• July 1, 2011
  • By Leonard Klie Editor, Speech Technology and CRM magazines
  • FYI

Hosted Solutions Slash Cost of Ownership

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Contact centers can lower the total cost of their contact handling and workforce optimization infrastructure by as much as 43 percent over five years by using cloud-based offerings rather than installing equipment in their own facilities, according to a Frost & Sullivan report. The study, “Premise Versus 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 study analyzed 12 contact center configurations that ranged in size from 50 to 500 seats and in functionality from automated call distributor only to a full-function ACD, interactive voice response, chat, outbound dialer, quality monitoring, workforce management, customer feedback, agent hiring, and eLearning system. The analysis of total cost of ownership (TCO) for both three- and five-year periods concluded the following:

• Hosted contact center services significantly reduce TCO compared with premises-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 43 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 jumped from 9 percent for a hosted ACD to 23 percent for a full-function, nine-application hosted system.

All of the study’s TCO calculations factored in the costs of systems and applications, implementation, maintenance and upgrades, and hosted per-agent monthly fees. The savings are driven by a pay-as-you-go hosted pricing model that eliminates in-house hardware investment as well as related IT infrastructure, maintenance, and upgrade expenses. Premises-based infrastructure requires an up-front capital investment that can easily exceed $1 million, maintenance contracts that are typically 15 percent to 25 percent of the purchase price, other continuing expenses, and equipment replacements every five to seven years, the report says.

“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-premises equipment,” Paul Jarman, CEO of inContact, said in a statement. “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.”

News Editor Leonard Klie can be reached at lklie@infotoday.com.

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