Cloud-based Contact Centers – The Appeal Beyond OpEx vs. CapEx

K. Landoline

K. Landoline

Summary Bullets:

  • Cloud service offerings in the contact center are proliferating, and more often than not they are reaching the short lists of decision makers who select customer care applications.
  • Many considering a cloud-based contact center solution summarize the appeal in terms of capital to operating expense conversion and seldom note the potential benefits in the area of disaster recovery.

It was difficult to walk the exhibit floor of the Enterprise Connect conference in Orlando a few weeks ago without realizing that cloud services was given a major emphasis by exhibitors and show attendees alike. The program listed 46 exhibitors (more than 30% of total exhibitors) under the category of “Cloud-Based Services,” and the attendees flocked to any break-out sessions with the word “Cloud” in the title, which resulted in standing room only sessions in many cases. As an analyst who has been tracking the shift to the cloud in the contact center marketplace, I was very interested in the advantages of the cloud being highlighted by exhibitors and perceived by enterprises and SMBs with mission-critical contact center applications.

What surprised me was how seldom the issue of disaster recovery came up as a driver of cloud-based services. However, when I questioned suppliers of cloud-based services on the use of disaster recovery as a sales stimulator for mission critical applications such as the contact center, they unanimously agreed that there was a tremendous appeal to that story but implied they simply had not begun to capitalize on that yet as a way of enhancing sales. Prospects for cloud-based contact center services with whom I spoke also agreed that the disaster recovery sales pitch was worthy of consideration and was very appropriate given recent world events such as severe weather conditions in the mid-west and terrorist threats around the world. So why does disaster recovery, given the apparent market need and unanimous recognition of its benefits in a cloud offering, remain a tier two market driver?

I believe there are two reasons. First of all, the well-noted benefits of the cloud today include reducing initial capital outlays, providing an expected stable expense stream (i.e., $/agent/month) and the flexibility to allow agent levels to be expanded for business peaks and contracted when demand decreases. These currently provide a strong enough level of attractiveness to the customer. Secondly, suppliers of cloud services have not been proactive in promoting and packaging disaster recovery services as a virtue of the cloud offering. I am not implying that a simple shift in marketing would do the trick. Providers of cloud services would also need to price disaster recovery solutions, while in back-up mode and not being actively used, effectively for them to make economic sense. Based on input from both potential customers as well as service providers, there seems to be a consensus that a rate amounting to 15 to 25 percent the normal cloud service price per agent/per month rate would be a reasonable “insurance policy” rate to have a back-up service ready to go should disaster strike a premise-based system. Of course when put into service the redundant cloud service pricing could then be raised to normal cloud service levels or even have a slight premium added depending on specific requirements and service level agreements.

I suspect in the coming months, and certainly by next year’s Enterprise Connect conference, we will see disaster recovery becoming a larger force in driving the cloud contact center services market based on customer interest and the providers’ need for another sales stimulation tool to add  to their toolbox.

About Ken Landoline
As Principal Analyst within the Current Analysis Business Technology and Software group Ken Landoline tracks the enterprise unified communications and contact center (UCCC) markets.

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