Helping web sites take phone calls

Call it e-commerce without the browser. Shoppers who want to buy office supplies from Office Depot Inc.'s Web site can simply dial a toll-free number and place orders using an interactive voice-response system that does the browsing for them.

Office Depot's application, built and hosted by NetByTel Inc. in Boca Raton, Fla., uses voice synthesis and recognition technologies to let shoppers find and purchase goods from the retailer's online catalog.

Ken Jackowitz, Office Depot's vice president of business systems, says NetByTel's technology, which understands and interprets natural language phrases, offers a user-friendly alternative to interactive voice response - the typical "press 1 for . . ." telephone application.

With the NetByTel system, customers provide the necessary information by responding verbally to prompts instead of punching buttons. If NetByTel needs information from Office Depot - a product description, for example - it retrieves it by initiating an XML-based client session with the Office Depot Web site in Delray Beach, Fla. Jackowitz says no burden was placed on his IT team because the system leveraged Office Depot's existing infrastructure to provide the data interface, and NetByTel developed and hosted the application.

Call Savings

The new system, in place since October, accounts for 5 percent of all of Office Depot's retail catalog orders, Jackowitz says. Orders handled by NetByTel cost 88 percent less to process than orders placed through a human operator, he estimates, and orders that come through the system average more items than the average six items per order placed through human operators.

Because NetByTel develops and hosts the applications for each customer and charges a flat per-transaction fee, Office Depot's up-front cost for voice-recognition technology was low. That pay-as-you-go business model, says Jackie Fenn, an analyst at Stamford, Conn.-based Gartner Group Inc., means that NetByTel has a solid financial proposition for most of its customers.

Fenn also credits NetByTel with building its applications on top of existing voice-recognition technologies from companies like SpeechWorks International Inc. in Boston. In this way, NetByTel can focus on building customized voice-enabled applications that tie into the vendor's e-commerce system.

But NetByTel's approach may not make sense for companies where speech recognition is a key component of the business model, Fenn says. Companies that want to build multiple voice-based applications may find it more economical in the long run to buy the necessary technology and train internal people to use it. A large organization, like Fidelity Investments, which has extensive voice-based customer self-service applications, wouldn't be a good customer, she says.

However, NetByTel's CEO and co-founder, Neal Bernstein, says he doesn't see many companies taking the applications in-house. The secret to a successful voice-based application, he says, isn't just the technology, but also the human factors, such as knowing when and how long to pause for responses, how to differentiate among ambiguous answers and how to design a script so that customers feel comfortable with the system.

Toward Better Speech

Bernstein says the firm's immediate plans are to improve the naturalness of the product's speaking voice. Long-term goals include improving the software's understanding of natural-language commands.

NetByTel also plans to expand the types of applications it builds, says Bernstein. Right now, the vendor focuses on voice-recognition ordering systems for Web-based e-commerce sites. But NetByTel could also support applications like expense reporting and delivery-status updates, he says.

There's already an example of such an application at Office Depot. NetByTel's order entry application was so successful, says Jackowitz, that Office Depot commissioned a voice-based system for the company's delivery drivers to report problems. As a result, more up-to-date information has been available to service representatives who handle order-status inquiries, he says.

Johnson is a Computerworld contributing writer in Seattle.

Sidebar: NetByTel Ahead Of the Curve

The emerging market for voice-recognition applications has yet to prove itself, says Gartner Group analyst Jackie Fenn. But vendors like NetByTel have found a few early customers. The financial services and travel industries, Fenn says, are ideal because companies in these markets have demonstrated success in handling transactions over the phone. Dot-coms also might see voice-recognition as a revenue opportunity because these applications let firms provide access to people who don't have Web browsers, without the heavy investment of building a call center, she says.

NetByTel is in a good position to lead the market, says Fenn, not only because of its technology, but also because of its position as one of the earliest entrants to offer a voice-recognition sales application. But the start-up could face competition from voice portals like Tellme Networks Inc. in Mountain View, Calif., and BeVocal Inc. in Sunnyvale, Calif. Although these vendors are best known for providing prepackaged information over the phone - like stock quotes and weather reports - they also promote their services to business customers who wish to build custom, private-label, voice-driven applications.

NetByTel's closest competitors include the following companies:

Interactive Telesis Inc.

San Diego

Interactive Telesis builds and hosts voice-recognition applications, but unlike NetByTel, it doesn't focus specifically on Web-based e-commerce applications. Its customer list includes university records offices and accounting firms. The types of applications it builds range from voice-mail access to interactive voice response programs, in which users punch buttons on touch-tone phones to input commands.

Voci Corp.

Campbell, Calif.

Voci teamed up with Menlo Park, Calif.-based Nuance Communications Inc. last August to add access to Internet content and e-commerce to its voice-recognition applications. Like NetByTel, Voci hosts the applications on its own speech platform. However, Voci has been marketing itself strongly as an alternative to call centers.

- Amy Helen Johnson

Sidebar 2: NetByTel Inc.

Location: 1141 South Rogers Circle, Boca Raton, Fla. 33487Telephone: (800) 638-2983Web: www.netbytel.comThe technology: Develops and hosts voice-enabled e-commerce applicationsWhy it's worth watching: Adds a phone-based sales channel to e-commerce Web sitesCompany officers: - Neal Bernstein, co-founder and CEO - Paul Robinson, co-founder, president and chief operating officerMilestones: - June 1999: Company founded - April 2000: Services launchedEmployees/growth rate: 40; 200 percent per yearProfitability date: mid-2002Burn money: US$10 million from Chelsea Capital Partners LLC, Mesco Ltd. and T-VenturesServices/pricing: Revenue Generation Suite and Customer Relationship Management Suite; each is priced at 50 cents to $1.25 per transaction.

Customers: Office Depot, Inc., Inc., Inc., BigStar Entertainment Inc., Inc., Greenfield Online Inc.

Partners: Dialogic Corp., SpeechWorks International Inc. and SCA Promotions Inc.

Red flags for IT: - Companies that require many voice recognition applications may want to develop their own systems in-house. - Low barriers to entry mean other vendors could quickly jump in as the market takes off.

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