In this age of social networking, Web 2.0 and peer-to-peer communications, the core definition of customer relationship management (CRM) is undergoing fundamental change. With its acquisition of PeopleSoft and Siebel, Oracle has cornered the market for CRM as “Big Software,” with Microsoft and MySAP nipping at its heels as they vie for their rightful share of the $11+ billion in enterprise spending.

To the credit of its keyword buyers, “Salesforce.com” rockets to the top of the results listings on all of the major Web search engines. This gives the company a chance to raise awareness and highlight the popularity of the ‘software-as-a-service’ (SaaS) model. Though only 10% of CRM spending came in the SaaS or on-demand form, it’s a high-growth field because it lowers the barriers for firms of all sizes to put CRM to use.

The concept of CRM has evolved along several dimensions. Its humble beginnings were ‘point solutions’ to support sales efforts (lead generation), customer service (streamlining access to purchase or transaction history) and marketing efforts (with recommendation engines and the like). In modern, automated contact centers, CRM systems are invoked as soon as an inbound call, e-mail or instant message arrives. The CRM database is consulted to learn everything about the client or customer.

In the best case situation, the information is used at the very outset to determine how to treat each call. Based on a quick dip of the CRM database, highly valued customers are routed directly to specialized sales representatives. Less important customers are put ‘in queue’ for the obligatory fifteen minute ‘wait for the next available agent.’ Business rules apply and all is right with the world.

Speech as a Service: The Other SaaS

Opus Research is in the final stages of completing our periodic assessment of ‘best practices’ among Voice Application Service Providers (Voice ASPs). In the past we’ve used terms like “voice hosting” or “distributed speech” to capture a concept where deployment of speech applications conform to a Web-like architecture. That’s to say that ‘server farms’ in a public network cloud are deployed to run automated contact center applications on behalf of a wide variety of clients. This model, while accurate, pays short shrift to the overall importance of customer relationship management in all its manifestations.

Like Salesforce.com, Voice ASPs offer their services ‘on-demand.’ By a quirk of history, the outsourced, interactive speech and outsourced CRM markets are approximately the same size ($1.2 billion). Voice ASPs bill on a per-minute basis for use of their network, voice processing systems and application processors. Most charge for initial set up and development of applications. They also have rate cards that attach premium prices for speech recognition (contrasting between small vocabulary and large vocabulary) and have learned that the most important customer relationships to manage are with their own clients and customers.

Speech Isn’t the Perceived Value, Customer Care Is

It’s true to say that Voice ASPs are in the business of selling “minutes of use” on their network elements or application servers (as well as hours of use of professional services technicians) – at least those are the line items in their price books and service contracts. The value, however, comes from outsourcing customer relationships. Web-based resources have received the lion’s share of attention and investment to support customer care and self-service. Yet, it’s broadly acknowledged that the majority of customer interactions continue to take place over the phone.

Outsourcers of phone-based customer care are not selling technology; instead, they’re selling results. It is Conversational Relationship Management because they keep the conversations going between a company and its customers for purposes such as sales, retention, up-selling or trouble resolution. In spite of this fact, in a survey conducted by Opus Research earlier this year on what factors were most important for purchasers of outsourced voice self-service found “price,” “reliability,” and “features/functions” as the top three – not much different from any outsourced IT function.

By rights, the decision criteria should have been expanded to include: “understanding of my customer’s needs,” “creation of the best user experience” and “ability to detect and diagnose problems quickly and take corrective action.” In short, evaluating technology providers on purely technological and cost criteria devalues the elements of technology deployments that are most important in the long run.

Companies want the ability to apply the latest technologies on their customers’ behalf. In times of technological uncertainty it makes sense to turn to third-parties (outsourcers) to ensure that the technology in use has the highest level of reliability, with a high level of internal control. These modest goals should apply to any solution provided by a CRM vendor – be it premises-based “Big Software” or a hosted Voice ASP.

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