Seven Imperatives When Comparing Cloud Versus Premise Contact Centers

When business leaders consider the total cost of ownership (TCO) of cloud versus premise-based contact center platforms, they need to examine a variety of factors, including the amount of time it takes to deploy a solution, the business benefits that can be obtained in the long term, and the overall cost of the solution. Hunting for answers to these questions can unearth confusing and misleading information, shining a spotlight on the need for a solid comparison guide. Here’s a breakdown of the top seven considerations when comparing cloud versus premise-based contact centers.


While it’s essential for business leaders to drill down on the discrete TCO differences between cloud and premise-based contact centers, it’s also important to get the big picture. According to 2013 research by Aberdeen Group, companies that deploy contact centers in the cloud spend 27 percent less on their annual contact center costs ($112.5 million versus $155 million) than their peers. The average size of the contact centers in the Aberdeen study is 252 seats.

Industry estimates on cloud contact center ROI vary, ranging anywhere from 9 percent to 27 percent. That’s a broad spectrum and it doesn’t offer executives a concise breakdown on the cost benefits or the sources of those improvements. For instance, the cost differential for those organizations that plan to undergo time-division multiplexing (TDM) conversions is fairly dramatic when applying a cloud versus a premise-based contact center platform. Meanwhile, it’s also important for executives to see a complete breakdown of the operational cost differences between cloud and premise-based platforms. These include the savings that can be achieved by avoiding server acquisition and maintenance costs.

Individual TCO components can also vary depending on the size of a company’s contact center and the number of facilities it operates along with how lean its staff is (or isn’t). Proprietary research conducted by TeleTech finds that IT personnel costs can drop by as much as 15 percent by shifting from a premise-based contact center environment to a cloud platform. This depends on the number of IT resources that are dedicated to supporting a premise environment, says Kenneth Greenberg, executive director of cloud solutions at TeleTech.


One of the greatest financial advantages of shifting to a cloud contact center are the benefits realized by shifting from capital expenditures (CapEx) for software, servers, etc. to an operating expenditures (OpEx) model. CapEx typically requires companies to make a significant one-time investment in equipment (e.g. $100,000 for software) while there are ongoing support costs for contact center applications, servers, and other peripheral devices used to support them.


TeleTech research reveals an 8-to-22 percent improvement in FCR rates when using a cloud contact center, depending on the size of the customer support team and the level of advanced functionality adopted by each company. One of the biggest benefits of adopting a cloud contact center is the ability for companies to integrate silos of customer data that are distributed across various functions. When customer and operational data is disconnected and difficult for agents to access, this makes it extremely challenging for agents to find the information needed to support each customer quickly and comprehensively. Companies on the higher end of the cloud maturity model not only can use a cloud platform to overlay existing systems for customer data integration, they’re also able to use searchable databases to find the data they’re looking for.


By improving customer responsiveness, companies that adopt cloud platforms also improve the customer experience by matching customers to the agents who offer the right set of skills to resolve their issues. Matching customers and agents with pinpoint accuracy results in increased customer satisfaction and lower customer abandon rates. This helps explain why the customer contact abandon rate for cloud contact centers is 4.5 percent versus 6.2 percent for premise-based systems, according to Aberdeen Group. Companies that are able to improve their responsiveness to customers have also been shown to generate lower customer churn, higher customer satisfaction, and increased revenue.


According to Aberdeen Group, cloud contact centers experience less downtime (2.4 hours versus 3.7 hours per year) than companies that rely on a hodgepodge of heavily patched legacy systems. The cost of downtime will vary for different companies depending on their industries and the direct and indirect impact of customer support on revenue. To help put this into perspective: One financial services company lost $1.2 million per hour in downtime using a premise contact center before transitioning to the cloud.


TeleTech’s research finds that most companies realize a 3 percent to 5 percent reduction in IT headcount by moving to the cloud. This represents the average percentage reduction in IT resource costs, although the figures can run as high as 15 percent in extreme cases for organizations with disproportionate IT support. While there are obvious reductions in the number of IT staffers needed to support premise-based contact center apps once a company shifts to the cloud, a hosted platform can generate additional cost savings. These include a decrease in the number of FTEs (full-time equivalent) IT workers needed to support ancillary systems (servers, storage) as well as the cost savings involved. Such savings can stem from eliminating the expenses associated with training IT employees on premise software certifications along with the time spent in certification classes that can be redirected into productive work.

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