The elusive achievement of IP contact center ROI: ten reasons why contact centers migrating to IP telephony don't hit their ROI projections--and what you can do about it.

One of the leading messages for IP telephony in contact center markets is that IP reduces costs and "increases your return on investment," or "delivers ROI in 12 to 18 months," or "produces a higher ROI than traditional communications." But while IP is backing up its savings claim with causes and effects such as toll bypass to reduce long-distance charges and simplified moves, adds and changes that lower IT and labor costs, the ROI equation remains open to interpretation.

Not surprisingly, the majority of contact centers that have adopted VoIP these past few years have failed to reach their projected ROI numbers and time frames. Why? The reasons vary, as no two IP migration projects are alike. Yet what is consistent from one project to the next are the misappropriation, or total lack of, true ROI dynamics in a contact center's ROI model.

Here are 10 of the most common reasons why contact centers and other businesses don't meet ROI objectives as planned, why vendors frequently come up short of advertised ROI timeframes, and what you can do to fix it.

1. No strategy, no ROI. Just as timing is everything in business, strategies are everything for IP migrations and maximization of return on investment--especially for multisite contact centers that lack a clearly defined plan to consolidate agents and skills across sites. By formulating and refining a plan to optimize VoIP, virtually any distributed contact center organization can more effectively balance call loads, reduce wait times and match each customer with the appropriate agent the first time. That, in turn, means more customers, higher customer retention rates, increased revenues and, ultimately, a better overall ROI.

2. Innovation counts. It's no secret how critical competitive advantages are to a contact center's prosperity and survival. With innovation as a driving force, new IP telephony software suites for contact centers pre-integrate features such as speech-enabled IVR to off-load agent time and knowledge management to off-load FAQs and routine customer requests. For one reason or another, though, most contact centers fail to leverage IP to inject innovation into the services on which their customers insist. Instead, they mimic the traditional systems they're accustomed to, offer no real value-adds to consumers (or clients, in the case of a teleservices provider), and miss out on opportunities to further elevate ROI.

3. Hardware or software? All major PBX and telecommunications vendors offer VoIP solutions, and they have for a few years now. Three things to be aware of, however, should your contact center decide to go the proprietary IP migration route: 1) The IP products from these vendors are essentially hardware add-ons and forklift upgrades that drain ROI; 2) Most hardware-centric vendors are still trying to adopt the SIP open-communications standard that supports VoIP; and 3) Proprietary vendors continue to lock your contact center into their own often-overpriced IP system components, such as gateways, voice cards and end user devices.

Moreover, consider that new IP technologies have become increasingly software-based, as calls are directed to application servers on the data network, similar to e-mail, Web chats and other media. The better ROI bet, then, is to look closely at a bundled application suite for IP, particularly one that provides a migration path via open standards, including SIP.

4. Hardware or software? (Part II). A few more ROI-regarding reasons to consider a software-based migration to VoIP: server-driven IP solutions open the door to new ROI-enhancing technologies such as the Intel NetStructure Host Media Processing (HMP) software, which provides the resources for voice, conference and fax capabilities as well as RTP audio streaming for IP-based speech recognition. IT staff can additionally appreciate HMP because it allows for replacing complex, unreliable voice hardware as well as reduction of maintenance and costs.

Additionally, as opposed to proprietary voice boards for handling station or trunk/line interfaces, calls in an IP environment are directed to the application server for ACD, PBX, IVR and other voice functions via SIP. Auto-attendant processes are similarly executed by pre-integrated applications. And whether for one location or for several, server-based IP systems are easily administered over a LAN or WAN--usually with a single central interface--and even allow you to purchase, when needed, only the applications and functionality your contact center needs.

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5. The best-case scenario illusion. So you've decided on an IP solution and formulated your IP migration or implementation plan. The first thing to expect is that not everything will go as expected. Costs for additional needed labor exceed budget, the new IP system isn't fully utilized early on, etc. Contact centers, therefore, should figure their preliminary ROI model, then immediately trim 20 percent to 25 percent for unplanned expenditures that typically come with an IP migration.

6. Forgotten ROI contributors. On-the-go consumers are increasingly taking advantage of the automation that IP contact center suites offer, such as speech-driven IVR, FAQ auto-response and Web self-service. As these and other convenient services attract customers, the revenues they bring to business add to the return on technology investment. Oddly, though, many contact centers overlook this aspect and miscalculate ROI expectations, even when the competitive advantages which IP provides are an ROI upside.

7. Overemphasizing soft-dollar returns. Many contact centers base their ROI forecasts on "soft-dollar" results, such as better agent productivity, operations efficiency and so on. Though results like these can certainly be measured and calculated toward a return on investment, ROI projections should first focus on hard-dollar cost savings, such as how much your contact center stands to save over a 12-month period by using SIP long-distance dialing. Additional hard-dollar calculations can include, among others, how much you'll save in proprietary vendor maintenance contracts after replacing a PBX, as well as how much new IP phones or soft phones will reduce equipment costs.

8. Disregarding secondary costs. Along with soft-dollar ROI projections, contact centers often fail to account for "secondary" costs associated with a new IP system deployment. That is, they don't gauge costs to (re)train users, costs to train internal support personnel, or other similar level-two expenditures beyond initial system purchase and direct labor costs. Of course, contact center and IT managers know best what their agents' training needs will be and how much their support staff knows or doesn't know about VoIP, but a qualified IP consultant can objectively help zero in on these and other secondary costs for more accurate ROI estimates.

9. Generic ROI models don't completely apply. IP vendors aren't necessarily untruthful, but certain parts of the ROI calculators they use are generic and may not apply to your IP migration project's expected return on investment--not completely, at least. So keep a critical eye on the ROI calculator any vendor uses, eliminate those items that don't apply to your IP initiatives, and customize the final ROI study based on your contact center's specific expectations.

10. Vendor shortcuts in the ROI calculation process. Again, many vendors make an honest effort to ensure you're satisfied with their IP products and services. But when it comes to their ROI estimation process, these vendors often take a quick look, make a couple of calculations and call everything good. Businesses investing in these technologies should demand that vendors take the time--and interest--to fully and correctly calculate any ROI for their migration to IP telephony. In doing so, companies can eliminate problems on the back-end if and when original ROI expectations are not met.

The Bottom Line On ROI

Review any business' communications investment objectives and you'll find a higher ROI is nearly always at the top of its list. Interactive Intelligence has installed its Customer Interaction Center (CIC) software in thousands of contact centers and enterprises worldwide--with hundreds of implementations of the CIC IP contact center suite based on VoIP and SIP--and in virtually every project our customers have emphasized the importance of their return on investment.

What is the business moral here? Let us help with your contact center's migration to VoIP. Because along with delivering innovative yet practical IP solutions, it's safe to say we've learned quite a bit about optimizing "true" ROI. Our customers have made sure of it.

Peggy Gritt is senior director, Product Marketing, for Interactive Intelligence Inc., a global developer of software for contact centers and the enterprise since 1994. Interactive Intelligence integrated out-of-the-box IP functionality into its lineup of business communications software solutions in 2002, and today remains a leader in the VoIP and SIP movement. Contact Interactive Intelligence at 317-872-3000 by voice and fax, or visit www.inin.com for more on the company's complete suite of IP contact center solutions.

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