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The small to medium sized business (SMB) market holds huge growth potential for IP contact center software vendors. The vast majority of businesses fit into this category, and in recent years the SMB market has seen faster and stronger year-over-year growth than the enterprise and small office/home office (SOHO) business markets combined. In fact, most of the IP contact center software makers who have traditionally targeted the enterprise now view the SMB market as the primary driver of their future growth.

Contact center software makers are successfully targeting this market through the development of less expensive, scaled-down versions of their enterprise solutions. They’re also having great success penetrating the market by offering their software using the hosted or Software as a Service delivery model. Now that SMBs are able to access the same technology the enterprise has access to, they can gain an edge over the competition and in some cases even take their own slice of the enterprise market.

And the need for contact center software in the SMB market has never been stronger. Today, an SMB can see rapid growth practically overnight: A small company that had only 300 customers two years ago can have more than 2 million customers this year, yet its staff may have only grown from 25 to 50 employees. In order to keep up with the increasing number of customer inquiries and orders (coming mainly via phone calls), SMBs are increasingly investing in customer service centers to better handle their growing customer base and improve communications across the organization. Gone are the days when a small business had a lone receptionist answering the phone all day, trying to keep up with all the customer inquiries and ordering. Today, even a small business can afford to set up a small contact center operation consisting of five seats, with technology that enables it to serve its customers just like a multi-national corporation. With today’s hosted or SaaS solutions, all a business really needs is a server, some PCs, some headsets, and hot agents. Indeed, with their flexibility, ease of customization and infinite scalability (not to mention the simple and affordable pay-as-you-go pricing model), today’s hosted solutions are enjoying rapid adoption in the SMB market.

Indeed, market research shows that the SMB market is ripe for penetration. Not only are many SMBs behind the curve in terms of investing in advanced contact center technology, it is also a market, which hasn’t been tapped into that much, therefore it holds vast potential for finding new inroads to long term business relationships.

To get a better idea of why the SMB market is so hot right now, Customer Interaction Solutions asked representatives from five of the leading contact center software makers — Joe Scotto, director of SMB product marketing for Avaya, Jim Dvorkin, chief technology officer for Five9, Inc.; Walter Kenrich, vice president, product management, for Vertical Communications, Inc.; Prem Uppaluru, CEO, Transera Communications; and Tim Kraskey, VP of business development for Calabrio Software — some questions about what is driving the growth in this area. Without further ado, here are the questions and selected responses:

Why is the call center market paying so much attention to small to medium-sized businesses nowadays?

Joe Scotto: There are a number of reasons why this market is sizzling. First, its sheer volume. Ninety-nine percent of all businesses worldwide are either small or midsized. The call center market, along with many other markets, is recognizing that these businesses are ripe to drive new growth. Second, they are easier to sell, in that it’s far less complex to find the right decision maker so the sales cycle is greatly reduced. Third, they are increasingly savvy. Now that the Internet, wireless and other technologies have become part of the mainstream, the barriers to having capabilities that were previously affordable and accessible to only large enterprise no longer exist.

SMBs are facing the same challenges as large enterprises but can leverage the “nimbleness” of their size to grow quickly and compete effectively. Small and Mid-market businesses are recognizing the value of customer service and its importance as a core competence they are expected to develop. As markets commoditize, customer service becomes increasingly important to survive and thrive, e.g., the smaller PC vendors have a difficult time keeping up with larger corporations like Dell and HP that have significant investments in customer service. Also, with what can be done with personalization of portals and with software as a service (SaaS), for example, service and support to SMBs can be done much more cost effectively than before — in a fulfilling, quality experience. This was a significant barrier that has been removed. Overall, the call center market knows that its technology can provide a secret weapon for SMBs. Given SMBs are now much more receptive to that, it’s time to give them the focus and investment they deserve.

Jim Dvorkin: According to market sizing research from one of the world leading companies specializing on call center business intelligence, Datamonitor, the majority of the growth in call centers over the next three years will happen in the market segment with less than 100 seats. That makes every call center vendor need to think through about their strategy on how to address this market segment.

Many companies of all sizes respond to competitive pressures by differentiating themselves based on customer experience. Usually, smaller companies must set their customer service goals even higher, since word of mouth and referrals can play a more significant role in their fortunes. As voice over IP and hosted software solutions lower the up-front investment costs for sophisticated call center technology, small and medium-sized companies can finally provide a world-class customer experience.

What special needs do these companies have?

Walter Kenrich: SMBs have the same requirements as large enterprises for contact center applications. However, SMBs need solutions that are low cost, easy to install, easy to mange and with a feature set that is comparable with large enterprises (but at a fraction of the cost). They also need solutions that are pre-integrated to their existing infrastructure (PBX, network) as well have the same desktop call control interface for both contact center calls and normal business call. SMB contact center solutions also need to support remote/home based workers. Finally, they need contact center solutions that will allow them to grow both in terms of agents and applications without adding costly servers. Optimal solutions for SMBs will have the contact center solution pre-integrated on their IP-PBX, so they can enable the call center functionality without adding costly servers or adding to the infrastructure. Today’s solutions enable SMBs to deploy an enterprise level contact center application via a simple license key and be up and running in a matter of hours versus weeks or months… at a very low cost point per agent.

Prem Uppaluru: Small and mid-sized companies want the ability to compete effectively with larger companies for the same clients and market share. They want their customer-facing organizations to give an impression that rivals the best of their larger competitors, without making significant capital or IT staff investments. With a leaner IT staff, the SMB customer needs a complete end-to-end solution that is easy to use and manage, and one with more operating efficiencies. There’s a real need to offload the ongoing system maintenance, including hardware and software configurations, equipment replacement and troubleshooting. In addition, the call center solution needs to seamlessly integrate with other on-demand software applications that the SMB already has or plans to have.

How are the features scaled down when products are built for the SMB market? Is it only in terms of number of seats, or is it in terms of breadth of features?

Jim Dvorkin: The right solution for SMB customer needs to be incredibly well packaged. Usually, this means that the software is designed with specific user tasks in mind, helping to ensure SMB call centers can operate effectively with a minimum of IT support. As a result, the user interface is clearly laid out to improve productivity, complex menus and options are avoided, the need for custom development is reduced, and all essential contact center info is easily accessible in real time and in reports.

Walter Kenrich: SMB’s do not expect “scaled” down contact center features or scalability. In fact they might have more needs than large enterprises as to what is included in the contact center package. For example, in our Wave IP 2500 platform we have a robust contact center application that resides on the PBX platform and includes skills-based, priority and DB routing, screen pops, desktop call management, on demand or queue-based call recording with archiving and full reporting, supervisory tools, among other features. Furthermore, not all SMBs need a formal contact center operation, so the contact center product and pricing must be flexible enough to enable two agents or more than 100 agents.

Do you think there are “fake” SMB call center solutions out there... i.e., large solutions artificially and perhaps not optimally “shrunk” for smaller businesses?

Joe Scotto: Yes, and caveat emptor. Shop around so you don’t get oversold. Know what you want. Research it with peers in your industry. Ask a lot of questions regarding what it does upon implementation (and how long that will take) and understand what support looks like and what it, along with regular upgrades, will cost.

TCO really is what you should look at here. An offer, covering the whole market on the one hand side brings with it the promise that a SMB will hardly ever outgrow it. On the other hand what you are usually buying with the scaled down offer is a long implementation cycle and thus high implementation cost. The amount of dollars, a SMB company can or wants to spend on the implementation, compared to the dollars spent on the software/solution is different to what large enterprises can afford. But going with a scaled down offer in most cases requires the same spend on professional services - compared to the software cost — as for large enterprises. As an example, an enterprise solution — even if scaled down — might require $4 in professional services per $1 in software. A true SMB solution may require only $1 in professional services per $1 in software cost.

Prem Uppaluru: Granted, some traditional call center vendors have attempted to retrofit their platforms and pricing models to target the small and mid-sized market, they simply have not addressed the larger issues of cost and complexity. These solutions are still difficult to configure, integrate and maintain, requiring an IT staff for management and support.

Should SMB solutions be built from the top down or the bottom up?

Tim Kraskey: This is difficult to answer because even larger call centers today are being made up of a series of smaller centers. Are these small or large centers? We’ve built all applications to scale from one person in a home to large, multi-site centers and still be simple to integrate and support. They have all been designed for VoIP, so they are often deployed and supported in small centers, even though they are part of a larger center. They key thing is that the solution meets the requirements of the smaller center. This can probably be done either way, as long as the needs are understood and the requirements are met.

Jim Dvorkin: Since the SMB market has unique requirements, call center software for SMBs must be designed to address those requirements in the most elegant way possible. There are many examples in the history of the technology starting from leading enterprise CRM companies that failed miserably by trying to down-scale their existing complex enterprise-class solutions. On the other end company like Salesforce.com originally made its success by providing on-demand, easy to use, easy to implement out-of-the box solution for SMB space that now is making major traction among enterprise customers as well.

Does an SMB solution automatically translate to “software as a service?”

Walter Kenrich: No, SaaS will not be able to provide all the required features and functionality required for a SMB contact center (formal or informal). In addition, an SMB SaaS solution would need to consider the PBX, DB integration work and management of separate systems and vendors that will unnecessarily add to the operational costs of the overall solution.

Joe Scotto: No. While smaller firms like to outsource technology with the understanding that some entity can make it work all the time for them, others like having the control of premise-based solutions. If they have the staff and knowledge to manage and administer it, they can save money and time over the long haul.

Do smaller companies typically want the broad array of features that larger companies have/need?

Joe Scotto: Smaller companies typically don’t buy for the same exact feature set of broad array of end to end features as a larger enterprise. Generally all companies irrespective of size prefer solutions. They know their business needs and will look to solve for their specific problems. If a reseller, for example, can educate them on how new features that they were unaware of can save them money or make them more productive, it can change the game. Outside of that, they will buy mostly based on price, reliability and the “it does what I need it to do” factor.

Jim Dvorkin: Although smaller companies need many of the same features that larger companies require, the software must be designed so that those features can be utilized with a minimum amount of configuration and ongoing maintenance effort. Leading call center software for SMBs is designed with the needs of their users in mind, and will usually accomplish their goals by running with the default settings. Additionally, seamless integration to other popular software such as CRM products will typically be available, further reducing the administrative costs of the solution while providing application functionality that was previously only available to large call centers.

Do large enterprises ever have a use for solutions that are ostensibly designed for the SMB market? Are they learning any lessons from this marketplace?

Jim Dvorkin: Since SMBs and large enterprises share many of the same customer service goals, and since lower TCO benefits companies of any size, software that is designed primarily for SMBs may also be a good fit for large enterprises. Understandably, large enterprises may have unique requirements for custom integration, advanced analytics, data warehousing, and voice application design that are more extensively covered by products traditionally marketed to large enterprises.

Prem Uppaluru: Adoption of the SaaS model is rapidly increasing in the small and mid-sized call center, but larger enterprises are discovering the advantages of virtualizing their call center and unifying call center functions into a cohesive call center strategy across a highly distributed call center with captive or outsourced agents located onshore, offshore, at home or remote offices.

Large enterprises are learning through small pilot deployments that vital call center applications can be deployed on-demand, enabling the rapid deployment of a new call center, or the ability to seamlessly expand call center operations, with no infrastructure investment required. Because SaaS solutions virtualize call center operations, enterprises can more effectively manage distributed resources located onshore, offshore or at home. Essential call center functions can be delivered where and when they are needed, no matter where your agents are located.

What can smaller companies do now with the newer SMB-targeted solutions that they couldn’t do a few years ago?

Tim Kraskey: Small companies can now automate a lot of the processes they used to have to take on manually or on crude tools, such as spreadsheets for WFM, silent monitoring when they can now record calls, leverage CTI instead of deal with complex desktops with many required apps, etc. Again, our goal is usefulness right out of the box with no programming and without having to pick up a manual.

Prem Uppaluru: With the new generation of SaaS solutions, small and mid-sized companies are creating what are in effect virtualized call centers, in which agents can be working from any desk, in any office, offshore or at-home. A phone and an Internet-connected PC, and they’re in business, with instant access to a full suite of call center applications. There’s literally no infrastructure required, which means significant reductions in both Capex and Opex costs. With the new crop of Web and Presence technologies, call center managers and supervisors can now manage calls, observe agent activity, and monitor any call from any location — including a mobile device. This ability to oversee call flows and monitor active calls helps supervisors ensure that calls are handled promptly, agent resources are optimized, and customers are receiving the kind of consistent, high-quality service that will earn their loyalty.

The author can be reached at [email protected]

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