Hosted/SaaS vs. Premise: Pros & Cons

By Keith Dawson (News - Alert)

In these days of scary economic news (and 2009 budget planning that often reflects that uncertainty) many contact centers are considering a question that has been bubbling under the surface for a couple of years now. That is: Is it a good idea to offload some of the technological infrastructure to a hosted provider?

Every contact center is unique, so there are no set rules that govern the answer to that question. The issues that bear on that decision reflect corporate culture, budgets, internal purchasing dynamics and specific technology needs. To make matters more complex, what we define as a “hosted” solution can take several forms, each with its own distinct pros and cons. And the range of technologies that it’s feasible to offload has expanded — it is possible to move almost everything from switching to CRM to some forms of workforce optimization into the cloud. Should you? That depends.
Factoring the Decision

The answers to all of these questions can be found by isolating and weighing some of the distinct factors that bear on your particular situation. Each contact center is a unique and beautiful snowflake; what makes sense in one case may be completely off-base in another. Here are some of the variables that you need to come to terms with.

The time horizon. This is perhaps the most important element to contend with, and is tied up with the question of which specific tool you are looking to acquire. For example, say you are at facing the end of life for your switch and are weighing different options for your routing fabric. It will be important to consider future growth scenarios in call volume, in customer expectations, in agent headcount — all of these things change the calculation of total cost of ownership of a system. Will you be using a platform for one year, as a bridge to IP? Or for three to five years? Will you be needing features that include remote or virtual agents and multi-site capabilities? Spec-ing out your future needs and when you might have to incorporate them into your framework becomes critical to deciding in-house or outside.

Moving certain tools off-premise is easier to ballpark. IVR systems and CRM software, for example, are easier to pilot and scale up or down, making them good candidates for “toe-in-the-water” experiments where the duration isn’t so crucial.

Size of the deployment. Deploying hosted technology is not a binary, all or nothing choice. With certain technologies you can start small and gradually move upscale, depending on your needs. Of course, if you don’t know how large you might need to grow, you may end up on the wrong side of the cost equation when you eventually do expand capacity.

Hosting is a good candidate for technologies that are new to you, that you may eventually want to invest heavily in, but not until you can build a business case that the features are actually useful. Remote agent management is one good example; many centers that want to implement a dispersed workforce run into limitations in their call recording or monitoring systems that prevent them from implementing their traditional quality programs across a virtual agent pool. Bringing in a hosted call recording platform can help determine the viability of an agent program, and act as a bridge until it is time to refresh the in-house platform.

Which leads directly to the next variable: Budgetary wiggle room. Why are you considering off-premising in the first place? Is it because you want to try something you’re not currently using? Or because you need to grow/ shrink/cut costs? The key to making this decision successful is knowing whether you are looking at hosting/ leasing as a transition, or as a permanent shift in how you use technology.

IT interference & corporate buy-in. If you have come down on the side of making a permanent transition, then it is critically important to have the support of both the IT team and upper management. Moving to a cloud-based infrastructure to replace hardware requires IT to vet interoperability with other corporate systems, and to establish that there are appropriate security layers to the seam between the contact center’s tools and the premise-based networks.

On the other hand, if you have an unfortunate relationship with your IT department, one in which they prevent the contact center from adopting tools that are needed to be more productive, then hosting may be just the trick for doing an end-run around them. Moving to a web-based software platform for your CRM, or for your voice front end may save you from having to go through a recalcitrant IT group every time you want to make a change to the system. It can save time and resources.

Security concerns. There is no question that certain applications in certain circumstances should not be removed from the premises without a very careful security inspection. Many companies, especially those in financial services and health care, have to follow guidelines regarding the dispersal of private customer information. If social security or credit card numbers are part of the normal data collection process, then a contact center needs to be sure to establish that the hosting partner you choose has the appropriate safeguards in place.

Intangibles. There will always be an x-factor that intrudes on the discussion of whether to host or stay on-premise. Sometimes it will be rational, other times less so. This includes questions of vendor preference; executive comfort level with lack of control; outright bias towards or against certain technology models. These may be in the mind of a decisionmaking individual, or weaved into a corporate culture; either way, they have to be reckoned with just as clearly as a cost or ROI factor. When confronted with an irrational intangible that weighs heavily against the contact center’s preferred choice (pro or con), it helps to acknowledge that there are intangibles at work, and to gently try to quantify their effects in terms of costs and revenues.

Something Else to Consider

There are some problems that contact centers face that never seem to go away. Agent turnover is one. Improving customer satisfaction is another. At first blush, these things seem to have nothing to do with the question of where you locate your technology. Solving them really has more to do with fixing business processes (and building better ones) than it does with applying specific tools to the problems.

Empirically, we have more than 20 years of evidence that shows that premisesbased technologies (by themselves) manifestly do not solve these structural endemic problems. It may be the case that removing technology management from the contact center’s daily experience provides the window of opportunity to actually deal with those business processes. After all, creating workflows and managing people are what centers are genuinely good at. An argument can be made that hosting may be the next great transformative leap that allows contact centers to really engage with their employees and customers and leave handling the switch or the software to someone else.

Keith Dawson is a Senior Analyst with Frost & Sullivan (News - Alert).

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