The party line is that AI will replace call center agents. Will it though? Yes…and no. Are there other significant opportunities to leverage AI to enhance customer experience? Absolutely!
In the contact center, AI could more likely to replace the IVR first and agents second. The challenge is that many IVR systems are engrained into the call flow operations and, if a physical IVR, are amortized with depreciation still hanging on the system. Unwind those operations and/ or writing off depreciation with physical assets is a challenge for many enterprises. Hence why we are back to talking about agents.
More likely we will see existing agents with the capabilities to do more which, technically, means you are adding fewer agents moving forward. So, is AI going to replace agents? Yes…but not how many think.
Replacing contact center agents with AI has tradeoffs
Many view AI as a direct replacement for contact center agents supporting customers. Companies have tried this bold approach with mixed results. Klarna tried replacing agents with AI in earnest and made a big splash about how it would dramatically reduce their headcount. After replacing human agents with AI they saw their customer satisfaction scores take a dramatic drop. Shortly after seeing the results, they started hiring human agents back. They still are planning to leverage AI. It was a very public, and painful example of consequences that could be felt.
On the other hand, companies such as Best Buy and Ikea have had good success with replacing human agents with AI. In the case of Ikea, they repurposed and retrained agents to be design consultants. Essentially, this is less about reducing cost and increasing the value of employees…by increasing the value they provide to customers.
What separates success from failure? First, it requires intimately understanding your business, your customers and the processes. For enterprises, there are some key steps that are leading to successful outcomes. This requires quite a bit of planning and prep work.
Unfortunately, the party line is still fixated on direct human replacements.
AI brings more to customer engagement
We are largely still in the first of three main horizons of AI. The first is focused on efficiency and cost savings. With a renewed focus on the customer experience (CX), enterprises are looking for ways to increase the value to customers.
One way to increase value is increasing the velocity of getting customers the information they need or resolving their issue faster. The focus here is speed and efficiency. From service management systems to call center platforms, companies are able to leverage AI to increase the value to customers.
Service management solutions can leverage AI to understand trends, provide insights and respond to inquiries including ticket deflection for tier 1 and tier 2 cases.
Today’s call center solutions such as NiCE CXone, Amazon Connect and Five9 are leaning heavily into AI. You can read my thoughts on NiCE’s acquisition of Cognigy and their agentic AI platform here. Service management solutions from ServiceNow, BMC, Zendesk and others are also heavily leaning into AI. ServiceNow acquired Moveworks and logik.ai to significantly raise their AI game. Read my thoughts here.
Human agents now have more information at their fingertips than ever before. But it is more than just just information. They now have insights and suggestions to help respond to the customer needs more quickly and efficiently. Add AI into the mix and you bring those very insights directly to customers. Plus, you have the opportunity to move from reactive to proactive. More on that to come.
Where does this leave human agents? Is AI replacing human agents?
Companies are looking at the value their agents bring and identifying opportunities to leverage AI to provide the most straightforward of requests coming into the call center. Solutions like Salesforce’s AgentForce are looking to go beyond and provide support to more complex customer requests using AI.
Does this mean the end of human agents? No. Sure, agents that are providing basic support may be the most impacted through case deflection where the AI agent responds and resolves the issue faster…and cheaper. However, the opportunity is to increase the value that any given agent can provide to customers.
In the short term, we can expect to see some upheaval in terms of human agent numbers. That brings a challenge for enterprises that have long-term contracts with vendors too. If customers are still running physical hardware, the move to AI will push them to more flexible cloud-based solutions.
How does this impact vendors?
For the contact center and CCaaS vendor, it shifts demand from on-premises solutions to cloud-based solutions. Those that focus on AI to provide greater value to agents (human and digital) through insights and ticket deflection will excel. Those insights are also coming from other systems of record. Integration capabilities are one thing. Today’s AI integration needs three things: data integration, context around the data and governance.
Those vendors that are looking to disrupt the space are looking at the overall customer experience outside-in, how customers are engaging with their company and how AI can increase the value to customers.
I’ve already gone on record that in the near future we will likely stop using the terms like CCaaS in favor of talking about customer engagement or customer experience. That does not mean that CCaaS is completely going away. It does represent a shift in thinking…and approach by focusing on the customer experience.
There are a lot of vendors and solutions in the marketplace today. I expect to see vendor consolidation happening along with greater integration of solutions within and outside of the contact center and service management spaces. Much of the data needed for effective service management and contact center solutions comes from other systems of record.
We will also see greater integration between service management and contact center functions as the thinking and processes start to shift.
Regarding contracts, I expect terms to shorten and provide greater flexibility for customers during this period of change. Today, some enterprises are sitting on 5+ year contract terms. The exception are those vendors that provide the greatest flexibility moving forward to adapt to changing customer needs.
For vendors in both the service management and contact center spaces, this also means considering the CIO persona in your GTM, sales motion and partner strategies.
CIO Perspective
The contact center and service management platforms are moving into the CIO’s orbit very quickly. The combination of AI, data governance and more complex systems requiring significant integration are driving CIOs to engage more fully with their CMO counterparts to collaborate on customer experience.
Contact center systems have largely been outside the purview of the CIO and resided with the contact center manger. That is dramatically changing. Contact center systems are getting greater visibility as their function starts to integrate more fully into customer processes.
IT service management systems (ITSM) have always been part of IT going back decades. BMC’s Remedy and ServiceNow have been the gold standards over the years. Of course others such as Zendesk, Freshworks and Zoho also have service management solutions and are making inroads into markets previously dominated by the their larger competitors. Even large ERP solutions such as SAP have enterprise service management (ESM) solutions that span from HR to finance to operations.
Service management is no longer just focused on IT systems. Similar to how ITSM has IT-specific functions, today’s service management solutions have picked up function-specific processes for other functions such as HR and finance.
The bottom line is that enterprises need to get ahead of these moves before the ramifications hit them. The impact of AI on both contact centers and service management is about to accelerate. Get ready!
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