Goodbye to the Box: The Rise of Hosted Call Center Infrastructure

In late 2010, a DMG Consulting report on the hosted contact center infrastructure market¹ proclaimed a “significant paradigm shift” away from installing ACDs and related equipment on company premises. Instead, the report noted, companies are increasingly electing to have call routing and related functions delivered over a broadband connection.

While stopping short of writing an obituary for the on-premise giants of the industry, DMG said the momentum is clearly on the side of moving call center infrastructure into the cloud. The analyst estimated a 26% increase in hosted seats and a 50% surge in hosted deployments between 2008 and 2009, with growth rates of up to 35% forecast over the next few years.

In this regard, contact center technology is following in the footsteps of Salesforce CRM and other Software-as-a-Service (SaaS) offerings that are transforming the way that businesses acquire the various tools they need to operate.

For contact centers, as for other environments, one of the primary drivers of the hosted model is economic. The ability to have core back-end hardware and software housed, updated and monitored at the vendor’s data center – instead of sitting in servers at the call center’s facility - virtually eliminates upfront capital outlays as well as in-house maintenance, software upgrade and equipment replacement costs.

In fact, DMG traces the turning point in hosted contact center infrastructure adoption to the Great Recession of 2008, which spurred enterprises to explore more cost-effective ways of upgrading their core call distribution systems and associated technology.

But operational and flexibility advantages over premises-based systems are also fueling the transition to cloud-based platforms. These benefits range from the ability to easily scale up and down for seasonal business fluctuations, emergencies and changing company fortunes to easy connectivity for home agents and multiple sites.

Here are 11 reasons that contact centers are finally jumping on the hosted bandwagon in large numbers – a decade after the first SaaS solutions hit the market.

1 – No Capital Outlays

Customer premises equipment (CPE) requires an upfront capital investment that can easily exceed $1 million for equipment, installation and configuration, plus servers, security, backup, testing, maintenance contracts that are typically 15-25% of the purchase price, and so on. With a hosted solution, these costs disappear and are replaced by affordable monthly per-seat or per-user subscription fees. These fee payments come out of the operating budget instead of the capital budget, making it easier to foot the bill.

2 – One-Third the Cost

With the pay-as-you-go pricing of a cloud-based telephony infrastructure, contact centers not only eliminate capital expenses and other costs like in-house maintenance, but also pay only for the seats or users needed in a given month. One Yankee Group study² 2 estimated a 45% reduction in the total cost of ownership with a hosted system. Other calculations suggest a greater savings, with a typical per-seat hosted charge of $9,000 over five years, compared to $25,000 for an installed solution.

3 - Faster Deployment

Because no hardware or software installation is required, a hosted-based call center system can be up and running in as little as 45 days and sometimes even faster. Traditional premises-based deployments typically take months.

4 - Low Maintenance

Under the cloud model, all real-time monitoring, redundancy and ongoing maintenance are handled by the service provider with little or no need to pay in-house IT personnel for system management and support. In contrast, in the installed model, a portion of the required maintenance may be covered under paid service contracts, but in-house technicians are responsible for 24/7 system uptime and day-to-day maintenance.

5 – Expand/Contract Instantly

Hosted solutions make it possible to ramp up capacity in minutes without being constrained by the size of your phone switch or investing in a bigger switch than you need 90% of the time. The provider can add virtual seats whenever you need them, remove them when you don’t, and charge only for what you use each month. Premises-based call centers cannot shrink or grow on demand, resulting in inefficient hardware utilization during slow times and potentially inadequate coverage during busy periods.

6 - Easy Home Agent Setup

In the past, adding at-home agents has been a complex and expensive process with a variety of technology and management challenges. With hosted platforms, home agents can be set up quickly and inexpensively with only a standard telephone and computer, enabling staffing flexibility as well as operating cost reductions. Calls are delivered to the next available agent regardless of location, so there is no negative effect on call handling.

7 - Easy Multi-Site Support

If you have multiple sites – whether in-house facilities, outsourced call center services, at-home agents or any combination – hosted call center technology allows them to operate as one at little or no incremental cost. In contrast, premises-based call center solutions require substantial additional hardware and telecom expenditures for setup at each site and often encounter connectivity difficulties that cannot be overcome.

8 – Feature Parity or Better

As the hosted market has matured over the last decade, the platforms have become sufficiently robust to deliver functionality that is equivalent and in some cases superior to the older “box” offerings. In addition to core components like ACDs, IVRs and computer telephony integration (CTI) that connects the phone system to your databases and agent desktops, the leading vendors now offer integrated plug-and-play features such as social media support, call recording, customer survey tools, predictive and blended dialers, workforce management and eLearning.

9 – New Functionality Faster

The just-mentioned new feature delivery is accelerated by the nature of hosted technology. Feature upgrades are delivered continuously and transparently over the user’s Internet connection with no software installation on company servers or desktops. In the traditional upgrade scenario, new features are introduced en masse under expensive maintenance contracts that keep users waiting for important new functionality as well as requiring in-house installation and in some cases new software licenses.

10 – Backup/Disaster Recovery

Cloud-based solutions also make it possible to protect yourself against power outages, fires, natural disasters and other service interruptions without duplicating your own infrastructure at two different sites. Hosting service providers typically have multiple data centers where they mirror their own infrastructure in order to guarantee service continuity to their customers. It’s an extra assurance that most call centers cannot afford with premises-based equipment.

11- No Equipment Replacement

Since you don’t own the equipment involved in a hosted infrastructure scenario, you don’t have to replace it every five or seven years. That means there is no disruption to your operation and no big-ticket item to finance periodically from your capital budget as older systems become obsolete. Upgrades are exclusively the responsibility of the hosting provider, and they happen behind the scenes.

For these reasons and more, the hosted call center infrastructure market is booming. In Part 2 of this series, we will discuss how four different contact centers are using the power of cloud-based technology to achieve efficiencies and capabilities that are not possible with conventional premises-based systems.

¹Hosted Contact Center Infrastructure Market Report 2010-2011, DMG Consulting

²VOIP and Lower TCO Will Drive Adoption of Hosted On-Demand Contact Centers, Yankee Group

Mariann McDonagh is Chief Marketing Officer for inContact. [email protected]