Among the many reasons why customer satisfaction with hosted Contact Centre solutions is at an unprecedented high are the minimal cash outlay required, quick deployments, rapid and quantifiable return on investment, scalability and agility, ongoing investment protection, reduced maintenance burden and the opportunity to try before you buy.
Ongoing vendor investment and product enhancements continue to expand product functionality at the same time as vendors are introducing improved deployment and integration models. The strength of the hosted Contact Centre infrastructure sector is evident in the market share it has taken away from traditional premise-based solutions; hosted infrastructure revenue is expected to grow by 35% in 2010, and 20% in both 2011 and 2012.
Changing business dynamics have created the need for virtual, multi-channel and flexible servicing infrastructures. Internet Protocol (IP) and Session Initiation Protocol (SIP) based technologies have eliminated physical communications constraints, empowering enterprises to be more responsive to the needs of their customers. Enterprises are looking for new ways to leverage these new technologies, and Contact Centre hosting is an ideal, cost-effective fit (hosting is also referred to as Software-as-a-Service (SaaS) or Communications-as-a-Service (CaaS)).
The new generation of hosted/CaaS-based Contact Centre infrastructure has overcome the technical and functional limitations of older solutions. Now the leading vendors need to invest in marketing efforts to correct the misperceptions that are still hindering more widespread adoption of hosted Contact Centre solutions. The five top hosted Contact Centre infrastructure misconceptions are discussed here, along with responses to each issue.
The most convincing support for the viability and broad capabilities of hosted Contact Centre infrastructure solutions comes from enterprise users of these solutions. In DMG Consulting’s most recent customer satisfaction study of hosted Contact Centre infrastructure customers, "an unprecedented 50% of surveyed customers rated themselves completely satisfied with their product. Key drivers for product satisfaction were product flexibility, scalability and ease of use.”
Concern 1: Hosting is only for small Contact Centres
The Reality: Approximately eight years ago, when some hosted Contact Centre 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 "democratise the world of Contact Centre.” This meant that small and mid-sized organisations that could not afford to purchase a premise-based Contact Centre platform could now realise the same benefits as companies that had the financial and IT resources to acquire these solutions and support them on an ongoing basis.
Hosting vendors have given small and mid-sized enterprises new servicing capabilities that do not require them to compromise on functionality. DMG research shows that the typical buyers of these solutions are mid-sized customers; the majority of purchases are to replace an existing premise-based Contact Centre solution that no longer meets the organisation’s needs.
Concern 2: Hosted Contact Centre solutions are functionally inadequate
The Reality: There are many hosted Contact Centre infrastructure solutions available in the market, each with its own unique design, architecture and functionality.
A few hosting vendors have built their offerings upon premise-based Contact Centre platforms. Just as no two premise-based solutions are alike, neither are the hosted Contact Centre solutions.
Get applications for workforce management, quality assurance, surveying, performance management, coaching, and knowledge management. As the market is still evolving, leading providers are moving toward a common set of capabilities that includes call routing and queuing, interactive voice response, dialling, computer telephony integration and recording.
A few of the vendors have taken an "all-in-one” approach, and have started to include modules for the applications most commonly used by Contact Centres, such as workforce management, quality assurance, surveying, performance management, coaching and knowledge management.
Each of the hosted vendors has a different packaging and pricing strategy. Some of the vendors give all users their entire set of modules, while others offer standard capabilities and then sell optional add-on modules for a fee. Some of the hosted Contact Centre infrastructure vendors partner to deliver certain functional capabilities; they generally assume responsibility for supporting these modules because they run on their hosted platforms. In fact, a number of the hosted Contact Centre infrastructure providers offer some of the most competitive and functionally rich solutions in the Contact Centre market. This is one of the most exciting aspects of this sector; the range of choices available to users has never been greater.
Concern 3: Hosted Contact Centres solutions are inflexible and not customisable
The Reality: Based on the findings of DMG Consulting’s customer reference calls, the opposite is true. In general, end users consider the hosted vendors and solutions to be very flexible and scalable, although there are significant differences among hosted Contact Centre providers, just as there are among the premise-based competitors.
There are a couple of aspects of the flexibility issue that prospects should address when making a selection. The first is ease of setting up and modifying the application; the second is the vendor’s flexibility in making upgrades to their solution. A major advantage that hosting vendors have over premise-based providers is the ease with which they can offer new functionality.
Hosting vendors simply load up new software, making it immediately available, as compared to premise-based vendors, who either ship out upgrades on a CD, or have customers download them from a support site. In both scenarios, end user involvement is required to integrate and apply the enhancements in their operating environment. Just as prospects looking to purchase premise-based solutions can negotiate system enhancements as part of their purchase agreement (along with delivery time frames), hosting customers can do the same. Managing the relationship with the vendor is always an important aspect of using a third-party application, whether it is premise-based or SaaS.
Hosted solutions are also highly scalable, and allow users to add and reduce Contact Centre functionality as needed. This enables users to meet cyclical or seasonal volume peaks and valleys, paying for only as much capacity as they use.
Concern 4: Hosted Contact Centre implementations and integrations are more difficult than premise-based initiatives
The Reality: Few integrations are easy, whether the solutions are premise-based or hosted. Fortunately, some of the Contact Centre platforms have been built using newer, more standards-based and open technology than many of the older premise-based Contact Centre offerings. The more standards-based and open the underlying system, the easier the integration. And, some of the hosted Contact Centre offerings are built upon a premise-based Contact Centre system so that they cannot be any harder to integrate than their underlying core technology.
Hosted solution vendors are highly motivated to get their offerings up and running as quickly as possible because they do not earn revenue until the system is in production. Additionally, end users have made it clear that a primary reason for selecting a hosted offering is because they do not have the money to pay for an expensive and lengthy implementation.
While it took the hosting vendors a few years to respond appropriately, most are now doing a very good job of keeping their implementation and integration costs down. Many of the hosted vendors offer fixed implementation and integration fees that compare very favourably to the cost of premise-based efforts. This is another reason why the hosting vendors are highly committed to performing rapid integrations and efficient implementations.
Concern 5: Hosting has a higher total cost of ownership than premise-based solutions
The Reality: Many chief financial officers prefer to invest in hosted solutions rather than purchasing licenses for systems and applications. Hosted solutions require no capital investment, no or low implementation and integration fees, payments that scale in line with business activity, no support costs, limited risk and obligations, and ongoing investment protection (no need to pay for upgrades).
Total cost of ownership (TCO) looks at the cost of an asset or investment over its lifetime. It takes into account the purchase price, cost of internal and external resources to support the solution, hardware costs, maintenance, and upgrade fees.
While the numbers vary for every acquisition, DMG Consulting has found that if an enterprise were to conduct a three-year host vs. buy analysis for a Contact Centre solution, assuming no functional (hardware or software) upgrades, the maintenance fee would not increase; where minimal IT and business resources are required to manage the solution, 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 premise-based solution, the hosted alternative will often have a lower total cost of ownership.
It’s not surprising that there are so many misconceptions in the market about hosted Contact Centre infrastructure solutions. The growing acceptance of functionally rich, flexible and responsive SaaS-based offerings that deliver significant benefits has revitalised the Contact Centre competitive landscape.
Contact Centre infrastructure buyers should consider hosted/SaaS/CaaS based solutions when making a selection. The numbers tell the story — although the final results are not yet in, DMG’s preliminary research reveals that in 2009, revenue for hosted based Contact Centre vendors increased by 20-30% while premise-based Contact Centre infrastructure revenue dropped. While capabilities vary among the providers, the hosted Contact Centre infrastructure market is viable and coming on strong.
Download the DMG Whitepaper, titled ‘Hosted Contact Center Solutions: Setting the Record Straight’ (March 2010), at http://www.dmgconsult.com/publications/whitepapers.asp