It’s impossible to forecast the direction of technology. When everyone thought mass hard-drive storage was the next trend, it moved to the cloud. When everyone dismissed the original tablets (circa the 2002 Windows XP Tablet PC) they made a huge return in the form of the iPad. And who could have predicted the impact that Google (News - Alert) Docs has had on the Microsoft Office dynasty?

So how could one possibly imagine the future of Interactive Voice Response systems? Or the bigger question: will IVR even be necessary? Well, to predict the future, one must look to the past. The technology that created the landing pad for IVR was launched by Bell in 1941 with the introduction of the tone dialing, followed up by the invention of Dual Tone Multi Frequency DTMF, which in brief allowed for the dialing of area codes.

So in the 1970’s, when the technology for IVR was similar to that of the electric car, fully capable but too expensive to be widely adopted, large corporations began to envision the future advantages. And by future advantages, I mean cutting the cost of paying employees to do basic tasks that customers could accomplish through self-service. IVR was introduced to help large corporations handle their call volumes, route their calls, and extend their service hours. After a certain point, IVR became the key gateway for customer care delivery. Because of advancements in technology and corporate growth, these systems exploded in the 1980’s. If you needed help with anything, you called their customer service line. Seems obvious, but to those of us from Generation Y, where you Google, then e-mail, then are forced into resorting to traditional IVR, it’s important to explain.

From the consumer’s perception, the immediate traditional benefits of IVRs are exclusively passed on to the corporation - less people to train and employ and less contact centers to keep running. In fact, recent studies have shown that over 75% of consumers believe that IVR’s were introduced for the business’ benefit. Having automated menus reduces the need for an operator who has to listen to what you want, then determine the correct agent to connect you to. Prerecording the IVR to answer some common basic questions, like address and hours, saves time for the agents as well.

While the businesses did achieve some cost savings, it was at the expense of customer satisfaction. The flaws in this system are obvious: redirected calls to the wrong channel, and being forced into menu options that probably don’t directly address your needs.

In the 90’s, basic speech recognition technology was implemented into IVR systems. Even with recognition technology, the IVR problems didn’t cease to exist. With limits in technology, it was hard to have IVR’s deliver adequate customer service. At the time, there were no alternatives, such as the web, and while outsourcing allowed for more agents at a cheaper cost, it brought on a whole new slew of problems, which we are all familiar with.

Companies that strived for great customer service in this era were forced into 1) developing a more effective IVR or 2) hiring more customer service representatives. Neither of these options provided a cost effective way to improve service.

But back then, good customer service was a luxury. In the past few years, the industry has done a 180 and customer service directly influences the bottom line, as many recent studies have shown. We are in the era of creating customer experience. Customer care is now a necessity and if you’re not doing it well, your customers are talking it about it and are seeking other alternatives.

So, with a plethora of alternatives to customer care in 2011, why is the Global Speech Technology sector expected to have a $20.9 billion valuation in 2015, an incredible 23.2 percent growth? Why is the IVR industry expected to be worth $1.9 billion by 2015 as well, when there haven’t been any significant implemented changes to the industry since its inception? Possible reasons might range from very recent technology innovations to the ongoing increase in customer care demands. 

Either way, it’s clear that the IVR industry is changing and adapting to a new market. The technological changes are already available. New platforms allow speech technology to be adapted into web applications. These applications allow you to communicate with an IVR through your laptop’s microphone, navigating a website and answering your cry for help without ever picking up the phone or speaking with a live agent. This technology is where the market is headed and in a few short years, we should see more accessible speech dialogues from websites. Imagine heading to Amazon.com (News - Alert) and without ever touching a finger on your keyboard, using an IVR to find you the lowest cost MacBook and then directing the system to purchase it and ship it to your house, all with quick speech technology.

There are a few aspects about the future of speech technology and IVR that we can predict for sure. First, we know that speech technology will continue to evolve and improve. Additionally, having human intervention in speech technology provides limitless potential for the understanding capabilities of speech recognition software. Human intervention even allows IVRs to understand anger and frustration. This will further close the bridge between the understanding capabilities of live customer agents and IVR. The second fairly certain development will be the application of this technology.

Speech is easy – we speak years before we learn how to write and type, and it remains a much easier form of communication for us. It’s also easy to read inflection and emotion from each other’s speech. Perhaps the greatest advantage of speech is that you don’t even have to be literate to speak. Advanced IVR applications will undoubtedly benefit the 1.2 billion illiterate people in the world. With all these benefits, it’s impossible to deny that the future will contain speech applications everywhere we look. Imagine a server at a restaurant carrying around a wireless speech decoder that will passively listen to your order. Instantly it understands that you would like your T-Bone medium rare, and sends your order right to the kitchen, without the server ever having to manually plug it in and with no possible human error.

Given these unlimited possibilities, many of which are almost certain to occur, the real question is what will the new role of customer service representatives hold in the future? While I believe that in the near future, live representatives will remain a large part of customer care, I can easily foresee the role evolving to only handling the truly complex items with the overwhelming majority of interactions being handled by self-service. What is your opinion? Where do you see the future of IVR?

Dan Fox is a Marketing Director at Interactions Corporation (@interactionsco).

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2011, taking place Sept. 13-15, 2011, in Austin, Texas. ITEXPO (News - Alert) offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. To register, click here.