What is “on premise IVRS (Interactive Voice Response System)”?
On premise IVR system can be defined as Interactive Voice response System (IVRS) which is installed in the premise of the company who is using IVRS for providing various services to its customers. On Premise IVR systems are also known as “Legacy IVRS” which are normally developed specifically for the company, using native API functions of CTI boards. It is tightly integrated with CTI board used, PBX or telephone operator, Operating System of the machine and normally written in a well defined languages like C++, .NET C# etc.

While, hosted IVR may provide many advantages, mainly outsourcing of maintenance and low initial investment, but on premise or legacy IVR systems are going to stay, in my opinion.

1. Recurring Cost
Hosted IVR services are normally rented. So, it is a recurring cost for a company. Hosting service provider may restrict services when some call spikes take place. Unlimited calls and one time cost is more beneficial in terms of ROI for many large corporates than paying for every calls handled by hosted IVR. Many companies already maintains various computer servers and PBX systems and putting one more server ( the IVR System) is not another heavy investment.

2. Long term Operation
Can a large enterprise afford to change their customer care number overnight ? What happens when hosted IVR service provider company stops its services as it closes down? With experience of recent recession in the world where many large companies went out of business, this is a real danger now where a Hosted IVR service providers close their shop, leaving their customers high and dry. Even the companies using their IVR services may close down, but they wont be needing IVR services too, right ?

3. Control and Integration
Some facility or control may not be available on hosted IVR. For example, transferring IVR call to some person in office. It can be done free of cost with in house PBX. While it may not be at all possible in case of hosted IVR or would cost money for making the outbound IVR call. Integration with PBX gives many features to IVR application, which otherwise will not be available in a hosted IVR. Another advantage would be to access IVR generated voice recordings/complaints on local LAN quickly by many people.
On premise IVR provides complete data security, protection along with customer caller IDs!

4. IVR development Tools
Now a days, there are many IVR development tools which can be easily learned and used for creating IVR applications. So, it is not difficult to manage IVR application any more. These tools can be used to develop any IVR applications in matter of days, if not hours! So, the advantage of hosted IVR for “going live quicker” can be matched with on premise IVR systems too.

5. Initial Investment
With easy availability of low cost CTI boards like Donjin, Synway etc., the initial investment for putting up a on premise IVR is no longer a deterrent. Many Telephone companies provide ISDN leased lines for voice at low rental, making it affordable to many medium sized companies too.

Many will still prefer hosted IVR over on-premise IVR systems and choice between them would largely depend on the IVR application and usage. When number of calls remains more or less constant and data security is required, than on premise IVR systems seems a better choice.

I think, on premise IVR systems are going to stay.