Build vs. Buy

Web and Telephone self-service software helps put call center costs on hold

Buy it or build it? When it comes to self- service applications, the answer isn't so easy. To cut costs, companies are moving away from the call center. Instead, they're putting the bulk of their customer- and partner-assistance services on the Web and other self-service platforms, such as interactive voice response systems (IVR) and so-called virtual agents that can respond via e-mail.


Off The Shelf

What to look for in a store-bought self-service system:

  • The ability to tailor an FAQ feature to the context of your business

  • Natural-language processing capabilities

  • The ability to share a knowledge base across all channels, including e-mail, telephone and the Web

  • Good data-import capabilities that allow for the easy incorporation of different file types and data forms in a knowledge base

    Source: Forrester Research Inc., Cambridge, Mass.

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    But until recently, no single vendor could offer companies exactly what they needed. This situation has improved somewhat with better tools to integrate legacy systems and customize off-the-shelf software, but many firms are still doing a lot of development in-house or cobbling together custom and store-bought software.

    Just ask Terry Povey, director of Web business development at Blue Cross and Blue Shield of South Carolina in Columbia, an early adopter of Web-based self-service. In 1999, the organization set out to deploy an application that lets its members and physicians electronically access benefits, claims and health information.

    At the time, Povey found that her IT staff would have to do most of the development - and many other companies were discovering the same thing. Indeed, nearly half of the 42 companies surveyed last May by Cambridge, Mass.-based Forrester Research Inc. reported that they had developed their own self-service applications, citing the immaturity of products available when they began their Internet initiatives.

    "We saw a business opportunity for this software, but when we decided to launch it, there was nothing available off the shelf. And there's still nothing," says Povey.

    Luckily, the company had enough in-house expertise to create its own Web application, called My Insurance Manager. But Povey had to look outside her IT department for help with authentication and security and connecting the application to back-end systems. She chose DirectorySmart from Clearwater, Fla.-based OpenNetwork Technologies.

    Povey could have outsourced to one of a growing number of application service providers that offer similar Web-based services to the health care industry. But by keeping the data in-house on its own legacy systems, Blue Cross can more easily and quickly provide real-time claims, eligibility and benefits information to members, she says.

    Since rolling out the self-service application and the Voice Response Unit, an IVR system developed in-house that runs on IBM's DirectTalk voice-processing platform, resolution of member inquiries has increased from 30% in 1999 to 43% in the first quarter of 2001. What's more, 97% of member inquiries sent via the Web were resolved immediately.

    Since Forrester issued its report six months ago, vendors are "hitting their next wave of revisions," and e-businesses are beginning to realize that some tools will fit their needs, says Forrester analyst Bob Chatham. For example, vendors such as Primus Knowledge Solutions Inc., Kana Software Inc. and ServiceWare Technologies Inc. are helping companies consolidate customer data flowing in from multiple channels.

    Moreover, despite still-unresolved software integration and customization challenges, Forrester concludes that if an e-business takes the right steps, it can realize as much as a 200% return on investment on a typical packaged self-service application by the fifth year of deployment. For example, answering a phone call costs $12, compared with $6 for an e-mail and 35 cents for an IVR interaction, according to Forrester. A typical self-service software package, including a knowledge-base server and associated hardware, license and maintenance fees and other costs, can add up to about $250,000.

    "When you look at the size of that investment, a 200% ROI over five years is pretty good," says Chatham.

    But where business policies, technology infrastructure and customer relationships are already well established, many businesses are hard-pressed to find made-to-order software that fits their needs to a T, says Erin Kinikin, an analyst at Giga Information Group Inc. in Santa Clara, Calif. "Self-service applications are still at an early stage. Early adopters build, and then everyone in the mainstream learns, and then they buy," she says.

    Also, early adopters don't always want to throw out their existing customer-assistance services and start over again.

    Consolidated Freightways, a $2.3 billion commercial shipping company, is a prime example. With 20,000 employees, 300 terminals and 29,000 truck trailers in North America, the company ships 55,000 loads of all types of material per day.

    To help answer customers' shipping inquiries, Vancouver, Wash.-based Consolidated married a homegrown tracking system with packaged software from several vendors to manage 700,000 customer profiles in the company's database. Now, a suite of tools targeted at Consolidated's 150,000 customers lets them track shipments online as well as view bills of lading and receipts and generate electronic reports. Before, it cost up to $5 every time a customer called about a shipment.

    "We're a trucking company, not an R&D shop," says Martin Larson, Consolidated's CIO and vice president of e-commerce. "I have 200 IT people whose focus is not on creating everything from scratch. It's too much work."

    Shunting customers and business partners to the Web can pay dividends in reduced call center costs, but people still like to pick up the phone. IVR systems can help companies achieve the same goal as a Web-based self-service application. And in this case, a vendor's software might just work.

    Ford Motor Co.'s Business Assistance Center in Dearborn, Mich., installed IVR software from Nuance Communications in Menlo Park, Calif., last year, after it had purchased Siebel Systems Inc.'s Call Center software. Although they're separate, stand-alone packages, Siebel's software manages actual phone calls, while Nuance's manages automated voice responses to those calls. Complicated questions from Ford dealers, car rental agencies and corporate buyers can be handled by humans, while basic questions can be handled around-the-clock by the IVR system. Where the IVR system is available, it handles up to 20% of the 4 million incoming and outgoing calls per year.

    "Many of our business partners wanted English-speaking answers to questions, rather than pressing phone keys to get information," explains Frank Veros, manager of the Business Assistance Center. "The accuracy got acceptable in the last 12 to 18 months, and these systems can handle [different] accents now."

    The system was originally designed to help quell negative feedback about the push-button inquiry system, and, so far, it has, says Veros. It has also saved money. "People costs go up every year, so if I can reduce the head count in my call center by 50% by implementing an IVR system that customers can use 24 hours per day, I'll do that," he says.

    Veros advises other companies to make sure the vendor will still be around after the software is purchased. He turned to Siebel and Nuance so he wouldn't have to hire an expensive consulting firm to install the software. Siebel stuck by his company during deployment. "A CIO doesn't want to spend millions of dollars on software and consulting and then have to cancel the project because they can't get it up and running," Veros says. ROI


    Copyright © 2001 IDG Communications, Inc.

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