IP Contact Center Technology: Eliminating The Risks (Part V)
By Eli Borodow of Telephony@Work and Kevin Hayden, TELUS Communications Inc.

Multisite Economies Of Scale
Multisite organizations generally benefit most from IP contact center technology because they can gain huge economies of scale by centralizing technology resources for use across all locations.

Of course, most technology vendors approach centralization with an eye for preventing any loss of license revenue. Because centralized infrastructure eliminates the need for location-specific staff to provision and maintain local systems, technology vendors will typically focus on the obvious benefits of dramatically decreased staffing requirements. They’ll also promote the decreased management costs that result from reducing the overall number of “one-off” integrations at different sites and the reduced complexity resulting from a single-deployment approach. Reduced hardware and data center requirements are another key benefit you will see highlighted in vendor white papers. You can also expect to hear about telecom efficiencies and reduced telecom infrastructure costs (which are achieved by having multiple locations share a common pool of phone lines in one or more data centers — with IP-based routing between locations). Of course, technology vendors will also spotlight centralization benefits related to operational efficiency, as a common multisite infrastructure empowers more efficient skills-based routing (enabling routing to the “best-qualified” available agent, without reference to physical location).

The one issue that technology vendors typically avoid talking about is economies of scale in licensing costs. This month, we’ll focus on what you need to know to gain and maximize economies of scale in software licensing.

Dynamic Cross-Media Licensing
An important licensing consideration is whether your vendor of multisite infrastructure provides “cross-media” licensing; wherein a license works for any communications medium and, as needed, can be reallocated to different communications media types dynamically (in real time). A cross-media license should encompass every form of customer communication, including phone calls, chat sessions, Web collaboration, voice-over-Web and Web callback, as well as e-mail, fax and voice mail management. It should also encompass all of the monitoring and recording technologies required to deliver world-class customer service.

A cross-media licensing approach is better because it eliminates the need for separate licensing for each medium of communication, in favor of a “dynamic license” that can be dynamically applied to any form of communication. For example, with dynamic cross-media licensing, a thousand licenses can service 1,000 phone calls for agents one moment, or 500 phone calls and 500 chat sessions for agents in the next — using a shared pool of licenses that extends across all media. A pool of universal licenses is also an easier and more cost-effective way to manage than by estimating needs and purchasing separate licenses for each communication media. Cross-media licensing is more efficient because it reduces overall licensing requirements and eliminates the risk of possible shortages in some mediums, while other licenses sit idle as the contact center struggles with spikes in media-specific traffic.

Per-Seat And Per-Login Licensing Inefficiencies
Most vendors sell technology on a per-seat or per-login basis. There are no economies of scale in per-seat licensing and only limited economies of scale in technology licensed on a per-login basis. Because an agent shift is typically eight hours long, the maximum economies of scale that one can expect from per-login licensing is 3x — and even that figure is deceptive because it’s only meaningful to companies that offer 24-hour service.

Here’s why:
Let’s use a hypothetical U.S.-based operation as an example. Despite having multiple time zones within the U.S., if every center in a multisite enterprise operates between 9 a.m. and 6 p.m. local time in each U.S.-based time zone, then at some point in the day every center would be running at 100 percent of logins. This means that there would be no reduction in required login-based licenses. As most U.S.-based companies using offshore agents do so to serve the U.S. market, in most cases there would be no economies of scale by going offshore either.

Licensing Designed For Multisite IP Contact Center Deployments
Carriers and large-scale service providers were among the first to recognize the lack of efficiency in traditional per-seat and per-login-based licensing models. Before launching hosted services initiatives at scale, these service providers recognized the need to rethink how they licensed software; this in order to achieve economies of scale that could be translated into lower pricing for business customers and competitive advantage over new entrants. The goal was to drive down the cost of hosted services to levels far below the cost of deploying traditional, dedicated premise-based systems. These service providers demanded “capacity-based” licensing from the technology vendors who would supply the infrastructure for their emerging hosted services offerings.

The capacity-based approach allows service providers to leverage economies of scale because it enables them to support more than one logged-in agent per license; with “licenses in the cloud” to enable license sharing across all locations. The philosophical core of this model is that idle agents, regardless of the fact that they are logged in and looking at their screens, should not tie up a contact center technology license unless they are actively communicating with a customer. The corollary to this, of course, is that the solution should provide unlimited logins. Because different businesses have different peak busy hours, economies of scale will result from sharing a common pool of licenses in a “shared license” capacity-based licensing model across different businesses and/or different time zones.

A good analogy is the comparison with dial-tone. Dial-tone is a shared resource that appears to be dedicated to our homes because dial-tone is always there when we need it. Unless there’s an earthquake or some other disaster that causes everyone to pick up their phones at the same time, most of us live happily under the illusion that we’ve got dedicated dial-tone — while the phone company shares dial-tone resources across its subscriber base to reduce per-user costs to levels far below what it would cost to maintain dedicated dial-tone resources for each phone line. That is the capacity-based licensing model in a nutshell.

Over time, the capacity-based licensing model has also become available to corporate customers. When capacity-based licensing is applied to corporate use of contact center technologies, economies of scale are driven by the diversity of the business units, sites and vertical markets that are being served, as well as by the differences in their peak busy hours. Because the peak busy hour is constantly moving across time zones, license utilization is maximized in larger companies whose operations are distributed across many different time zones. The greater the diversity of time zones, sites and business units, the greater the number of seats-per-license that can be supported. That’s called the “agent-to-license utilization ratio” — and a better ratio equals lower costs.

Competitive Advantage
A service provider having a four-to-one agent-to-license utilization ratio means that the service provider can support four agents with a single license. Assuming there is price parity per license between seat-based and capacity-based licensing models, in this example the service provider’s cost per seat would be one-fourth of the cost of a dedicated per-seat license. The result: even at 100 percent margin, the service provider can deliver equivalent infrastructure as a service for half of what it would cost to buy and operate a dedicated premise-based solution in a traditional licensing model (without up-front capital expenses).

The same math holds true for a “corporate service provider” that buys its own infrastructure and delivers services to its own internal constituents from its own data center(s). The greater the diversity of business units and time zones, the better the agent-to-license utilization ratio is likely to be. The result of the capacity-based licensing model is that bigger, multisite organizations with more diversity will operate at lower cost than their smaller competitors. Those companies will also operate their contact centers at a much lower cost than equivalent or larger-sized companies whose contact centers are saddled with “traditional” per-seat or per-login technology licensing.
As we’ve discussed in previous columns, autonomy loss at the local level can also be eliminated as an issue despite the fact that all technologies are centralized, as true “multitenant” solutions will provide greater local control over “virtual” infrastructure than what was possible with traditional legacy solutions installed locally at each location.

Effectively Leveraging Time Zone Efficiencies
To effectively maximize your agent-to-license utilization ratios, look for solutions that also include time zone sensitivity. This will enable all of your reports and real-time data to be presented in the context of each user’s local time zone, empowering geographically distributed agents, supervisors and administrators to most effectively leverage your centralized IP contact center infrastructure. Your solution should also have configurable language support and localization capabilities to allow users to work in their own native language, with data presented in their own local context, thereby better empowering multinational license utilization and greater agent-to-license utilization ratios.

Conclusion
Multisite IP contact center deployments should leverage centralized infrastructure solutions to gain economies of scale and dramatically reduce their operating costs across locations. The alternative is duplication, inefficiency, higher costs and competitive disadvantage. The approach under which that centralized infrastructure is licensed will be a key determinant of the degree to which multisite efficiencies will be achieved.

Eli Borodow is CEO of Telephony@Work, the world’s leading provider of adaptive, multitenant IP contact center technology for contact centers and service providers. For more information on IP contact center technology, visit www.telephonyatwork.com.

Kevin Hayden is the Director of Integrated Contact Center Solutions at TELUS Communications Inc., a tier-1 telecommunications carrier in Canada and the Canadian leader in hosted contact center services.

[ Return To The June 2005 Table Of Contents ]