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Contact Centers can Save as Much as 43 Percent by Using Cloud-Based Services

May 03, 2011
By Tracey E. Schelmetic, TMCnet Contributor

You know all the technological reasons why using hosted contact center applications makes good sense: the elimination of a need for upfront capital investments, the loss of an IT headache, and the ability to precisely meet your headcount needs, scaling up and down as necessary. You may also find appealing the ability to let someone else worry about administration of your contact center solutions.

But perhaps that hasn't been enough to send you scurrying to hosted contact center solutions' Web sites, or contact center trade shows to see demos. No, doubt, the results of a new study will clinch your interest. Research group Frost & Sullivan (News - Alert) has published a report that reveals that contact centers can lower the cost of their contact handling and workforce optimization infrastructure by up to 43 percent over a five-year period by using cloud-based (software-as-a-service) offerings rather than installing premise-based equipment and solutions.

The study outlined in the report, titled Premise Vs. Hosted Contact Center: Total Cost of Ownership Analysis, was sponsored by inContact, a provider of on-demand contact center software and contact center agent optimization tools.

The studies’ authors analyzed 12 contact center configurations ranging in size from 50 to 500 seats, and in functionality from ACD-only to a full-function ACD, IVR, chat, outbound dialer, quality monitoring, workforce management, customer feedback, agent hiring and e-learning system. The analysis of total cost of ownership (TCO) for both three- and five-year time frames concluded that:

Hosted contact center services significantly reduce TCO over premise-based systems in both three- and five-year scenarios for all 12 of the configurations analyzed.

The larger the contact center, the higher the savings with the hosted model. Over five years 100-seat centers averaged 23 percent savings, 250-seat centers averaged 34 percent savings and 500-seat centers averaged percent savings.

The more contact center applications hosted in the cloud, the more money saved. In a 100-seat contact center, for example, the five-year savings jumps from nine percent for a hosted ACD to 23 percent for a full-function, nine-application hosted system.

All of the study’s TCO calculations take into account the costs of systems and applications, implementation, maintenance and upgrades, and hosted per-agent, per-month fees.

So where do the savings come from? From the elimination of in-house hardware investments, as well as related IT infrastructure, maintenance and upgrade expenses. Premise-based solutions require a significant upfront capital investment that can easily exceed $1 million. Maintenance contracts – absolutely necessary with a premise-based solution – are typically 15 to 25 percent of the purchase price. And at the end of five to seven years? Your investment is out-dated and no longer serving your needs, at which time you need to pony up all over again.

“This study not only validates the financial benefits of a cloud-based contact center infrastructure, but also clearly demonstrates that the appeal of the hosted model is not limited only to small businesses without the resources to purchase and maintain on-premise equipment,” said Paul Jarman, CEO of inContact. “The fact that the TCO increases as the number of seats grows will be a strong driver in the enterprise market, where we are already seeing significant traction for our own cloud-based contact center offerings.”

The full text of the Frost & Sullivan white paper is available at Premise Vs. Hosted Contact Center: Total Cost of Ownership Analysis.

Tracey Schelmetic is a contributing editor for TMCnet. To read more of Tracey's articles, please visit her columnist page.

Edited by Jennifer Russell

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