Interactive voice response phone answering systems have been loyally and quietly routing calls for over a decade in many companies.

But Forrester Research analyst Elizabeth Herrell says it’s time hardware-based IVRs were brought into the 21st century. Aging systems with a proprietary programming language – especially with rigid touch-tone systems – aren’t worth investing more in, she said in an interview.

“I don’t believe it’s a wise investment to pour money into proprietary applications when the market is now standards-based,” she said Tuesday.

Building applications around software standards such as SIP (session initiation protocol) and voice XML 2.0, which offer greater flexibility than hardware-based systems. That includes, for example, not only the ability to handle numeric voice demands (“for sales, say 1”) but also understand letters of the alphabet – handy for inputting of account codes and credit card numbers – and to confirm orders, all without speaking to an agent. Software-based, multiple IVR applications can be put on one platform and centralized, Herrell said.

Interestingly, Herrell said, organizations will boast of using open standards such as Web services, but their IVR systems have “more or less been neglected.” Which is too bad, said Herrell, because newer systems are less expensive to maintain.

She has no statistics on how many IVR systems in North American organizations are old, but said the market for hardware-based systems is mature.

Larger organizations may favor hosted IVR from a service provider such as Bell Canada or Telus, says Forrester, because they can scale when traffic spikes and route calls to multiple locations. Others will prefer to buy from leading manufacturers of IVR systems, including Nortel Networks, Cisco Systems, the Genesys Telecommunications division of Alcatel-Lucent, Aspect Software, Intervoice and Voxeo.

Nortel is an example of the industry trend. Its current IVR line-up is based around the MPS 500 and MPS 1000 media gateways for both TDM and SIP environments. There is still demand for TDM-based systems in organizations that haven’t converted to IP, said Jessica Disney, a company product manager.

However, she said that by the end of the year Nortel will release a software-only IVR system, first on Windows Server and later on Linux.

Although newer IVR systems are easier to maintain than older ones, they still need configuration and tweaking. “There is more up-front effort in getting a good speech application up and running,” Herrell acknowledged, compared to a simple touch-tone answering system, “and they tend to be consistently fine-tuned.” On the other hand, that’s “a small price to pay” for improved transaction completion rates.

She advises buyers of premises-based systems to look for solutions that support protocols such as Call Control eXtensible Markup Language (CCXML) for call control across the network, Speech Synthesis Mark-Up Language (SSML) for controlling the sound of text-to-speech

“I think it’s a proven technology customers are used to,” said Herrell.

Everyone wants personalized service, but organizations should reserve that to high value customers or those who have complex needs.