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    Beagle research  moving your on-premise contact center to the cloud Beagle research moving your on-premise contact center to the cloud Document Transcript

    • The Benefits of Modern Customer Service:Moving Your On-Premise Contact Center to the Cloud Many contact center managers are now deliberating whether to upgrade their traditional systems or start over with cloud-based technology. Recent end-of-life announcements by some contact center vendors and the high costs associated with upgrading to new versions of their systems are forcing the issue for numerous contact centers. Upgrading to new versions of on-premise systems means continuing the same software paradigm that has resulted in today’s decision point. The alternative to conventional premise-based contact center systems is one that is cloud-based. Cloud-based contact centers are a better option because they offer lower total cost of ownership, more deployment options and better service results. This Beagle Research Group executive white paper describes these advantages. July 2010
    • IntroductionIt has become a truism in the software industry that major systems need tobe re-thought and re-built about once every decade. Nowhere is this truerthan in the contact center where traditional, labor-intensive modes of assistedservice — phone, email and chat — are being superseded by multichanneloperations that use integrated, labor-saving Web self-service, social media,search engines, knowledge bases and crowdsourcing. Moreover, on-premiselegacy call and contact centers were designed for client-server computing andbased on a slow and expensive software-coding paradigm. Whether this truismholds in the age of multi-tenant cloud computing bears watching because cloudcomputing eliminates many of the attributes of legacy software that contributeto obsolescence.The legacy on-premise contact center has reached the point where it needsreplacement. When today’s legacy on-premise contact center systems wereconceived, designed and deployed, social media were not on the radar andso no provision was made for the technology and the changes it wrought inbusiness processes. Consequently, in today’s dynamic business environment,where innovation is highly prized, legacy on-premise contact center systems,and their owners, are uniquely exposed.The problems associated with legacy on-premise software — that it is hardto change when innovation is called for and that it is expensive to own andoperate — all apply to conventional call and contact centers. In contrast, thecloud-based call center has removed or significantly simplified these issues tothe point that it can out-compete legacy on-premise systems on any dimension.And as this paper will show, cloud-based call and contact centers save upwardsof 20 to 30 percent of the five-year total cost of ownership compared withlegacy systems.We believe that a cloud-based call and contact center developed on themodern concepts of multi-tenancy and social media present the next logicaladvance in contact center operations for technological fitness, economicnecessity and service rigor. This Beagle Research white paper examines theseissues in light of available technology and customer necessity.New Business Challenges and the Modern Contact CenterIn the years since the legacy on-premise contact center was introduced, therehave been numerous changes to business. New technologies for networkingand communicating have entered the scene, and people are generally moreattuned to using them. Customers have turned to these tools for answers totheir service problems. The client-server call center was a solution limitedto phone, email and chat for handling customer calls, but today’s customersuse search engines, social media, Wikis and other tools to get their questionsanswered faster and with greater reliability.This multi-channel approach is both a boon and a challenge to the conventionalcontact center. It is a boon because it reduces call volumes, but it alsochallenges the service organization to deliver on multiple fronts. Users ofconventional contact centers have tried to stay abreast of changes in the
    • industry by adding functionality. But, as is often the case, these add-onremedies have resulted in complexity layered on complexity and solutions thatare hard to manage or change.The accumulation of many changes has resulted in a decision point for manybusinesses that boils down to determining when to stop investing in the oldtechnology and turn to what’s new. End-of-life announcements by somecontact center vendors such as Oracle-Siebel have brought that decision to ahead.Modern Contact Center CapabilitiesA modern cloud-based contact center brings together cloud architecture andmulti-channel support to provide solutions designed around the tools andtechniques needed to compete in today’s marketplace. At the same time, itpresents a profile of efficiency and cost-effectiveness that is highly desirablein a world that is much more competitive than a decade ago. The followingsections describe some of the needs and benefits that a cloud-based contactcenter delivers.Improved customer service with updated capabilitiesContact centers continuously strive for improved agent productivity, which isboosted in three important ways. First, the cloud-based contact center enablesservice organizations to improve service quality and timeliness by incorporatingthe latest multi-channel and social media solutions to complement serviceofferings. For instance, multi-tenant systems are more flexible and configurablethan conventional client-server architectures so that user interfaces can evolvewith business processes. System evolution drives agent evolution, which canreduce the need for periodic long training sessions.Second, too often older on-premise architectures tie business processes inknots to accommodate the technology. Cloud-based contact centers enablebusinesses to reconfigure service processes or build new ones and to scaletheir service offerings to meet demands regardless of size or complexity.Third, the cloud-based contact center provides additional tools such as anintegrated knowledgebase and social media connectivity. The knowledgebaseserves as a repository for everything that a company knows about servicingcustomers as well as much of what the customers know and contribute. Andthe knowledge base is accessible to agents and customers alike throughvarious channels that can include search engines and social media as well asconventional agent interactions. Modern Enterprise 2.0 techniques such ascrowdsourcing drive the accumulation, sorting and distribution of the bestanswers to customer questions.A contact center that connects with customers on social media makes itpossible for customers to contribute service ideas that the company can vet,and the same social tools enable wider, faster and less-costly informationdistribution through all channels. If a customer prefers finding an answerthrough a search engine or through a social interface, the knowledge baseeasily enables that kind of information distribution. At the same time, though,the integrated knowledge base is also a resource for agents, enabling them Page 2
    • to access and forward service information through all media touch points,including social media and traditional channels.Leveraging cloud computing platforms and infrastructureCloud computing’s technological underpinnings are significant in areaslike security, configurability and customization. Once organizations fullyunderstand cloud benefits, many seriously consider if they could accomplish asmuch with a premise-based system — whether built by a software vendor ordeveloped internally.Cloud computing is, by now, well understood, but it bears reviewing, briefly. Allhardware, operating system, database, middleware, application and platformconsiderations are supplied by resources on the Internet, which presents thecustomer organization with a streamlined deployment proposition. Scalingthe number of users or expanding to other locations, for instance, are simplematters of provisioning. No one at the client organization has to figure out howmany open slots are available on a switch and no one has to track the numberof software licenses in use and in inventory. When a businessperson makes adecision to expand or contract use, it is a simple matter for an administrator tomake an adjustment online.Cloud security provisions are also robust. The top vendors use SaaS 70 TypeII networks of mirrored data centers to ensure that data is secure and, in theevent of down time for any single element, the redundancy built into thesystem helps to ensure processing continues.The Business Benefits of a Modern Contact CenterCloud computing, modern channels such as social media and powerfulknowledge bases help to lower costs throughout the service organization.Fewer components to manage simplifies IT’s role, greater application flexibilityreduces time to change applications and speeds upgrades and additionalcommunication channels increase customer involvement in problem resolution.The result is a call and contact center that is less costly to own and operate,better service outcomes and more satisfied customers.AgilityWhere conventional call centers require significant labor and expertiseto deploy, maintain, modify and tune all of the hardware and softwarecomponents, cloud computing provides a simple Internet connection thathandles these issues without user concern.Businesses can spend more of their time and resources servicing customers,innovating new service approaches, developing knowledge base articles andgenerally focusing more of their resources on the customer rather than on thesystem. When a company brings out a new product or service, or needs todeploy new contact centers quickly in response to product recalls or disasters,cloud-based contact center technology enables its agents to be ready and ableto respond. This increased ability to innovate provides tremendous agility tothe business. Page 3
    • Lower total cost of ownership (TCO) Cloud-based contact center implementations are less costly to deploy and they stay cost-effective over time. Scalability, license flexibility and numerous advantages that come from easy and fast configuration and customization may be hard to quantify because they are completely dependent on usage patterns which, naturally, vary from location to location. But if we analyze only the cost of acquisition and five-year deployment costs, a clear picture emerges nonetheless. By our estimates, a cloud-based contact center is more cost-effective at all deployment sizes (see appendix) from very small contact centers to some of the largest. Figure 1 shows the five-year total cost of ownership comparison between a typical legacy contact center and a modern cloud-based contact center with 1,000 seats. Notice that the middle years — two through four — are slightly more expensive with cloud computing. However, the slight additional cost is still lower overall compared to the on-premise system with its high up-front costs and substantial upgrade costs in year five. Of course, even this modeling only presents a static view of the situation. What Figure 1 Five-year TCO comparison: On-Premise vs. Cloud-Based Call Center Systems - 1,000 Seats. On‐Premise
7000000
6000000
5000000
 Cloud‐Based
 License
Fees
4000000
 Hardware/Infrastr.
 On‐Premise
 Maint.
Fees
3000000
 Personnel
Costs
 Cloud‐Based
 Cloud‐Based
 Cloud‐Based
 Cloud‐Based
 On‐Premise
 On‐Premise
 On‐Premise
2000000
1000000
 0
 Year
1
 Year2
 Year
3
 Year
4
 Year
5
 Source: Beagle Research Group, July 2010 Page 4
    • it does not show directly is the cost avoidance when an organization dropsseats to adjust for seasonal variations in demand, for example. The cloud’scontinuously variable provisioning means a contact center no longer has tohave important components or licenses in inventory to handle peak demand.When Upgrading to a Cloud-Based Contact CenterEverything wears out eventually. The complication with information systemsis that they continue running well beyond their useful lives so it is sometimeshard to justify a new implementation based on age. But although thetechnology may continue to work, in many cases the legacy contact centersystem has become obsolete, a latter-day antique.When considering upgrading or replacing a legacy contact center system,you need to evaluate additional metrics beyond simply whether or not thecurrent system still functions. Here are some ideas to keep in mind as youcontemplate your next move in call center information systems: 1. Take a cold analytic look at all aspects of your current implementation. It might be hard to ignore the time, effort and expense that went into your current deployment, but rationally speaking, the only thing that counts is the future. 2. Realistically evaluate costs. If your company currently hosts the contact center, then you have hardware, operating system, database and a variety of middleware, application and labor costs to consider. Because you can’t easily buy a 0.5 FTE, your labor costs may be comingled with other IT responsibilities. You don’t need a to-the-penny accounting, but you should strive to be as accurate as possible. Also, there may be hardware in mid-life cycle that you wish to preserve in a new conventional system. That’s fine, but make sure to include replacement costs in your five-year projection. Lastly, the most difficult part of cost evaluation is provisioning for the future because you don’t know what the future holds. Nonetheless, some trends are apparent, like the trend for agents to work remotely either at home or at satellite locations. You’ll need to provision for things like that which cloud-based contact centers do automatically. In contrast, the costs for a cloud-based contact center deployment are neatly summed up into a single bill. Given your ability to add and delete users as needed, there’s more flexibility in provisioning your contact center, so take advantage of it. If you have a seasonal business, budget for the slow times by having fewer seats as well as for the busy season. Also, try to get a sense from your current vendor of the costs for upgrading within the product family. If upgrade projects require additional personnel or investment in new infrastructure, these costs need to be factored in. With cloud computing, upgrades are automatic throughout the year and there is no concept of a separate upgrade. 3. Get advice from others by networking with those who have already moved to the cloud. Their experiences can be invaluable, especially when Page 5
    • it comes to hearing about their realistic results. Your peers had many of the same issues you have, so ask about everything that’s on your mind. 4. Get familiar with the underlying platform. You don’t need to know how to make a watch to understand one, but knowing that it is mechanical tells you it will need daily winding. In the same way, a call center system based on the same technology you are now using will have the same issues you have now and will age in a similar way. A cloud-based contact center will save you from many of the issues you now face with your legacy system. Find out how the cloud platform differs in the important areas of deployment, upgrade and maintenance. You can, and should, put a price on that. 5. Set realistic goals and hold to them. Many years ago we researched why so many CRM system deployments failed. Our surprising finding was that the majority of customers had failed to perform even a rudimentary needs analysis. Without that, and without the goal setting that goes with this analysis, the companies with failing deployments had no basis for claiming a failure, but they didn’t feel good about what they had achieved either. It’s critical whenever deploying a new system to understand your starting point and to set goals for improvement. If you can’t set improvement goals, why spend the money?The Service Cloud from Salesforce.comSalesforce.com’s Service Cloud is a good example of a modern, cloud-basedcontact center solution, and it has been rated very highly by numerous industryexperts; in fact, Gartner placed salesforce.com in the Leaders Quadrantin its recent “Magic Quadrant for CRM Customer Service Contact Centers”report. The Service Cloud provides the attributes and benefits of a moderncloud-based contact center discussed in this paper, including Web self-service,a public knowledge base, and social media integration with Facebook andTwitter. But in addition, the Service Cloud goes several steps further throughits integration with a complete CRM package and its enhanced systemmanagement.The Service Cloud is part of a full cloud-based front office system, and thisintegration ensures that all users have a consistent understanding of thecustomer. For instance, salespeople can easily see what is happening with theircustomers, and executives can monitor their business through configurabledashboards. In addition the Service Cloud offers an advanced multi-tenantarchitecture in which companies leverage shared services from a powerfulcloud-based infrastructure.Among the many benefits, all companies are on the same version of softwareand receive upgrades and new feature innovations instantaneously. Inaddition, a new management feature is being introduced to provide access todata during system upgrades, further improving availability and performanceover conventional rival systems.A new feature, Salesforce Chatter, makes it easy for anyone in the organizationto subscribe to real-time feeds about a customer, a service issue, a sectorof the business or any object tracked in Chatter. Contact centers can useChatter to proactively “swarm” on challenging cases and collaborate on Page 6
    • potential solutions. This new capability makes it possible for an organization tocollaborate and quickly respond whenever a need surfaces.ConclusionUpgrading and modernizing a contact center should not be a big decision, butfor many organizations using legacy systems, it is. Cloud-based contact centertechnology has raced ahead of the conventional systems employed by manycompanies today. The cloud-based contact center represents a significantimprovement in tools, methods, business processes and affordability overconventional solutions. Businesses contemplating their next move in contactcenter systems would be wise to evaluate the benefits of cloud-based systemsside-by-side with on-premise replacements. In the process, they may discoverthat the cloud offers a superior solution and an architecture that will make theon-premise upgrade a thing of the past. Page 7
    • Appendix The cloud-based call center represents a good value for most organizations. Here we provide some data on which we based our comparisons and drew the conclusion that cloud-based call centers represent a good value. Table 1 shows our basic assumptions for such essentials as hardware, software, labor and maintenance through five years of ownership for a conventional 1,000 seat on-premise contact center. This model also assumes an upgrade in year five, which requires additional personnel for re-implementation and training. As you can see, the total cost for 1,000 seats over five years is over $11 million. Table 1 Five-year costs for a conventional on-premise contact center - 1,000 seats. Year 1 Year 2 Year 3 Year 4 Year 5 Total CostApplication License Costs $2,000,000 $0 $0 $0 $0 $2,000,000(CRM + add-ons)Vendor Support & $440,000 $440,000 $440,000 $440,000 $440,000 $2,200,000Maintenance Fees (18-23%)Implementation Costs: $2,000,000 $0 $0 $0 $1,000,000 $3,000,000Initial deployment +upgradesHardware (procure, $200,000 $0 $0 $0 $100,000 $300,000prepare, test. provision)IT Infrastructure $100,000 $100,000 $100,000 $100,000 $100,000 $500,000Maintenance & SupportApplication Admin, $400,000 $400,000 $400,000 $400,000 $400,000 $2,000,000Maintenance & SupportUser Training & Ramp Up $1,200,000 $0 $0 $0 $300,000 $1,500,000Total On-Premise Costs $6,340,000 $940,000 $940,000 $940,000 $2,340.000 $11,500,000 Source: Beagle Research Group, July 2010 Page 8
    • Table 2 Table 2 shows the same basic assumptions for a cloud-based contact center. Cloud contact centers derive much of their savings from the many things customers do not pay for because they are included in the basic fee. Additionally, because upgrades are automatic with the cloud-based contact center, companies can avoid substantial personnel costs after the initial implementation. Table 2 Five-year costs for a cloud-based contact center - 1,000 seats. Year 1 Year 2 Year 3 Year 4 Year 5 Total CostApplication Subscription $1,200,000 $1,200,000 $1,200,000 $1,200,000 $1,200,000 $6,000,000Costs (CRM + add-ons)Vendor Support & $0 $0 $0 $0 $0 $0Maintenance FeesImplementation Costs: $1,200,000 $0 $0 $0 $0 $1,200,000Initial deployment +upgradesHardware (procure, $0 $0 $0 $0 $0 $0prepare, test. provision)IT Infrastructure $0 $0 $0 $0 $0 $0Maintenance & SupportApplication Admin, $160,000 $160,000 $160,000 $160,000 $160,000 $800,000Maintenance & SupportUser Training & Ramp Up $400,000 $0 $0 $0 $0 $400,000Total Cloud-Based Costs $2,960,000 $1,360,000 $1,360,000 $1,360,000 $1,360,000 $8,400,000 Source: Beagle Research Group, July 2010 Page 9
    • Table 3Table 3 provides cost comparisons for a variety of deployments based on theassumptions of Tables 1 and 2. Note that savings for cloud contact centersrange from 50 percent to 22 percent. Also, larger contact center often possessgreater economies of scale for personnel and hardware investments thansmaller contact centers, providing the latter with greater percentage-basedsavings.Table 3 Cost comparisons for different seat levels. Number of users Total cost Total cost Savings Conventional Service Cloud 100 $3,130,000 $1,560,000 50% 500 $6,750,000 $4,600,000 32% 1,000 $11,500,000 $8,400,000 27% 2,500 $27,750,000 $20,600,000 26% 5,000 $51,500,000 $39,600,000 23% 10,000 $99,000,000 $77,600,000 22% Source: Beagle Research Group, July 2010Table 4Finally, Table 4 provides a comparison in per-seat cost over the five-year spanof this analysis. Again, greater economies of scale in personnel and hardwarehelp larger contact centers realize a lower overall cost per seat.Table 4 Five-year cost per seat comparison. Number of users Conventional CC Service Cloud 100 $31,300 $15,600 500 $17,500 $9,200 1,000 $11,500 $8,400 2,500 $11,100 $8,240 5,000 $10,300 $7,920 10,000 $9,900 $7,760 Source: Beagle Research Group, July 2010 Page 10