipe dream to a business tool accessible to organizations of all sizes.

For decades, the telephone ruled the earth as the primary form of communication. It was a switched network world and anything that wished to survive had to conform or be crushed. In this PSTN environment, the toll-free number evolved and businesses were soon connecting to customers and partners located anywhere. Telephone calls from customers flooded in and staff and technology were dedicated to handling these calls. The call center was born.

The call center offered businesses myriad competitive advantages, including quantum leaps in customer service capability, partner support opportunities and preferential treatment for high-priority customers. The call center thrived and continues to do so today...but it has limitations. A traditional call center is restricted to one physical location. PSTN circuits must connect any location where call center agents work, and to establish those connections over anything but a very short distance is extremely expensive.

Managers have long sought a practical way to unify, not just connect, geographically separated call centers. Although the term hadn't yet been coined, managers were seeking virtual call centers. A virtual call center is, in essence, just like a standard call center except its agents can be located anywhere and work together as if they were in the same room. It offers the same functionality as an in-house call center, including skills-based routing, queuing, real-time monitoring, historical reports and trend analysis. Managers knew that the efficiency gains, flexibility and human resource advantages of such a call center would be tremendous. The virtual call center, however, just wasn't realistic in the PSTN environment.

A few, very large call centers do manage to connect separate locations using highly sophisticated and expensive networking systems. Few companies can afford these systems, and even these high-end technologies don't create a true virtual call center. They can overflow calls from one center to another in the event of a volume spike, natural disaster or power failure. They cannot, however, unite agents into common skill groups, seamlessly manage calls among multiple centers or monitor agent performance in remote locations. For the most part, once a call is sent to another call center, it's gone. There is no practical way to be sure it got there, track it or generate reports about how it and other overflowed calls are being handled.

Sometime about 65 million years ago, it is theorized that a giant meteor crashed into the earth and changed the planet almost overnight. It is believed that this one-time event altered the world dramatically, making it possible for mammals to flourish. Today, we stand at a similarly bright point in the evolution of business communications.

About five to seven years ago, Internet Protocol technology emerged and changed the communications environment almost overnight. IP technology was nothing less than an evolutionary explosion. It revolutionized communications in two ways. First, it eliminated distance as a barrier because it enables connections across any data network, and second, it opened the door to entirely new channels of communication, such as e-mail and chat.

In recent years, as e-mail and Web chat joined voice as primary communications channels, businesses have begun integrating these elements into their call centers. Because these Web-enabled call centers handled more than just calls, they became known as contact centers. Another evolutionary step was taken.

In the IP environment, the virtual contact center is no longer a mirage constantly eluding contact center managers. PSTN calls can be converted to IP packets and inexpensively transmitted over the network in the same manner as e-mail and Web chat. Using WANs, a data network can extend anywhere in the world.

"My kid made a soup-can-and-string telephone that sounds better than VoIP," you say? Get ready to reevaluate. The problem is that most people experience voice over IP (VoIP) over an unmanaged WAN, such as the Internet, where quality and reliability are nearly nonexistent. There are too many uncontrolled variables such as bandwidth, volume, demand spikes and congestion points to make VoIP effective.

However, in LAN and managed WAN environments (VPN or WAN with guaranteed service levels), quality factors are all controllable. With recent decreases in bandwidth cost and increases in quality of service standards utilization, VoIP in these environments is cost-effective and the quality is on par with traditional voice.

Thumbs gave primates a tremendous array of competitive advantages. Similarly, the virtual contact center offers an entire arsenal of benefits.

The virtual contact center versus independent centers. Erlang formulas, named after Danish mathematician Agner Erlang, were developed to accurately predict the relationship between call volume, wait times, number of agents and several other variables. They help prove one of the key benefits of a virtual contact center versus independent centers: the virtual contact center requires fewer agents to handle the same call volume.

Let's take a simplified look at how this works in an organization with four independent contact centers each handling a constant 100 calls per hour compared to that same organization operating virtually.


Contacts per hour

Agents required
Four separate contact centers 400 (100 each) 36 (9 each)
One virtual contact center 400 29
One virtual contact center 510 36

Average contact duration = 180 seconds
Average wrap time = 40 seconds
Answer target = 80 percent within 20 seconds

Assuming an agent cost of $40,000 (roughly the industry standard), the four separate centers can achieve $280,000 in annual savings by creating one virtual center. Or, looking at this effect another way, the same 36 agents handling 400 calls per hour in separate centers could handle more than 500 calls per hour in a virtual center.

Additional Mid- to Large-Size Contact Center Comparison Table


Contacts per hour

Agents required
Four separate contact centers 2680 (715 each) 200 (50 each)
One virtual contact center 2860 184
One virtual contact center 3130 200

This table illustrates the efficiency gained in a mid- to large-contact center environment as an organization moves from four independent call centers to one IP-based virtual contact center with four locations.

The virtual contact center offers advantages far beyond cost. From their desktop, administrators and supervisors can manage the entire virtual contact center network. They can access real-time reports, historical trending data, monitor activity on an agent-by-agent basis and even watch or listen to how an agent is handling a customer.

Yet another benefit of the virtual contact center is the expanded pool of skills available. Let's imagine a customer calls a center in Phoenix about a problem he is having with the optical output of a new DVD player. While the Phoenix center can handle general questions, this question is more specialized and beyond the scope of the center. There are, however, agents in the company's Detroit contact center that specialize in optical connectivity problems. In a separated environment, the Phoenix agent would have the customer call the Detroit center or, with advanced capability, the call could be transferred, at which time the customer would likely wait in queue for a second time. Once the call is transferred, Phoenix has no idea if the call actually made it to Detroit, if the problem was resolved or how long it took. In the virtual contact center, the call is automatically transferred to Detroit based on caller-directed input. The Phoenix agent's time is better spent handling questions that fit his or her skill level, the caller reaches the correct resource faster and managers can access full reporting on how the call was handled.

So what happens to a one-location contact center when the Blizzard of 2001 hits? Or when rolling blackouts turn computers into expensive paperweights?

In a virtual environment, the customer contact world doesn't end during an emergency. Again, using a virtual contact center with four locations as an example, if one location goes down, the impact on the customer service function is only a 25 percent capacity loss. Managers can log-on from home, or any location, to quickly reconfigure routing tables, record automated announcements and take other administrative action needed to assure that the virtual contact center is able to absorb the impact.

Virtuality allows organizations to place their contact center wherever favorable labor markets exist. Suppose a company is located in New England, but the market for agents there is so tight the company would have to pay agents more than most professional athletes to attract quality personnel. The problem can be eliminated when the company sets up a virtual contact center location in Salt Lake City, where there is a skilled labor pool that does not demand six figure salaries and a chauffeured limo.

A virtual contact center can structure its locations so that time zone issues are no longer a concern. A center with locations in each North American time zone, for example, can staff each with agents who work a standard 8:00 a.m. to 6:00 p.m. shift. By contrast, a single center located in the Eastern time zone would be in the unenviable position of needing a full shift of agents until 9:00 p.m. to cover contacts from the Pacific time zone.

Even in a local contact center situation, virtuality offers recruiting advantages. Imagine a center located in the Los Angeles area. The virtual contact center could have locations on the east, west, north and south sides of the metropolitan area. Agents could work at the location closest to them instead of traveling across the city to get to work. Recruiting and retaining employees is much easier in the former scenario.

Work-at-home employees are yet another human resources advantage of the virtual center. There are countless reasons a company may want to set up a valuable agent to work from home, and with the virtual contact center it is little more than a matter of connecting the agent to the data network.

Whenever new technologies evolve, wild predictions fly fast and furious. Promises that IP would usher in the era of the "buildingless" contact center in which hundreds of agents each work from a separate location can be filed right alongside that fat-burning pill claiming to magically make you lose weight while you sleep.

While the buildingless virtual contact center is technically possible, it's just not practical. For most employees, face-to-face collaboration and supervision will remain one of the best tools available to assure high productivity. Individually, certain employees will function extremely well in a work-at-home situation. In most cases, though, the management issues of a large workforce in a completely separated environment are enormous.

So let's take a look at the two most likely applications of virtual contact center technology.

Multiple small- to mid-sized contact centers working together. Most medium- to large-sized organizations already have multiple contact centers working independently or with some minimal level of coordination. These companies will simply apply virtual contact center technology to capitalize on the efficiency, customer handling and management advantages of virtuality.

Most companies with single contact centers aren't likely to tear them down and build multiple smaller contact centers. Rather, as their contact needs grow (and grow they will, with ever-expanding use of e-mail, chat and other Web-based channels), many will add smaller, separate centers and connect them virtually rather than continue building on their current center.

The extended contact center. The emergence of the virtual contact center allows existing contact centers to extend anywhere, thereby sparking the full evolution of the informal contact center agent. These are people outside the contact center whose primary job is not handling customer contacts, but who may be the best resource to handle certain high-level queries. As an example, let's go back to the customer calling about the optical output on his new DVD player. Perhaps his question relates to a distorted audio problem. The agent recognizes this highly specialized problem and transfers the customer to the company's engineering team responsible for building the optical transmission apparatus. One of the engineers takes the contact and helps the customer solve the problem. Informal agents aren't new, but until IP technology eliminated the distance barrier, centers were limited to resources located in the same building.

Work-at-homes, field personnel or any other distributed employee can also be connected to the extended contact center simply by adding them to the data network.

As in nature, the business world rewards those with advantageous adaptations. Such is the case with the virtual contact center. The business advantages offered by the distributed contact center are just too great for it to do anything but flourish.

As companies move to capitalize on these new adaptations, multiple virtual centers will become the norm. This will result in a dramatic decrease in the size of the average physical contact center location. In fact, the trend has already begun. Research company Ovum, Ltd. recently predicted that the average number of agents per contact center will drop approximately 50 percent over the next five years.

This is not to say that the large, centralized contact center will become extinct anytime soon, if at all. For some companies, this configuration offers advantages. Even the large, single-location center will be touched by aspects of virtuality, be it to retain a valuable employee who wishes to work from home or to add to and expand the services of the contact center.

So enjoy the view from this evolutionary peak. Look backwards and see the incredible evolution of customer contact from the telephone to toll-free to call center to virtual contact center, all in just over 100 years. Look forward and envision the customer contact possibilities of the virtual contact center and a nearly limitless IP world. Somewhere, Charles Darwin must be impressed.

Bryant Downey is the chief technology officer and co-founder of Cintech Solutions, Inc. Cintech creates Internet technology solutions, including the NetVIA e-contact center, to manage and analyze interactions with customers, partners and associates.

[ Return To The July 2001 Table Of Contents ]

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