ASR Technologies Seen as Key to Growth in the IVR Market

With about 90 percent saturation in the large enterprise segment, vendors in the North American interactive voice response (IVR) market are looking to small- and mid-sized businesses for future growth opportunities, according to a research report from Frost & Sullivan.

The same research found that this market earned revenues of $657 million in 2006 and is expected to reach $1.35 billion in 2013.

"While large enterprises across numerous industries have heavily adopted IVR systems to help route inbound customer contacts and handle simple self-service applications, the small- and mid-sized markets have largely avoided investment in these technologies," remarks Frost & Sullivan Senior Analyst Ian Jacobs. "This, however, is likely to change now that vendors are creating packaged voice applications, and speech-based IVRs are becoming more common and more effective."

Packaged applications continue gaining importance in the speech self-service market due to their ability to significantly reduce the time-to-market and realize deployment efficiencies, Jacobs maintains, noting as well that they are usually less expensive than customized applications. "Packaged applications and vertical-specific modules marketed at lower price points are helping widen the appeal of the technology and are bringing IVR applications within the reach of the small/mid market," he says. "They can prove to be a win-win situation for both vendors and customers, as enterprises can access the best that speech self-service has to offer and vendors can gain economies of scale through multiple sales."

Improvements to the technology and greater acceptance by the public are also driving the changes across the industry, Jacobs says. "Speech technologies offer a proven value proposition and are becoming an integral part of the customer service function."

The report explains that another factor responsible for increased activity in the small and medium market is the growing trend toward adopting open standards, such as VoiceXML. Industry participants have begun realizing the advantages of making their products interoperable with solution components and technologies offered by other vendors, it said.

Customers are also increasingly opting for products based on open standards because of their flexibility. VoiceXML-based systems, for instance, enable customers to start with a smaller number of ports, while older legacy systems required companies to have a minimum of 24 ports.

While the larger enterprise segment—with 65 or more IVR ports per operation—accounted for the majority of sales in the IVR market in 2006, systems with fewer ports are expected to drive strong growth for IVR vendors in the future.

Jacobs also expects robust IVR purchasing by larger enterprises in the coming months as these firms look to replace their first-generation systems with upgraded technology. Many of these firms made their initital purchases during technology upgrades in preparation for Y2K, he maintains.

However, persistent negative consumer perceptions will continue to pose a considerable challenge to vendors of IVR technology. Many consumers have faced difficulties in the past due to poorly designed IVR flows, a problem that remains one of the major hurdles to market growth. Vendors will have to proactively help customers design and deploy the technology to overcome such perceptions, Jacobs says.

"Technology manufacturers must, through their services, education, and training divisions, get involved in creating competencies in voice user experience design in their customer base," he continues. "Customers need to be educated on the concept of extending user experience design to voice applications and then helped to create userfriendly experiences."