ISG Software Research Analyst Perspectives

For at least five years, it has been clear that innovation in technology for communication and business processes is accelerating. This year, that trend has been especially notable with the explosive emergence of artificial intelligence in the contact center software market. But what tends to get lost in the excitement around innovation is what sits downstream of the development process: the impact of new technology on how buyers organize the processes and the disruption that new technology causes in the marketplace among software providers. We saw one element of this shift earlier this year when evaluating contact center platforms for our Contact Center Buyers Guide. As we explored the offerings from software providers across the industry, it became clear that the focus of innovation had moved decisively away from traditional interaction routing in the direction of tools for managing data and analysis. The centrality of the automatic call distributor has shifted, particularly now that digital interactions represent a significant portion of the total. There are many reasons for this transition, including the ongoing shift from on-premises to cloud platforms. But in reality, this change has been coming for some time, and the long-term signs – especially in terms of the health and growth of some of the legacy providers in this space – have been pointing this way. What appears to be happening is that de-emphasizing the core communication aspects of routing interactions has opened a space for alternative providers to offer relatively complete contact center application packages that focus on different aspects of running a contact center. This includes optimizing for agents, collecting and analyzing customer interaction data or merging service operations with distinct functions like marketing and sales. This transition has encouraged providers to reconsider technology offerings and the resulting market positioning. Most prominently, some providers in the industry have floated the idea of redefining contact center as a service, arguing that it is no longer necessary for a buyer to place a call distributor at the center of a purchase. Rather, it is now possible (some providers argue) to put other elements of the portfolio in the spotlight. If an ACD can be replaced by a cloud-based routing package or some form of “bring-your-own-telephony” (BYOT), then providers without an explicit telephony switch product can compete on a more level playing field with legacy ACD providers. We predict that through 2026, most organizations will identify digital communications needs as a priority for their contact centers over voice technologies, a sea change compared to five or 10 years ago. Looking downstream of the technology itself, it seems useful to take note of the shift to a tech stack that looks like it is constructed out of Lego pieces. We also need to examine the question of whether separating the telephony from the rest of the contact center tech stack is beneficial for contact center operations. One of the implications of this shift is that it opens up the design phase of building a center. Consider why contact centers take the form they do: Early on, putting people in large rooms was the only way to provision the telecommunications needed to function at high volume and high criticality. Siting a center had to balance two elements: the quality of the local telecommunications infrastructure and the depth of the local labor pool. In North America, those factors favored concentrating centers in the American Midwest, sited close to college towns, military bases and other inexpensive labor and tech-friendly environments. But now the workforce is hovering at around 60%-70% work-from-home. Centers themselves are getting smaller. Because you can source labor literally anywhere, the core ideas that motivated the design decisions for sites and operational functions are different. Availability of robust voice communications technology is still important, but it doesn’t have to be the foundational element that determines location, size of the physical center or – most importantly – the operating applications that form the bulk of contact center and customer experience activity. When voice is seen and treated as a digital channel or one of many pathways into a center, other aspects of running the center move into the foreground: the ability to thread channels together, manage customer data or analyze interactions in real time. All this starts to overshadow the question of routing – moving an interaction from point A to point B. Business tools and platforms that centers share with other departments now rise in importance in the design and deployment phase: customer relationship management, customer data platform, customer feedback, knowledge management and automated self-service. Is this shift good for operations professionals (i.e., the buyers of this technology)? I think that anything that improves the customer experience while providing better data for enhanced efficiency and revenue should be seen as a net positive. It will undoubtedly shift the personas involved in provisioning centers because without telecom-centricity, the focus can be on systems that have broader value across the enterprise and on removing silos (or not creating them in the first place). Moving to the cloud improved the environment for the better. Cloud services offer more varied software that is easier to deploy and use, with more varied features and a reduced burden on IT resources. I expect a similar dynamic will play out as we move past the idea that CCaaS equals “ACD in the cloud” rather than “all the contact center technology in the cloud.” How should solution providers respond to this shift? Two things to note: All of the ongoing changes (those noted above, along with the AI and automation tsunamis) reflect one basic fact: Interaction routing is secondary to what people do with the interaction once it’s in-house. Everything we hear from end users suggests that they care about data, analysis, situational awareness of context and providing more customizable experiences at scale. Those are the hot buttons to push with buyers, not channel variety. An AI strategy should be thought of as a practical data strategy and as a labor-management strategy. When you de-emphasize voice routing, you open a wide space for people to explore new operational modes, which brings along a whole series of possible software and technology configurations. At this moment, when the industry needs to talk about AI, vendor conversations with buyers should focus on the ways software solves specific business and customer problems and less on the communication modes used to talk to customers. This is a snapshot of a long-term shift that will still take years to fully play out. But it is useful for buyers and sellers to consider how technology doesn’t just make existing business modes more efficient; it opens up new ways of approaching customers and providing them with useful experiences. In short, I recommend viewing the contact center less as a communications island within an organization and more as an integrated user of complex business software with specific IT needs. The decoupling of telephony with BYOT from contact center software provides an arena to showcase the benefits of today’s advanced software applications and the benefits of embedding the center more deeply into back- and middle-office activities. For more information on related subjects, see the recent Analyst Perspective on Optimizing Customer Communication Channels or visit our Customer Experience Expertise Area. Regards, Keith Dawson

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