Customer insight into the business. Business insight on the customer. Lowering of the cost structure. Improvement to revenue or profits
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1 Decision Framework, M. Maoz, E. Kolsky Research Note 3 January 2003 Customer Service Hype Cycle 2003: Strategy Comes First Customer sophistication will drive demand for improved service and support. Carefully examine emerging technologies and processes to address user demand at a reasonable cost and to drive increased revenue. Core Topic Customer Relationship Management: Business Strategies, Technologies and Apps. for Customer Service and Support Key Issue How will customer service evolve from a department into an enterprise discipline? Strategic Planning Assumptions By 2006, leading B2B service organizations will demand applications that incorporate collaborative, real-time case capabilities (0.7 probability). By 2008, an enterprise will be valued based in part on its ability to deliver insight and relevant customer information specific to the employee or software agent, together with the communication tools, as part of the customer interaction (0.8 probability). The most successful customer-focused enterprises are those that build customer service processes designed from the customer's point of view, and then select and deploy technology and applications to enable new behaviors and better interactions based on those points of view. The more difficult aspects of customer relationship (CRM) to address and, in fact, the more critical ones will be improved processes, organizational collaboration and metrics. The applications, technologies and processes tracked on the customer service and support Hype Cycle are chosen for their ability to support these aspects. They must succeed at optimizing one or more enterprise capabilities: Customer access (speed and convenience) Customer insight into the business Business insight on the customer Lowering of the cost structure Improvement to revenue or profits In selecting technologies for use in enhancing customer service solutions, it is important to consider four factors: 1. Fit within the enterprise strategy: Has the appropriate change necessary for technology adoption occurred? 2. Customer demand to provide the new technology, balanced by the expected potential benefits to the business 3. Viability of the vendor providing the implementation of a technology Gartner Entire contents 2003 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.
2 4. The enterprise's tolerance for risk in trying new technologies, and existence of a backup plan if these fail When these factors are considered, enterprises will have a strong ability to prioritize technology adoption and implementation plans. Implementing leading technologies to gain competitive advantage is good for leading-edge companies, but those not comfortable with risk should abstain. We have labeled each element on the Hype Cycle (see Figure 1) based on the type of adopter best-suited to the technology or process: innovators, early adopters and part of the pack. There are many caveats to any Hype Cycle, and the most important are: Many elements are specific to a business model, such as business-to-business (B2B), retail banking or indirect service through distributors. Creating a return-on-investment-driven business case for new technologies will be most important for organizations with a low tolerance for risk, whereas highly innovative organizations will look to the benefits of offering differentiated levels of service. Innovative technologies often come from vendors with questionable viability, and careful planning must be done. Action Item: Consider the risk the organization takes with a new, unproven technology when making the decision to implement it. Weigh it against needs and potential benefits. 3 January
3 Figure 1 Customer Service and Support Hype Cycle, 2003 Performance Mgmt. Service Voice IVR Visibility Analytics NL Tools Virtual Agents Speech- Enabled Web Customer Interaction Hub Intelligent Devices PRM SPO Technology/ Business Trigger Peak of Inflated Expectations Mobile Service KM Tools Contact Center Call Center CTI ACD Web Collaboration IVR UQM ERMS Quality Assurance WFM Self-Service Virtual Centers Trough of Disillusionment Slope of Enlightenment Plateau of Productivity Type A Adoption Type B Adoption Type C Adoption Innovators Maturity Early Adopters Part of the pack Shows the evolution of call centers into virtual centers, then contact centers and, finally, customer interaction hubs. Acronym Key: ACD CTI ERMS IVR KM NL PRM SPO UQM WFM Automatic call distributor Computer-telephony integration response system Interactive voice response Knowledge Natural language Partner relationship Service process optimization Universal queue Workforce Source: Gartner Research The Gartner Hype Cycle The Gartner Hype Cycle contains five stages: Technology/Business Trigger: A breakthrough, invention, discovery, public demonstration, product launch or other event generates significant press and industry interest. Peak of Inflated Expectations: During this phase of overenthusiasm and unrealistic projections, a flurry of wellpublicized activity by technology leaders results in some successes, but more failures, as the technology is pushed to 3 January
4 its limits. The enterprises that make money during this phase are generally conference organizers, magazine publishers and consultants. Trough of Disillusionment: Because the technology does not live up to its inflated expectations, it rapidly becomes unfashionable, and the press abandons the topic or touts its failure to meet expectations. Slope of Enlightenment: Focused experimentation and solid hard work by an increasingly diverse range of organizations lead to a true understanding of the technology's applicability, risks and benefits. Commercial off-the-shelf methodologies and tools become available to ease the development process and application integration. Plateau of Productivity: The real-world benefits of the technology are demonstrated and accepted. Tools and methodologies are increasingly stable as they enter their second and third generations. The final height of the plateau varies according to whether the technology is broadly applicable or benefits only niche markets. As an enterprise looks to exploit elements on the Hype Cycle, it will be critical to determine which interaction channels are of highest importance to end customers (see Table 1 and Table 2), and how might that translate into profit for the business. Typically, the best opportunities are where there is a strong correlation between both factors. In the current environment of highly restricted budgets to finance innovations, a third factor must be included: the time and cost of an implementation of the technology or process. These three factors will dominate project prioritization until the return of a sustained business expansion. 3 January
5 Table 1 Prioritizing the Hype Cycle Elements Hype Cycle Element Primary Channel '03 Value to Implementation Time Customer Enterprise Service Analytics Phone (Agent) Very High Very High Average-Long Voice Interactive Voice Response (IVR) Knowledge Management (KM) Tools, Universal Queue Management (UQM), Natural-Language Tools Performance Management, Field Service Optimization Phone (IVR) High Very High Long Medium/High Medium Short-Average Field Medium High Average Natural-Language Tools, Service Analytics, Partner Relationship Management (PRM) (B2B) Web (Self) High Very High Short to Long Web Collaboration, KM Tools, UQM Web Collaboration, KM Tools, UQM Web (Chat) Medium-High Medium-Low Average to Long Web (Call Me) Low Medium-High Short UQM Web (Kiosks) Low Medium-High Very Short Mobile Service, Field Service Optimization (FSO) Wireless (Short Message Service, or SMS) Low, by Segment Low Short FSO Wireless (Gateway) Medium-Low Low Average-Long Contact Center, UQM Voice Over IP (VoIP) Low Medium Short Source: Gartner Research Table 2 Definition of Time and Value Implementation Time Value Short Three to Nine Months Low Not Needed or Wanted Average Six to 12 Months Long Nine to 24 Months Source: Gartner Research Medium High No Correlation (Buyer and Seller) of Needs and Wants Definite Need and Want New Additions to the Hype Cycle for 2003 Customer service and support strategies will continue on the leading edge of adoption of real-time capabilities. During 2003, 3 January
6 we expect an acceleration in the number of innovative vendor offerings that accelerate real-time customer information in the areas of service analytics, service performance optimization, collaborative case (CCM), intelligent device, field service optimization, customer interaction hub and PRM (see "Management Update: 2003 CSS Predictions Stress Value of Customer Service" for more on service analytics, the customer interaction hub and PRM). Each of these consists of a combination of new processes, business applications and improvements to established technologies. In the following sections, we describe some of these new areas. Leading service organizations will adopt service performance optimization. Workforce is a mature technology, yet the majority of the metrics that are tracked are efficiency metrics that do little to measure how the customer service experience affects sales or customer defection. The transition from standard efficiency metrics to business performance metrics (upsell, lead generation, new business creation, suggestions for product improvement, one-and-done issue resolution) in the call/contact center is what is referred to as service performance optimization. Such vendors as Performix Technologies, Nice Systems and Blue Pumpkin Software, as well as business intelligence vendors, together with several global business consultancies, are promoting this trend. By 2007, 70 percent of Type A organizations (aggressive adopters of technology) will have adopted service performance optimization as a standard for call/contact center performance, although fewer than 30 percent will have mapped performance to corporate objectives (0.8 probability). Call Centers to Customer Interaction Hubs: The transition from call center to multichannel contact center is well under way, with the majority of centers deploying supporting technologies. Leading enterprises worldwide will begin planning for the next step in customer service and support, which is the creation of an integrated customer interaction framework, or hub, that provides a real-time, and thorough, view of the customer across channels to all relevant customer-facing employees. This will include a segmented, analytical evaluation of the specific customer, along with a determination of the level of service resources to apply to the customer based on the customer's profile. By 2008, an enterprise will be valued based in part on its ability to deliver insight and relevant customer information specific to the employee or software agent, together with the communication tools, as part of the customer interaction (0.8 probability). CCM will emerge as a standard for B2B customer support. In a B2B support environment (for example, capital equipment, software applications, professional services, contract 3 January
7 manufacturing), total call volumes are far lower than in a consumer call center, and there is less of an emphasis on total handling time and efficient call. The emphasis is on account, satisfaction and identification of additional selling opportunities. The challenge that most enterprises face is in capturing the correct customer information necessary to demonstrate mastery of the customer's needs and expectations, and delivering it to the support agent, as well as fostering collaboration with colleagues on case resolution. In more than 90 percent of B2B support centers, there is inadequate CCM application support available to the agent to: Access relevant customer information Capture interaction data in real time Identify possible associates to resolve customer issues Enable collaboration with associates Record the results of a customer interaction so that they would be globally available to other sales, service or product specialists who will eventually interact with the customer Analyze interactions for hidden patterns CCM extends the concept of a 360-degree view of the customer to a 360-degree view of the internal resources (associates, information, insight) required to meet customer demands. Evidence gathered from Gartner clients indicates that the absence of these tools, applications and processes drives up service costs by 12 percent to 20 percent, as well as inhibiting upsell and cross-selling opportunities. By 2006, leading B2B service organizations will demand applications that incorporate collaborative, real-time case capabilities (0.7 probability). Acronym Key B2B Business-to-business CCM Collaborative case CRM Customer relationship FSO Field service optimization IVR Interactive voice response KM Knowledge PRM Partner relationship SMS Short Message Service UQM Universal queue VoIP Voice over IP Bottom Line: Customer demand for improved service and support will grow, and customers will give little consideration to the budget constraints imposed on the enterprise to make these improvements. Enterprises should examine the technologies and processes on the Hype Cycle based on the ability to improve specific aspects of the customer experience: customer access (speed and convenience), real-time customer insight into the business, business insight on the customer, lowering of the cost structure, and improvement to revenue or profits. Before embarking on any new initiative, the enterprise should examine whether the project is in line with customer demand, and whether or not the necessary change has occurred. When using any leading technology, there will be a need to balance any potential reward against the level of risk that can be tolerated, and to create a backup plan in case the project fails. 3 January
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