Call Center Magazine: What are the advantages of hosted speech recognition service over premise-based applications? Your Datamonitor report predicts huge growth in speech hosting in the next four years -- will premise-based systems disappear?

Daniel Hong: Once viewed as an immature and expensive technology, speech has become a commercially viable cost reduction and customer service improvement mechanism. However, the relatively high costs of the technology have deterred many businesses from investing in speech. As a result, a number of businesses have looked to hosting to leverage the benefits of speech without having to absorb the heavy upfront costs for a speech solution. Although the total cost of ownership (TCO) for a speech solution has become lower in the last couple years it still requires expensive professional services for application customization. Hosting provides more flexible pricing options (e.g. pay-per-use) for businesses, while premise-based speech systems do not. However, TCO for a premise-based speech solution in the long run will be lower as internal IT groups become more familiar with Voice-XML, SALT and speech technologies.

Both premise-based and hosted speech solutions will experience double-digit growth through 2009. Hosted will in fact experience more aggressive growth than premise-based because:

1) The hosted market for speech is smaller - therefore growth rates are larger.
2) Growing demand for flexible deployment models that include hosted and premise-based managed services.
3) Service providers and systems integrators are increasing investment for hosted speech services.

Call Center Magazine: What should call centers keep in mind when choosing a vendor and designing an application?

Daniel Hong: Technology, Experience, Customers (proof points), Expertise, Financial Viability, Partner Ecosystem.

Application design should be an extension of customer behavior -- understanding the customer's needs and creating an application that meets those needs is prudent. This will improve the caller experience and subsequent user adoption -- the ultimate goal for any customer-facing speech application.

Call Center Magazine: Blogger Paul English has made a name for himself bad-mouthing IVRs and speech systems. Has the IVR/Speech industry done anything to deserve this or is this just growing pains for new technology?

Daniel Hong: Yes and no. There were poor speech deployments in the past, Sprint's Claire and AOL by phone come to mind, which deterred many customers from speech recognition. Even now this resonates with many customers. But the more customers interact with speech they are seeing the benefits of the technology. The ability to access information quicker and to conduct transactions faster through self-service has helped drive customer adoption.

In the past two years the industry has made significant strides in voice user interface and call flow design, development environments, customer behavior analytics, improved speech recognition rates, best practices and packaging of reusable application components. This has helped bring the total cost of ownership for speech down -- and enterprise spending up.