Call Centers Build on IP

IP telephony is bringing new flexibility to the call center.

With IP telephony just starting to gain a foothold in many organizations, it's not surprising that research firm McGee-Smith Analytics in Pittstown, N.J., estimates that just 1% of the 80,000 call centers in the U.S. today are using applications built to run over converged IP-based voice/data networks.

But within the next five years, analyst Sheila McGee-Smith and others expect 20% of organizations using call centers to be running IP-based call center systems, which offer features such as automated call distribution, contact management and computer/telephony integration.

Call center managers cite several reasons for the expected transition, including the fact that it costs less to run one converged IP network than it does to run separate lines for voice and data, says McGee-Smith. IP-based call center systems also support improved integration with CRM systems and other business applications, facilitating the sharing of customer data.

Jeff Wasierski, vice president of technology at vCustomer Corp.
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Jeff Wasierski, vice president of technology at vCustomer Corp.
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But converged call centers have another big benefit. "The top driver of IT call centers is that they allow remote connectivity," says Katrina Howell, an analyst at Frost & Sullivan in New York. Indeed, call center agents can move to any location with a network jack to receive calls, whether at home or abroad. And since call routing can take place over the corporate WAN, toll charges are reduced, which can vastly lower costs.

McGee-Smith notes another virtue: Developers can modify IP-based call center software using open standards such as XML and HTML, rather than having to learn a special language and use proprietary application programming interfaces.

The changeover to IP started about three years ago but has been limited to small and medium-size call centers, Howell says. Migrating to an IP-based installation is still too expensive for the big call centers, which can have as many as 10,000 agents processing credit card accounts or airline reservations, she says. One reason is that an IP-based call center system requires upgrading the private branch exchange (PBX) or replacing it with a native IP telephony system. The big uptick should begin in 2005, Howell says, when many corporations will begin replacing the PBXs they installed in 1999 to address Y2k issues.

Global Savings

Global adhesives manufacturer H.B. Fuller Co., which began adding IP-based call center technology in 2001, has realized more than $2 million in savings, says Kevin Wetzel, manager of global network services at the St. Paul, Minn.-based company. IP telephony and call center servers in one location now service the needs of five call centers in St. Paul, each staffed with seven to 35 agents, over a corporate WAN.

With a traditional system, Wetzel says, he would have needed a $500,000 PBX in each call center. Instead, he uses data network switches and IP call management software, along with IP Contact Center software (now called IPCC Enterprise Edition) from Cisco Systems Inc.

Although Wetzel won't say exactly what he spent overall, he does say the Cisco IP phones and server software alone cost less than $1 million. Wetzel expects to realize more savings as six European call centers move to IP telephony by the end of the year. All will be run from the St. Paul-based contact center servers.

Weztel also expects savings because he won't need a separate telephone line to each desktop. One Ethernet cable will run to each Cisco 7960 phone, which includes a second port to network the desktop.

H.B Fuller's long-distance calling costs for interoffice call routing have been completely wiped out, Wetzel says. In Latin America alone, he estimates that he has cut $100,000 in costs per year by avoiding toll calls back to St. Paul.

The system has also enhanced the way the call centers function, Wetzel says. It's now possible to add functions such as agent call distribution and computer/telephony integration less expensively. One copy of the software can serve many call centers, whereas with the PBX-based system, each call center had to have its own copy.

The agent distribution software has eliminated problems with dropped or incorrectly transferred calls, and Wetzel says staff and overhead costs are lower because he no longer has to manage telephone switches at each call center. "The IP component is undoubtedly making it economically feasible for us to install new call centers," he says. "In general, our ROI per location is about six months to get back the infrastructure costs."

Getting Personal

Restaurant equipment distributor Franklin Machine Products Inc. (FMP) in Marlton, N.J., migrated its 35-agent call center to an IP-based system about a year ago. Bob Fisher, director of IT, says the system was an affordable way to handle the growth in call volume and still retain the human touch with customers. The call center had a mandate, issued by the company's president, that every customer be greeted by a live receptionist.

FMP chose an Avaya IP Office system from Avaya Inc. in Basking Ridge, N.J. The system handles 1,500 calls per day, and calls that can't be routed immediately to the receptionist go to an automated attendant that lets customers choose to speak to another staff member, wait for the receptionist or leave a message.

At the time that Fisher selected Avaya, the vendor offered the only product that could alternate between having a person answer or having the system answer. "All the others had the person answer all the calls or the system, but we wanted something in the middle," Fisher says.

It took FMP just one year to recoup the $100,000 it spent on the new call center software, in part because the company no longer loses calls when the receptionist can't answer them, Fisher says. Also, when agents are added or changes are made to the systems, maintenance costs are much lower than they once were. Other applications have helped with sales reporting, tracking how many calls each agent receives and how long agents spend on each call.

Ultimately, the move will help FMP because its customers -- restaurant managers who order equipment -- are slowly becoming more computer-savvy. Fisher foresees the day when a restaurant owner or manager will be able to access the FMP Web site and quickly establish a chat session or voice conversation over the Internet. And if FMP opens a West Coast call center, hooking the two systems together would be "no problem," he says.

The biggest obstacle FMP overcame was getting sales personnel used to the new IP phones, which have more buttons and functions, Fisher says. "It was a steep learning curve for a month, like replacing your favorite pair of old slippers," he says.

India Comes to Seattle

Call center service provider vCustomer Corp. built its entire business on its Cisco-based IP telephony system, setting up the gear in its Seattle headquarters and hiring 1,800 English-speaking agents to work in call centers in New Delhi, says Jeff Wasierski, vice president of technology.

VCustomer's clients are U.S.-based retailers and computer companies that require a stable base of agents, in many cases with technical backgrounds, to handle customer service calls. The company also must be able to scale up quickly to handle the vast surge in calls that occur during sales increases around holidays.

The system allows vCustomer to quickly add dozens of seasonal agents, Wasierski says. Calls can be routed internally to its call center and tech support team in India without incurring toll charges. The company can find qualified staffers in India, where personnel costs are one-fourth what it would pay in the U.S., he adds. "We land our clients because of the cost of our service and keep them because of the quality of our agents," he says.

In all, vCustomer spent less than $3 million on its IP call center system, and it estimates that the 2-year-old system will pay for itself in another 18 months. Savings come mainly from Indian labor and the Seattle-based IP telephony infrastructure, which costs about 75% of what it would cost to run a digital PBX system, Wasierski says.

With the system, vCustomer's clients can use a Web-based interface to monitor the volume of calls they are getting and the number of customers who are on hold, Wasierski says. The remote monitoring would not have been as easy without IP telephony, he adds. "It's like it's happening on the floor below them," even when they are half a world away, he says.

Wasierski was worried that the system wouldn't be resilient with a "constant hammering" of a million calls each week during peak times. "But I've been pleasantly surprised," he says.

Wasierski says one key to success is finding a competent integrator and reviewing two of its recent implementations. In his case, the Cisco integrator "had no idea what it was doing," partly because the technology was so new. As a result, vCustomer had to scrap the integrator's work and start over, building the entire system in-house. "That was a learning experience," he says.

Copyright © 2003 IDG Communications, Inc.

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