On-Premises or Cloud: Which Contact Center Approach is Best for Your Business?


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Contact centers provide an advanced call center management system that offers your business the tools you need to manage a customer service operation, through both traditional voice support and multimedia applications like instant messaging, online chat, email, and social media queuing.

With technologies quickly evolving, new contact center applications are launched on a regular basis. Today, developers have capitalized on functionality that was unheard of only five years ago. But access to more sophisticated contact center technology brings a critical business decision: should your organization purchase an on-premises system or use a cloud contact center solution?

An on-premises system relies on one or more pieces of equipment that your business must purchase, install, house, manage, maintain, repair, and upgrade. Some businesses prefer the capital expenditure-based model of an on-premises solution, which provides fixed costs and predictable depreciation schedules. However, you need to be mindful of future added costs, such as annual maintenance fees, hardware depreciation, and system upgrade costs.

Alternatively, with a cloud-based system, a service provider handles all of the required system deployment, management, and maintenance responsibilities. And from a cost perspective, cloud applications require little up-front capital, often as small as one-tenth the cost of a comparable on-premises system.

Cloud contact centers have been demonstrated to deliver cost savings when compared to traditional deployments. For instance, a Yankee Group study showed a three-year total cost of ownership (TCO) savings of 28 percent to 45 percent for a cloud solution. Another study, done by Frost & Sullivan, revealed similar savings. It found that in all cases, cloud-based contact center services delivered significantly lower TCO than comparable systems for all configurations analyzed for both three- and five-year terms. It also found that larger, more feature-rich cloud call center solutions generated greater TCO benefits.

While looking at cost is an important consideration when evaluating both hardware- and cloud-based contact center applications, other factors need to be also examined. These include application flexibility, system capabilities, and user control. Here is a quick look at each of these areas:

Flexibility. With an on-premises system, businesses can determine the exact functionality needed and then tailor the solution to their unique requirements. However, upgrades or additions can often be difficult, unsupportable, or costly with a hardware-based system. With a cloud solution, your organization can be flexible in deploying agents to remote and home offices without requiring them to use the same device on one network. Cloud solutions are easily scalable, so companies can respond to call spikes, business expansion, or seasonal variations by adding more people as needed.

Capabilities. Both on-premises and cloud applications might include or be connected with capabilities, such as automatic call distribution (ACD), interactive voice response (IVR), workforce management (WFM), computer telephony integration (CTI), and more. However, deployment times for your application can vary greatly. On-premises systems often require lengthy implementation processes. With cloud solutions, service providers typically service multiple clients using the same underlying infrastructure and hardware. This means businesses can be up and running within a shorter period of time.

Control. Some organizations prefer to own and maintain their contact center applications internally. This control typically brings in-house staff requirements to manage and administer the system. With a cloud solution, certain regular upgrades and software maintenance are addressed by the service provider. Also, cloud solutions can boost continuity planning because you can easily configure the application to automatically react to business interruptions resulting from unforeseen events at your contact center location, thereby keeping your contact center operating even during a disruption.

According to Brendan Reed, an industry analyst, Frost & Sullivan, "Our research shows companies are going to the cloud for greater speed and ease of deployment, lowered total cost of ownership, increased flexibility, and business continuity/disaster recovery."

As your organization evaluates contact center applications, be sure to consider application cost, flexibility, capabilities, and control. Doing so can help you gain cost-efficient access to a high-functionality solution that transforms your contact center into a real asset.


Greg Ross is vice president of product management at FairPoint Communications. He has more than 15 years of business-to-consumer and business-to-business experience in more than 20 global markets, developing and executing comprehensive product strategies.