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Hosted Contact Center Solutions: Setting the Record Straight

By TMCnet Special Guest
  |  July 02, 2012

This article originally appeared in the June 2011 issue of Customer Interaction Solutions

Hosted contact center infrastructure solutions such as software as a service and communications as a service are gaining ground in enterprises of all sizes, and in a variety of public and corporate verticals. There are several good reasons why. In addition to the minimal cash outlay they require, hosted solutions provide quick deployments, scalability, agility, and a reduced maintenance burden. Vendors also continue to expand hosted functionality with product enhancements and improved deployment and integration models, all with the opportunity to try before you buy. The collective result is rapid and quantifiable ROI, as well as ongoing investment protection.

IP- and SIP-based technologies have largely eliminated physical communications constraints, empowering enterprises to be more responsive to customers using the virtual and multichannel servicing infrastructures of hosted solutions. As enterprises look for ways to leverage these new infrastructures, contact center hosting is an ideal, cost-effective fit.

Yet even as this new generation of the hosted/CaaS-based contact center infrastructure has overcome the technical and functional limitations of older solutions, common misperceptions continue to hinder more widespread adoption. DMG’s findings identify – and dispel – five of these misconceptions:

The myth: Hosting is only for small contact centers.

The reality: Ten years ago, when the first hosted contact center infrastructure vendors were looking for funding and sought to explain their value to the market, one of their standard arguments was that this new business model would democratize the world of the contact center. In other words, for small and mid-sized organizations that could not afford a premises-based contact center platform, hosting meant they could realize the same benefits as companies that had the financial and IT resources to acquire such a solution and support it on an ongoing basis.

Since then, hosting vendors have continued delivering new servicing capabilities that don’t require small and mid-sized enterprises to compromise on functionality. DMG research shows in fact that the typical buyers of these solutions are mid-sized customers, and that the majority of hosted solutions are actually deployed to replace an existing premises-based contact center solution that no longer meets the organization’s needs.

The myth: Hosted contact center solutions are functionally inadequate.

The reality: Just as no two premises-based solutions are alike, neither are the many hosted contact center infrastructure solutions now available – each of which offers its own unique design, architecture and functionality. (Note that some vendors have even built their hosted offerings on premises-based contact center platforms.)

As the market continues evolving, hosted providers are moving toward a common set of capabilities that include call routing and queuing, IVR, dialing, computer telephony integration, and recording. At a higher level, a select few vendors have further taken an all-in-one approach to add modules for the applications most commonly used by contact centers, such as workforce management, quality assurance, customer satisfaction surveys, performance management, coaching, and knowledge management. All told, and with various packaging and pricing strategies to choose from, hosted contact center infrastructure providers now offer some of the most competitive and functionally rich solutions in the market.

The myth: Hosted contact centers solutions are inflexible and not customizable.

The reality: Based on DMG’s findings from hosted customer interviews, the opposite is true. In general, hosted end users consider their vendors and solutions to be both flexible and scalable, although there are significant differences among hosted contact center providers (as there likewise are among premises-based competitors). In weighing a hosted solution and vendor, pay particular attention to ease of setting up and modifying the application, and to the vendor’s flexibility in making upgrades. For example, does a vendor enable your IT staff to add users and deploy new IVR services from your end, or do you have to rely on their people to perform such services for you?

Either way, a major advantage that most hosting vendors have over premises-based providers is the ease with which they can offer new functionality. Hosting vendors simply load software and make the new features immediately available. Hosted solutions are also highly scalable, and allow organizations to add and reduce users and functionality as needed to meet cyclical or seasonal volumes. Better, an organization pays only for as much contact center capacity as it uses, which is often negotiable with hosted vendors.

The myth: Hosted contact center implementations and integrations are more difficult than premises-based initiatives.

The reality: Few integration jobs are easy, whether solutions are premises-based or hosted. On the hosted side, however, some vendors have built their platforms using technology that’s far more standards-based and open than many older premises-based contact center offerings, making integration easier.

Also, because they don’t earn revenue until the system is in production, hosted solution vendors are highly motivated to get their offerings up and running as quickly as possible. Adding to the motivation is that most hosted end users have made it clear they chose a hosted offering to avoid an expensive and lengthy implementation. To that end, many hosted vendors offer fixed implementation and integration fees that compare favorably to the cost of premises-based efforts.

The myth: Hosting has a higher total cost of ownership than premises-based solutions.

The reality: There’s a reason – or, several reasons – the CFOs in many companies now prefer to invest in hosted solutions rather than purchasing licenses for systems and applications. Hosted solutions require no capital investment; low implementation and integration fees, if any; payments that scale in line with business activity; no support costs; limited risk and obligations; and ongoing investment protection because any costs for upgrades fall to the vendor.

Consider as well that total cost of ownership looks at the cost of an asset or investment over its lifetime, taking into account the purchase price, hardware costs, maintenance and upgrade fees, and the cost of internal and external resources to support the solution overall. While TCO numbers vary for every acquisition, in general, DMG Consulting has found that, in a three-year host vs. buy analysis for a contact center solution – assuming no functional (hardware or software) upgrades, no maintenance fee increase, and a minimal IT and business resource requirement – purchasing looks to be less expensive than hosting. However, if the calculation includes the cost of upgrades and a significant amount of internal resources needed to support a premises-based solution, the hosted alternative will often have a lower TCO in the end.


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Hosted Contact Center Solutions: Setting the Record Straight

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Edited by Stefania Viscusi