Worldwide IT Spending On Pace to Surpass $3.4 Trillion in 2008

Despite current economic concerns, worldwide IT spending will exceed $3.4 trillion in 2008, an increase of 8 percent from 2007 spending, according to Gartner, Inc. Analysts said much of this growth is based on the decline in the U.S. dollar. The estimated worldwide IT spending growth expressed in constant currency is forecast to be approximately 4.5 percent.

Worldwide software spending is on pace for the strongest growth rate in 2008 at more than 10 percent. IT services spending ranks a close second with more than 9.4 percent growth. Analysts said the IT services sector benefits from the continued innovation in software technology. New software solutions often require labor-based services to implement them.

IT spending is dominated by services rather than products. Together, IT services and telecom services account for 70 percent of total IT market spending. Gartner analyst said the telecom sector has a major effect on overall IT market performance, accounting for almost $2 trillion in 2008.

The main area of hardware growth activity is PCs, which represents 60 percent of total hardware spending. Growth in PCs is stronger than previously expected, with no signs of a slowdown. The U.S. forecast has increased marginally while forecasts elsewhere, particularly Asia/Pacific and Western Europe, have increased significantly.

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Unified Communications: Lifeblood of the Contact Center

In a new study exploring unified communications in the contact center, Aberdeen Group examines the business reasons for adoption of unified communications, the relationship between unified communications and customer satisfaction, customer retention and year-over-year change in customer satisfaction, and how Best-in-Class usage of unified communications have provided business, business process benefits and operational efficiencies.

Unified communications must revolve around the needs of the business -- finding the right business process to UC-enable, and finding the right return on investment for the right departments. A small number -- 23% -- have some form of unified communications implemented but an astounding 50% of customers surveyed are or will be evaluating unified communications in the next eighteen months.

The report demonstrates a direct correlation between implementation of unified communications by Best-in-Class customers and the performance in three critical customer-facing performance measures: customer satisfaction, customer retention and year-over-year change in customer satisfaction.

End-user customer feedback has indicated that customers have already invested millions in existing telephony and VoIP technologies to support the contact center, and intelligent unified communications investment needs to complement and extend this existing investment. These same customers also demonstrate the high level of confusion as to exactly what unified communications is and what each of the software vendors label their collection of technologies.

The required actions for companies seeking to gain the most benefit from their implementation of unified communications include a commitment to identify the right business processes to UC-enable, implement policies and procedures designed to maximize effectiveness and efficiency of these cross-departmental business processes, establish a contact center unified communications strategy and approach, and implement metrics to monitor and measure contact center performance.

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North American market for hosted outbound IVR services to more than double by 2013

A new report by independent market analyst Datamonitor reveals the North American market for hosted outbound integrated voice response (IVR) services is set to more than double from an estimated $213 million in 2008 to $524 million by 2013. Outbound IVR is the next generation contact center technology used for automated, phone-based outbound communications. The report, “Hosted Speech and Outbound IVR Services”, explains that the global market is shifting towards a more personalized, directed method of enterprise communication with customers. At the same time, enterprises are looking for ways to maintain an increased level of communication with customers while controlling costs.

Outbound IVR originates and executes outbound calls with customers. Today, outbound IVR is used primarily for proactive communications, allowing enterprises to reach out to customers through outbound call campaigns that use a combination of pre-recorded messages or text-to-speech (TTS) and interactive DTMF (dual tone multiple-frequency, i.e. touch-tone) and / or speech recognition applications. Speech recognition and DTMF are used as the primary interfaces and can verify customer details, complete transactions and help route calls to a live customer services agent.

According to Datamonitor, spending on hosted outbound IVR services in North America will increase at a compounded annual growth rate of 20% over the next five years as more firms leverage outbound communications to reduce costs and improve customer satisfaction. Some of the early adopters for outbound IVR services include financial services organizations - for debt collections and billing, and travel & tourism companies, to provide information about flights and gain a competitive advantage. Outbound IVR is also being deployed in the healthcare industry to send prescription refill, medication dose or appointment reminders to patients. Proactive communications help to reduce administrative costs as the number of missed appointments is lowered.

Customers are becoming more mobile and more demanding about the level of customer service they receive. Outbound services can be used to help reduce pressure on customer service agents and provide a service that would not be economically viable otherwise. An example of this is when alerting customers of flight delays, which are time sensitive and require many calls to be made in a short time period. Transactions can be carried out entirely via an IVR system which reduces the need for customer service personnel; this could include checking a bank balance, flight details or paying a bill. The call is routed back to a customer service agent only when the customer needs further assistance therefore enabling agents to spend their time speaking with customers that need their help or have more complex inquiries.

Although outbound speech applications are being developed and deployed today, the majority of deployments in outbound use simple DTMF applications such as identity confirmation, prescription reminders and overdraft notifications. However, the number of outbound speech applications is set to grow through 2013 as enterprises demand greater sophistication and intuitive design from their outbound IVR solution.

As the outbound IVR market grows and solutions mature, a greater number of enterprises will begin to use the technology to proactively reach out to customers. Vendors are beginning to offer outbound IVR alongside inbound IVR solutions and the market is changing to include email and SMS as part of multi-channel customer service solutions. Using this approach, communications can be made

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The Economy and Business Conditions Having More Impact on Small and Midsize Businesses Worldwide Than Excitement About New Technology

A new report from IDC finds more concern about the economy among SMBs worldwide than interest in the most potentially innovative new technology. Current economic growth and business conditions are by far the greatest concern for small and midsize businesses, particularly in North America, Latin America, and Western Europe, the new study indicates.

For this new study, IDC's regional SMB analysts assessed the current level of interest or concern in five different areas. This "temperature taking" focused on: (1) future economic growth and business conditions, (2) "green" technology, (3) software-as-a-service (SaaS), (4) virtualization, and (5) use of the Internet as a key business resource.

While there are differences across regions, SMBs in general are currently cold (or showing little interest/concern) when it comes to new and emerging technologies but are considerably warmer (or showing a great deal of interest/concern) when the discussion turns to economic issues.

Additional key findings of this study include the following:

--There are a myriad of factors that could raise, or in some cases lower, the future level of interest/concern among small and midsize business owners when it comes to the economy as well as new technologies. In general, smaller companies across regions are more tactical and near-term in their concerns, but this view is increasingly shared by mid-sized firms as times grow more challenging.

--Among the four key technologies examined by IDC analysts, use of the Internet as a key business resource was considered having the greatest upside potential in terms of future interest among SMBs.

--Virtualization and "green" technology are not yet registering with SMB owners except in more advanced medium-sized businesses across regions. Software-as-a-service (SaaS), in contrast, has a somewhat higher level of current visibility, although interest is still at an early stage. IDC expects temperature increases in virtualization and SaaS the next 12-24 months as vendor promotions gain traction. Going "green" will be a much tougher sell, especially in underdeveloped areas, and IDC analysts do not expect temperature readings to change much in the future.

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Issue Resolution Drives Loyalty, Retention, Satisfaction

The ability of Customer Service Representatives to resolve customer issues is the most critical driver of customer satisfaction, loyalty, and word of mouth recommendations, according to CFI Group’s second annual Contact Center Satisfaction Index (CCSI). Overall satisfaction with call centers improves, as the CCSI gains three percent to a score of 72 on the Index’s 100-point scale.

Though customer satisfaction with contact centers is up, the study finds that one in five
customers end their contact center experience with unresolved problems. These customers are half as satisfied (CCSI score of 40 vs. 80) and twice as likely to defect. Customers clearly punish poor performance, but they reward good customer service. Customers whose issues are resolved on the first call are 49 percent more likely to continue doing business with the company than customers whose issues are not resolved.

The CCSI study shows that more customers are using the call center as the resource of last resort. In today’s multichannel environment, Customer Service Representatives are more likely to get a higher proportion of “harder” questions that customers cannot find answers to on a website or elsewhere. Customers who tried other methods before calling the contact center have a satisfaction score of 64, which is 15 percent lower than customers who called the contact center directly (75).

Offshore contact centers are doing a better job this year solving issues, but their satisfaction scores still lag behind onshore contact centers by a wide margin (CCSI score 59 vs. 75). One of the main challenges for offshore contact centers is effective communication. The study finds that issues are 25 percent less likely to be resolved when Customer Service Representatives are difficult to understand.

Satisfaction with the contact center is an important indicator of loyalty and recommendations. CCSI data show that 94 percent of satisfied customers will do business with the same company again, and 91 percent will recommend. Percentages for dissatisfied customers are significantly lower. Only 62 percent said they will continue to be a customer, and only 39 percent will recommend.

The second annual CCSI measures customer satisfaction across several industries, but not all industries perform equally. The CCSI uses the methodology of the University of Michigan’s American Customer Satisfaction index (ACSI) to calculate industry scores on ACSI’s 100-point scale.

The CCSI industry scores are as follows:
• Banking (71)
• Cable and Satellite TV (66)
• Cell Phone Service (72)
• Government (70)
• Hotels (78)
• Insurance (75)
• Multi-Channel Retail (76)
• Personal Computers (69)

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Two Out of Five Executives Say Company Data Volume is Increasing in Size and Becoming Unmanageable

The Federal Rules of Civil Procedure were amended 18 months ago, requiring that companies have the ability to access quickly an inventory of various electronically stored information in the event of litigation. Yet, a recent online poll, conducted by Deloitte, found that nearly two out of every five executives (39.7 percent) felt that data volumes in the organizations they’ve worked for are increasing in size and becoming unmanageable.

In fact, 17.5 percent of executives surveyed said their companies are not ready to handle complex discovery requests.

Nearly 12 percent (11.8 percent) of companies surveyed have no policy in place to share clear guidance with the IT department and all other employees on document retention and destruction. Another 9.4 percent have no policy in place, but distribute specific directives when litigation arises.

Executive respondents’ greatest concerns about document discovery included: the expense of going through large volumes of files, due to vendor or in-house costs (47.5 percent); damaged productions and exposure to sanctions, due to vendor or in-house error (16.3 percent); and failure to meet deadlines set by the court (12.9 percent).

Some leading practices Deloitte recommends to help companies ease the process of litigation include:

• Prepare and implement an e-discovery program
• In conjunction with counsel create records management policies, procedures and retention schedules
• Map the company’s data system and data source catalog
• Manage and remediate legacy data
• In conjunction with counsel develop a legal hold strategy and process to preserve all forms of relevant information in the face of litigation
• Establish discovery protocol with regulators

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2008 IT Market Compensation Study Projects a Decline in IT Hiring

Although the recruitment and retention of skilled IT professionals continues to be a key issue for organizations, even under the current economic conditions, IT organizations will be cautious about their hiring plans in 2008 and 2009 in response to potential IT budget cuts, according to an annual survey by Gartner, Inc.

According to a survey of 285 U.S.-based IT organizations, 57.9 percent projected an increase in IT staff levels (including full-time employees and contractors as supplementary staff) during the survey time period (March 1, 2008 through February 28, 2009). However, this is a notable drop from 66.3 percent reported in the 2007 study. At the same time, the survey also showed the percentage of organizations projecting a greater than 10% increase in head count also dropped from 15.7 percent in 2007 to 12.1 percent in 2008.

The survey showed that the median employee-initiated turnover rate with retirements was 7.1 percent, down from 7.2 percent in 2007. The median voluntary turnover rate without retirements was 7 percent. IT organizations in other services, public, nonprofit and manufacturing experienced more retirement-related turnover than other industries over the past 12 months.

The survey showed that current economic conditions have yet to have a material impact on compensation budgets. Enterprises are continuing to budget for pay increases in 2008 at a level similar to previous years, with the reported median salary increase budget at 3.6 percent.

Companies that know where to invest their dollars in which reward elements based on their workforce demographic compositions, and closely align their rewards strategies with those of the business and IT, will gain a competitive advantage over their peers in the marketplace in attracting and retaining desired IT talent.

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