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Hosting Whys and Hows

(Excerpts from this article originally appeared in the April issue of Customer Interaction Solutions magazine)

Hosted or cloud contact center products, provided either by suppliers or third parties is becoming a mainstream alternative to buying and installing them on-premise. The key reasons for this demand and interest include capital and operating cost savings via reducing building footprint and IT support, greater scalability, continued and simplified access to technologies and improved security. Going hosted - also referred to as software as a service (SaaS (News - Alert)) - is a major change, though, for organizations that are accustomed to owning and internally managing their solutions.

We contacted several leading firms and authorities to get their insights on hosted contact center platform and solutions. The questions covered:

--Demand for hosted platforms and drivers
--Which product areas are being/not being hosted and why
--Challenges with using hosted technologies
--Best practices in buying and deployment

Here are the responses from several industry experts and thought leaders:

Steve Kowarsky, Executive Vice President, CosmoCom:

"We see demand increasing steadily, especially in the high end of the market. We forecast that about one-third of all seats will be hosted in about 10 years.

The largest contact centers know how much they are spending for the care and feeding of their technology base, and see the business case for technology consolidation under the hosted model very clearly. Tighter budgets are causing companies to think about operating expense business models that also reduce internal workload.  An increasing number of prominent reference customers have validated the hosted contact center solution.

Hosting is a big win for both service providers and their contact center on demand customers. Customers realize immediate benefits by focusing on their core businesses while enjoying expanded functionality in their contact centers. Service providers benefit from new high-growth revenue as well as from a transformation to being a provider of higher value services.

Inbound is hosted more than outbound. The complexities of outbound campaigns and their unique reporting requirements make hosting outbound more challenging. However, the advantages of virtual outbound calling with location-independent agents are significant, and provide incentives to meet these challenges.

Preserving the sense of user autonomy and the ability to customize the solution is the primary challenge of the hosted model. There are definitely ways to meet this challenge. The other challenge is inertia in the face of huge sunk investments.

During the due diligence process, contact centers need to assess what their needs are for hosted applications and select vendors which will accommodate their current needs as well as anticipate their growth in both capacity and functionality. Support of additional media, or growth into additional geographies, and expansion to larger agent populations should be seamless and not require reinventing the wheel in the provisioning process.

Set-up of hosted contact center applications should be provided by simple yet powerful provisioning tools which allow administrators to focus on the functional tasks at hand rather than the technical details of the platform. These tools should allow for graphical representation of call flows, features, communication modalities and integration with customer databases.  Task delegation should be offered to appropriate staff members through security schemes, which provide enough granularities for them to perform their roles while protecting non-authorized areas to appropriate users.

Contact center management should be possible through highly configurable and easy to access views to performance data.  Managers need the flexibility to organize the data in ways that meet their business challenges, which may include billing, performance management, staffing coordination, workforce management and quality assurance. Being able to customize the views into this data on a real-time basis provides the contact center managers the ability to be in control."

Keith Dawson (News - Alert), Principal Analyst, Information & Communication Technologies, Frost and Sullivan:

"Demand has been increasing for the past several years. There are several reasons for this; key has been the influence of the economy. As spending for capital infrastructure was constricted over the past couple of years, more contact centers buyers were tempted to turn to smaller pilot or demonstration projects with hosted service providers. As we've gone along, a lot of these pilots have been expanded, and we're now seeing a real interest among larger enterprises in off-loading some of their higher end infrastructure to the hosted model.

Another key driver has been an increasing confidence that hosted can provide an acceptable level of reliability and security. And frankly, a lot of people have seen hosted application delivery actually working in contexts that are very close to the contact center, like sales force automation (SFA) systems, CRM and customer support software. Thanks to the success in those areas, it's not so farfetched anymore for a center to start thinking about alternative modes of deploying its switching, IVR and APO (agent performance optimization) applications.

Although I think hosted will continue to grow quickly, there's a very large gap to make up between it and on-premise deployment models. I think it's going to be years before the lines cross, much like the transition from TDM to IP took many years.

The biggest areas are IVR, call routing (ACD), and the separate area of CRM/SFA. We're seeing a lot of end user and vendor interest in moving some of the APO applications into the cloud, especially call recording and quality monitoring. These are likely to be the next targets for hosted service providers. Some barriers to this have been legal/compliance rules regarding the location and transmission of voice recordings.

Most people already have a significant investment in premise equipment, so that's going to give anyone pause. I think from a user point of view, the biggest challenge is in coordinating the approach between contact center operations and IT - which is often very reluctant to approve a hosted (i.e., external) approach to technology management.

I highly recommend getting IT buy-in as early in the process as you can. Also, you want your hosted provider to give you a very specific ROI and TCO calculation.

Users also need to be very clear on the different shades of hosting: the differences between managed services, cloud computing, SaaS, etc. - all are subtle but meaningful. A contact center buyer needs to be clear exactly on what its needs are, and what its expectations are as far as SLA, reliability, growth and technology roadmaps."

Jim Tanner, Senior Vice President, Product and Strategy, inContact:

"Demand for cloud-based contact center solutions is growing quickly. Companies that may not have considered moving to the cloud a few years ago are realizing that the platform is secure, offers a rapid ROI in as little as two to three months - and is extremely flexible to shift with demand. Implementations are fast (typically under two months) with no impact to existing business or process.

A few of the key drivers of the increased adoption are:

--Growing awareness and market acceptance of cloud-based offerings. DMG Consulting forecasts that the hosted contact center infrastructure market will grow by 35 percent in 2010.
--As a result of corporate mergers and acquisitions, there is a lot of rationalization of product lines by premise-based companies. As they present their customers with end-of-life retirement and the prospect of a significant capital expense outlay to purchase a new solution, we're seeing these customers searching for a more stable vendor.
--Ongoing upgrades offered as part of the cloud computing software package.
--Simple to connect at-home and multi-location agents with just the Internet, a phone and computer.
--Leading security measures and multi-tenancy keep data safe.

We expect accelerated growth of SaaS in contact centers and to see an ever-increasing rate of erosion of the premise model for call center technology. Our winning percentage against premise players is exceptional, which is a strong indication of the maturity of our solution and the market acceptance.

Today, it is possible that the entire technology of a contact center is run in the cloud.  We're seeing increasing adoption to this model in all areas of call routing, including ACD, CTI, and IVR. It's interesting to see the growth in agent optimization tools being used in the cloud. Those tools, including WFM, e-learning, proactive hiring, coaching, survey and quality monitoring can be extremely difficult and time consuming to deploy on-premise, and we're seeing a large number of companies showing significant interest in putting those solutions in the cloud.

The biggest challenge to using a hosted solution is convincing skeptics of the benefits of the system. This is certainly diminishing as adoption and market acceptance accelerates.

Take your time to ensure you complete the due diligence process. Contact customer references to get the perspective of using each system from the people who are using it every day. Take a dive under the hood of your cloud-based provider to ensure that the security features, geographic redundancy, SLA and network operations meet the needs of your company. Think to the future - ensure that the vendor can provide the system you need today, as well as years down the line. Ensure that the company is manned with industry expertise, premier training and customer support personnel to get you up and running and continue to help keep you on the forefront of your industry.

Watch out for solutions that have extensive technology pre-requisites to deployment. Many solutions today are marketed as simple to deploy, but require specific topologies, premise technology, or significant IT changes. When you evaluate the overall cost, the business case does not make sense. Instead, seek out vendors that understand the business and technology implications of the engagement, and who are able to integrate with and leverage existing investment."

Paul Lang, SVP of Marketing and Product Management, LiveOps:

"The demand among customers for contact center solutions is steadily on the rise, specifically for cloud computing-based contact center solutions. LiveOps' multi-tenant, SaaS-based technology platform is one example of this type of solution.

Gartner (News - Alert) predicts that by 2013, at least 75 percent of customer contact centers will use a form of SaaS in their contact centers. While they have served well for many years, aging technologies and on-premise sites are reaching their end of life. Many companies are deciding to break away from the constraints of disparate, fragmented technology and high monthly maintenance fees within their existing contact centers. Increasingly, they are demanding flexible solutions that help them react quickly to business changes like spikes in contact volumes.

Economic drivers are also pushing management to reduce contact center costs: the ripple effect from the credit crunch has caused companies to tighten budgets as economic uncertainty looms. As a result, companies are shifting away from on-premise contact centers to cloud computing based, hosted contact centers as a way to move from high up-front capital expenditures to an operational expenditures model.

All products that make up a contact center solution are and can be hosted. These include the meeting and greeting performed in the interactive voice response system, selecting and routing to the right agent with skills or performance based routing with or without a screen-pop; monitoring activity in real-time, recording of calls and then evaluation of calls.

In the case of cloud computing-based hosted solutions, it requires some learning as far as best practices and processes go.  No longer a need to run to a data closet to make sure the lights are on, or coordinate a team of IT experts to make a simple routing change, business managers need to get accustomed to the new format just as they would in moving from a standard cell phone to a data device like a Blackberry or iPhone (News - Alert). Other considerations for moving to a hosted contact center model include: security (at the physical, network, application and data levels); availability; integration with existing applications; the maturity and unification of feature sets; the deployment flexibility to support gradual innovation; and choosing which technology best fits these needs."

Ensuring Hosted Solution Performance

How do you ensure that your hosted or SaaS solutions perform as well as on-premises-installed applications so that your agents can provide quick, accurate and seamless service to customers? Knoa Software's VCEM Virtual/Cloud Experience Manager (VCEM) could fit the bill. VCEM monitors and manages agent and supervisor experience in using enterprise-scaled products such as CRM, e-learning, routing and workforce and knowledge management.

One of its features is dynamic base-lining by which it tracks metrics such as response times and system and user errors when they vary over time and compares them to typical norms. Another is dynamic benchmarking, which enables system performance analysis prior to and after any change in your internal infrastructure that feeds the hosted applications to the agents. VCEM alerts managers who then alert the hosted providers or IT staff if the issue is with the infrastructure to the problem.

Dynamic benchmarking can also be used to monitor user behavior. Since SaaS vendors introduce new functionality more frequently than on-premise suppliers, Lori Wizdo (News - Alert), vice president of marketing, points out this feature also makes sure that new functionality delivered by the vendor has not changed user adoption/usage in any negative way. For instance the new functionality might require additional user training; the before and after tracking of user error patterns will show you that.

Brendan B. Read is TMCnet's Senior Contributing Editor. To read more of Brendan's articles, please visit his columnist page.

Edited by Patrick Barnard