Cloud-Based or Premises-Based Contact Center: Which Makes Sense for Your Company?

Ken Landoline

Ken Landoline

Summary Bullets:

  • Performing total cost of ownership (TCO) and return on investment (ROI) calculations is usually essential to assessing whether or not a cloud contact center is right for your company.  However, there are a couple of basic questions to be answered beforehand that may make the decision a lot simpler.
  • Many cloud-based contact center offerings have reached technical and reliability parity with premises-based offerings, removing major factors that were initially delaying the growth of the cloud-based customer service market.  Therefore, I am optimistic that cloud-based contact center offerings have a strong future and will be applicable in many, if not most, environments.

It is a new year with new budgets, and like many customer service professionals, you may be evaluating the pros and cons of investing in new equipment and technology for your contact center operation.  Perhaps you are even considering the economic and practical tradeoffs of a cloud-based versus premises-based contact center operation.  While it is very valuable to do detailed total cost of ownership (TCO) and return on investment (ROI) analyses before making such a major decision, there are some facts you should consider about your customer service environment beforehand that may get you going in the right direction very quickly, based on your company’s particular characteristics and circumstances.  While there is little doubt that a cloud solution can improve operational flexibility and scalability, as well as get a system up and running more quickly, premises-based solutions may make more sense for companies with IT staffs already in place that are planning to stay with the considered technology for more than four or five years.

In general, cloud-based contact centers may shine in companies that are short on capital investment budget money, regularly expand and contract agent seat counts based on seasonal business patterns, are short on internal IT personnel and expertise, are spread over multiple sites, and/or require the latest technology to be available quickly and at all times.  In general, premises-based systems seem to make better business sense for companies with a stable number of agents, little need for application upgrades or regular technology refresh implementations, and a plan to keep the same system in place for five or more years.  Of course, premises-based systems will also require a significant upfront capital expenditure investment and IT staff to keep the system up and running.

The number of established and stable providers of sound, proven hosted and cloud-based offerings has risen in the past two years and now includes Cisco, Convergys, Enghouse Systems, Genesys, inContact, Interactive Intelligence, LiveOps, and USAN, among others.  I believe the stage is set for cloud-based contact center services to capture a large and growing portion of the available customer service marketplace.  Cloud-based customer service solutions may not be appropriate for all environments, but they are certainly worth considering in most situations.  At minimum, they deserve a place on the short-list of everyone making a contact center technology purchase decision.  I would be interested in your thoughts on the cloud-based option for customer service operations and its place in the future.

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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