The Inner Circle Guide to
Cloud-Based Contact Centre Solutions
Written by
Sponsored by
CONTENTS Introduction: Why is Cloud computing hot? .......................................................................................................... 4 Drivers for Cloud-­‐based Contact Centre Solutions ................................................................................................. 6 Financial .............................................................................................................................................................. 7 Operational ....................................................................................................................................................... 12 Functionality ..................................................................................................................................................... 15 Strategic Considerations ................................................................................................................................... 17 Inhibitors ........................................................................................................................................................... 18 Cloud-­‐based Contact Centre Solutions: Terminology ........................................................................................... 24 Implementation and Use ...................................................................................................................................... 27 Deciding on cloud ......................................................................................................................................... 27 Choosing a vendor ........................................................................................................................................ 29 Estimating ROI and TCO ................................................................................................................................ 32 Implementation Timings ............................................................................................................................... 33 Results of Using Cloud-­‐based Solutions ........................................................................................................ 34 Market Landscape ................................................................................................................................................ 35 Pricing and Contracts ........................................................................................................................................ 37 Key market sectors ........................................................................................................................................... 39 Conclusion ............................................................................................................................................................ 41 LiveOps ......................................................................................................................................................... 42 About ContactBabel .............................................................................................................................................. 44 2 Table of figures Figure 1: Capex and Opex changes in UK & US contact centres, 2011 ................................................................... 8 Figure 2: Contact centre operating expenditure in UK & US, 2011 ........................................................................ 9 Figure 3: What concerns do you have about cloud or hosted solutions? ............................................................ 18 Figure 4: Characteristics of businesses choosing cloud and CPE .......................................................................... 27 Figure 5: Have cloud-­‐based solutions made any difference? ............................................................................... 34 Figure 6: If you use this functionality, is it delivered through a cloud/hosted solution? ..................................... 35 Figure 7: Pricing examples .................................................................................................................................... 37 3 INTRODUCTION: WHY IS CLOUD COMPUTING HOT? Having technology provided and managed by a third-­‐party away from a customer's premises is not a new idea, with service bureaux and ASPs (application service providers) being around for many years. PBX functionality through Centrex has been available since the 1960s, with IVR and ACD functionality often being offered through a network provider too. In the past few years, SaaS (Software-­‐as-­‐a-­‐Service) solutions such as Salesforce.com offer desktop functionality for the contact centre, and many solution providers now offer convincing, rich-­‐featured applications hosted in the cloud. That cloud-­‐based contact centre solutions are now 'hot' is down to a mixture of factors, including the recession's negative effect on capital investment, the increasing functionality of hosted applications, and the proven success and general acceptance of cloud-­‐based solutions. Additionally, the stranglehold that incumbent CPE telephony providers had on the industry has been loosened by the advent of IP and more open systems, with the net result being a greater choice of solution providers. The maturity of Western contact centre markets, coupled with the high levels of mergers and acquisitions in industries such as utilities, telecoms, insurance and finance mean that many large companies are now in a position where they provide customer contact via multiple sites, often running on disparate technologies. Cloud-­‐based contact centre solutions allow a way out of proprietary systems, lack of interoperability and the expense of maintaining many different systems without gaining from economies of scale. For example, only 28% of multisite UK operations ran as truly virtual contact centres in 2011, although the US equivalent was greater, at 49%. The main reason stated that 51% of US multisite operations stayed non-­‐virtualised was that there were too many different systems at each location to work together: a problem that cloud-­‐based contact centre solutions address. The general lack of investment within the past few years is now showing in many contact centres, yet capital expenditure is still not forthcoming. The avoidance of large capital investments, and reduced start-­‐up costs associated with cloud solutions is of great interest to many organisations, as is the reduced risk of trialling new functionality, and inherent future-­‐proofing that cloud offers through frequent technology upgrades. 4 Get the simplicity, scalability, speed and
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DRIVERS FOR CLOUD-­‐BASED CONTACT CENTRE SOLUTIONS The many potentially-­‐positive factors driving the uptake of cloud-­‐based solutions can be grouped into four areas: Financial, Functional, Operational and Strategic: x
x
x
x
Financial: how does cloud affect the investment and ongoing expenditure connected with technology and the operations of the contact centre? Functional: what is the effect of cloud-­‐based solutions on the functionality available to the contact centre? Operational: what are the changes in the way in which the contact centre is able to operate? Strategic: how are wider concerns of the business addressed by having contact centre functionality within the cloud? 6 FINANCIAL Cloud-­‐based solutions are sometimes thought of as having a ‘pay-­‐as-­‐you-­‐go’ financial model that allows business of all sizes to move away from high front-­‐end expenditures in favour of a more manageable operational expenditure approach without any overspending. While some solution providers offer this, to varying extents, it is by no means universal. It is perhaps better to consider the financial opportunities of cloud as being related more to shifting expenditure from capital expenditure (Capex) to operational expenditure (Opex) Small and mid-­‐size companies in particular typically do not have the ready access to cash to make the necessary capital expenditures for expensive CPE. As a result, making the shift from Capex to Opex is especially relevant for these firms. Recently, poor economic conditions have affected companies and finances, and some organisations that would have been previously less likely to have considered Opex investments (e.g. public sector, utilities companies) are now doing so, as many large Capex projects have been shelved indefinitely. Cloud offers contact centres a way forwards without relying on capital investment: x
x
x
x
x
Businesses can scale down future customer premises equipment (CPE) investment, with a resulting decrease in capital expenditure There is also an opportunity to buy services using a pay-­‐per-­‐use or even pay-­‐as-­‐you-­‐talk pricing model, which helps to keep operating expenses to a minimum Additionally, issues surrounding the total cost of ownership of CPE do not arise with hosted solutions: outright purchase of equipment isn’t for everyone, perhaps for reasons of budget or the ability to maintain the systems Low-­‐risk ability to start up or move or expand without risking existing business plans Business retain the freedom to downscale change targets and plans to meet demand, rather than commit themselves to long-­‐term arrangements needed to justify the purchase approach of high value CPE. 7 Figure 1: Capex and Opex changes in UK & US contact centres, 2011 Capex and Opex changes in 2011 (UK & US)
100%
90%
80%
3%
7%
27%
70%
6%
10%
3%
11%
1%
8%
11%
20%
Increased by 25%+
24%
Increased by 10-­‐25%
60%
50%
49%
30%
40%
30%
Increased by <10%
17%
47%
Decreased by < 10%
25%
Decreased by 1 0-­‐25%
12%
20%
No change
10%
18%
16%
0%
2%
UK O pex
2%
US Opex
12%
6%
8%
6%
13%
UK Capex
US Capex
Decreased by 2 5%+
6%
Recent ContactBabel research carried out with more than 400 US and UK contact centre operations shows that investment levels and budgets are still in the doldrums. Almost 1 in 5 US operations had their investment budgets cut by more than 10% in 2011, even though many businesses believe that they have weathered the worst of the economic storm. These figures show that the cut in investment has not led to a loosening of the purse strings where Opex is concerned either, with a rough balance between those increasing and decreasing their ongoing spend. 8 Looking in more depth at Opex, we can see that it is typical for total salaries to account on average for around 70% of a contact centre's Opex, with much smaller elements spent on IT, telecoms, training etc. Figure 2: Contact centre operating expenditure in UK & US, 2011 Contact centre operating expenditure, US & UK, 2011
Recruitment
2.3%
Utilities & local taxes
2.6% Training
Other
8.5%
3.2%
IT maintenance
3.6%
Telecoms c harges
4.7%
Rent
4.8%
Agent salaries
57.0%
Other salaries (e.g. management & IT)
13.4%
In current circumstances, we can see that for many businesses Capex is tight or non-­‐existent, and Opex budgets are rising very slowly, if at all. The positive financial impact of cloud-­‐based solutions is built on shifting from Capex to Opex, but the question is: if Opex is also closely-­‐controlled, surely a business won't countenance a big jump in spend, even if it is shifted into a monthly operating budget? If this is true, it is worth considering how a movement from CPE to cloud-­‐based solutions could impact on expenditure in each of these Opex categories, thus reducing or substituting existing expenditure within the Opex budget and freeing up budget with which to pay the cloud provider. Agent salaries: At 57% of Opex, any small change in salaries will make a large impact on overall spend. At first glance, shifting technology from CPE to cloud doesn't look like it will impact on agents at all. However, moving to cloud means that companies can be more flexible in their staffing arrangements, either through having agents in lower-­‐cost locations (either onshore or offshore), and by supporting a more volume-­‐driven staffing schedule (e.g. by having homeworkers log on for short shifts when they are needed, rather than the full eight hours). Seasonality is also addressed, through being able to add and shed agents as needed. Cloud offers various ways to reduce or otherwise manage overall salary costs, through contact centre virtualisation in all of its forms. 9 Other salaries (e.g. management & IT): Businesses can experience a decrease in development costs and attendant IT management salaries, as cloud solution providers will already have solutions up and running. Moving physical hardware off-­‐site also means that maintenance requirements will no longer be an issue for the contact centre. Furthermore, for multisite operations, moving to the cloud will offer greater opportunities for having a single-­‐
cross-­‐site management team in place, with call routing and self-­‐service controlled at a single point, reducing management costs as well as improving consistency and increasing the available labour pool. Infrastructure and processes which are held in the cloud can avoid issues which CPE resources can experience, such as unnecessary duplication across multiple sites and a corresponding increase in management costs for configuration, administration and performance checking. Rent, utilities & local taxes: Although businesses are usually tied into contracts for their premises, a cloud approach to technology means that a growing business can look for value elsewhere if a new operation is to open; or a contract break occurs, without the upheaval and downtime associated with moving on-­‐site hardware to another location. Moving equipment to the cloud will reduce energy expenditure. Telecoms charges: Call queuing at the network level also saves money. In multi-­‐site operations -­‐ rather than pass a call down to a contact centre which may not have an agent immediately available to take the call – it makes sense to queue the call at the network level until an agent is capable and available to take it. The call is then passed – once – to the agent in the specific contact centre. IT maintenance: Cloud-­‐based solutions can mean that the need for large server farms is reduced or removed, lowering the cost of hardware and maintenance. Software upgrades are carried out at a network-­‐level, reducing cost and upheaval. Training & Recruitment: Cloud does not offer a great deal of opportunity for saving costs on training, although there may be some opportunity for recruitment savings based on having the ability to locate contact centres or homeworkers anywhere, including in lower cost areas. 10 Other expenditure: Apart from these instances of reduced Opex, cloud offers other opportunities to cut down on unnecessary expenditure, including: x
x
Operations with fluctuating traffic (either on a seasonal or more frequent basis) do not have to buy sufficient software licences and telephone line capacity to cover the peaks, as many cloud providers offer the possibility of adding short-­‐term licences on a pay-­‐as-­‐you-­‐go basis The cloud allows users cost savings associated with not having to own or run their own hardware. Although servers may be a commodity purchase, the energy costs involved in running them can far outweigh the initial purchase and 85% of computing power generally sits idle in any case. End-­‐user question: "Where do the biggest cost savings come from?" (Utilities company) The biggest cost savings will come from converting a capital expenditure to an operating expenditure. Additionally, companies can reduce the number of in-­‐house resources required to operate and maintain these systems. On average the majority of savings realized in the first year are elimination of maintenance costs. Most organizations are able to achieve a roughly 30-­‐40% decrease in TCO. Finally, most companies can be up and running in the cloud in days rather than months, another significant savings. 11 OPERATIONAL On a day-­‐to-­‐day basis, cloud-­‐based contact centre solutions can theoretically offer a better service level and a simpler environment for businesses to operate in. Reduced need for IT support and implementation: Having hardware and software based in the cloud means that ongoing system maintenance is significantly reduced, as it is the duty of the cloud provider to handle such matters. This is also the case in terms of implementing new systems, with users generally stated to be up and running in days, although of course the level of customisation is often far less than that in a CPE environment with dedicated IT and business resource available. Larger pool of agents to choose from: Treating multiple contact centres as a virtual contact centre allows great efficiencies can be made through economies of scale. This is especially true where businesses are using skills-­‐based routing. All agent competencies are displayed to the scheduler – regardless of agent location -­‐ who can be more flexible, simply because the available resource pool is so much more deep. Short-­‐term scalability: The cloud offers great flexibility in adding or shedding agents and user licences, of particular relevance to businesses which have substantial changes in call volumes over a year (such as the seasonality experienced by retailers and travel agents) or which have to react quickly to handle event-­‐driven call spikes (e.g. an emergency weather-­‐drive situation affecting utilities companies). Scalability is key: many contact centres want to be able to gear up and down to suit business demands and cope with peaks and troughs without unnecessary expenditure, and with cloud-­‐based solutions they can do this on a daily basis if necessary, instead of spending on capacity that they may not use for months. Centralised management: In a multi-­‐site, cloud-­‐based environment, self-­‐service and call routing scripts can be held centrally to increase the speed to alter these as required, and also to maintain consistency across sites. Infrastructure and processes which are held in the cloud can avoid issues which CPE resources can experience, such as unnecessary duplication across multiple sites and a corresponding increase in management costs for configuration, administration and performance checking. 12 End-­‐user question: "Does cloud make it any easier to implement virtual contact centres or multichannel/ social media? If so, how?" (Retailer) The cloud contact center IS the virtual contact center so for these purposes they are one in the same. Both Social Media and multimedia are seamlessly integrated in the cloud via open API’s. LiveOps recently released our new Social Application, which is fully integrated with Facebook and Twitter, providing real time social feeds into the agent’s dashboard for immediate review and response. 13 Case Study
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FUNCTIONALITY Cloud-­‐based applications may allow businesses greater opportunities to implement new technology, a point of particular importance to the traditionally-­‐overlooked mid-­‐sized contact centre sector. Trial new applications quickly using a low-­‐risk pilot: Contact centres can expand, move, increase size or try out new functionality without the high initial set-­‐up costs. Using a pay-­‐per-­‐use model allows businesses to start a contact centre or move at low risk or increase for a temporary campaign or try out new functionality without having to spend excessive amounts of time and money first. This is especially true for new and usually expensive applications such as speech recognition which can be a very expensive solution to implement at a CPE level. The hybrid cloud model (a mixture of CPE and cloud) is often used to migrate existing applications to the cloud once the decision to upgrade or replace existing CPE functionality is made. Amongst the biggest gainers from cloud technology are mid-­‐sized contact centres, a market which many vendors have been failing to address for a great number of years. Solution providers which have deep and rich functionality aimed at the high-­‐end of the market have been reluctant or unable to offer similar features to smaller operations at a price point that is acceptable to both parties. Cloud-­‐based solutions mean that this market becomes potentially profitable to vendors: for example, the customisation of cloud-­‐based offerings can be far less, which means that overall cost for the smaller operations is less than in a CPE environment, as vendors gain from the economies of scale associated with multi-­‐tenancy. Future-­‐proof: A competitive, open cloud environment should mean that vendors will be motivated to innovate and provide better service. Cloud solution providers have continually to enhance and develop their services which bestows a competitive advantage to business users who can deploy the latest technology and the often inherent advantages of improved functionality, service and reduced costs, through their contact centres. In effect, a hosted solution removes the technology stranglehold experienced by many contact centres with CPE and allows them to concentrate on their core business as this release of frequent new functionality can be used to achieve a strategic service advantage. In a CPE environment, upgrades to applications are carried out under ongoing maintenance contracts. Upgrading one element may cause a knock-­‐on effect requiring other applications to be upgraded as well, a task which can be long and expensive. Cloud-­‐based providers update applications on an ongoing basis. 15 End-­‐user question: "How does cloud-­‐based functionality compare to on-­‐premise?" (Large retailer) Cloud-­‐based functionality has significantly narrowed the gap with on-­‐premise systems over the past couple of years. In some cases cloud-­‐based advantages are found through increased efficiencies by operating in the cloud like seamless integration and very flexible scalability. 16 STRATEGIC CONSIDERATIONS Apart from the day-­‐to-­‐day improvements in the functionality and operations that cloud-­‐based solutions can provide, wider impacts have to be considered as well. Disaster recovery: Ensuring business continuity during outages, facility emergencies and inclement weather is a critical requirement. Cloud-­‐based contact centre models ensure business continuity by enabling agents to be connected to the technology platform and necessary applications from anywhere with Internet access. Even in an outage, companies maintain the ability to service and sell to the client base, undermining what could otherwise be a disastrous situation resulting in lost revenue, dropped calls and negative customer experiences. Cloud solutions eliminate the costly and time-­‐intensive process of building and maintaining a back-­‐up site from which to take calls and deal with emergency situations, and superior solutions are fully-­‐redundant, with complete disaster recovery and business continuance delivered from multi-­‐site locations. Cloud solutions can also provide back-­‐up disaster recovery protection to centres which prefer on-­‐site CPE or a hybrid model, as reserve protection. Cultural considerations: Making the move to cloud is a far bigger proposition than deciding whether to implement or replace a particular contact centre application such as call recording or workforce management. The decision can be as much cultural and political within an organisation as it is technological or operational. As the report will show, the perceived security and data privacy issues around cloud are always present in any such discussion, and a lack of confidence or understanding of the reality around these issues, especially in the higher echelons of decision-­‐makers, can veto the move to cloud, regardless of the financial or functional arguments put in its favour. The move to cloud has similarities to the decision-­‐making process around IP that many contact centres have been through in the past few years: x
x
x
x
x
it may not be related just to the contact centre, but other business areas too the technical elements of the decision may not be easily understood by business-­‐focused executives concerns about security and reliability are frequently aired the general movement of control away from the enterprise to a third-­‐party can cause uneasiness final decisions may not be made from within the contact centre environment. In the case of IP, 40% of contact centres in the US and UK state that the move to IP was a corporate decision, not a contact centre decision. Although the case for cost reduction via a single IP network was stated to be the most important factor in the final decision, corporate sponsorship (or lack of it) was placed at no.2. 17 INHIBITORS Despite the generally positive experiences that most users of cloud & hosted solutions report, there are still considerable barriers to implementation that are holding back some potential users, mostly around security, availability and functionality. The strongest of these is the concern that data security will be compromised by allowing a third-­‐party to control customer details. 21% of non-­‐cloud-­‐based respondents state that data security in the cloud is of great concern to them, down on last year's figure of 30%, which shows that greater education and understanding about risks and successful cloud projects (e.g. CRM) is making an effect. Some cloud-­‐based solutions allow clients to keep call recordings and sensitive customer information on their own site, whereas most others provide externally-­‐audited and accredited dedicated security that can surpass on-­‐premise offerings. The difficulty in integrating with existing systems, and to a lesser extent, loss of control is also of concern, although most respondents rightly do not consider a lack of reporting to be a deal-­‐breaker. 47% had some concerns that existing investments would be wasted if they were to move to cloud, although many solution providers offer a solution that can work alongside existing CPE elements, such as a PBX. Solution providers should continue to focus their efforts on demonstrating the strength of their security measures, and reassuring potential users of cloud and hosted solutions that the security measures in place are actually stronger than would be feasible within a fully premise-­‐based operation. Concerns about the practicality of integrating with existing systems should also be addressed. Figure 3: What concerns do you have about cloud or hosted solutions 1? 1
Data from "The UK Contact Centre Decision-­‐Makers Guide 2012" (ContactBabel) 18 Security The greatest concern around cloud-­‐based solutions -­‐ particularly in multi-­‐tenancy, public cloud environments -­‐ is around security, both from attacks from outside or within the service providers' organisations, or through poorly-­‐designed security allowing data leaks without a sinister motive being present. Allowing a third-­‐party to be in control of a businesses' data security is a major cultural and technological change to the way most businesses and IT departments operate. Organisations should expect that data should be at least as secure in a third-­‐party environment that is dedicated solely to providing a high-­‐quality cloud-­‐based service, as this is one of the factors by which the solution provider will succeed or fail. Potential cloud clients should look for: x
x
x
x
x
x
x
x
x
multiple levels of firewall protection continuous intruder detection systems a two-­‐person rule for changes to code or hardware frequent scheduled password changes external testing and audit trails data encryption used both in storage and in transit, under the control of the user additional layers of user authentication and privilege vetting of employees with access to sensitive information or hardware internal traffic and server monitoring. Businesses should make sure to ask their cloud provider what data encryption levels are operated, and whether the customer is given control of the data encryption key. Data should be encrypted at all stages, when travelling over the network between business and the database, and also when it is in the database and any back-­‐up databases too. US organisations may wish to check that providers are FIPS 140-­‐2 certified, and compliant with PCI-­‐DSS, Sarbanes-­‐Oxley, IFRS, HIPA and any other regulatory requirements. Some elements to consider asking about include: x
x
x
x
x
x
x
Security: the cloud provider must have a strong security management system based on an internationally-­‐accepted security framework Usage: make sure customer data is used only as instructed or to fulfil the cloud service provider’s legal requirements and that governance and role-­‐based access management policies, and ongoing process testing procedures are in place Data ownership: make sure the cloud provider claims no ownership rights to customer data Payment functionality: some providers (PCI DSS Level 1 compliant) can process payments themselves in the cloud via IVR, whereas others work with call recording companies to pause recording when relevant Disclosure: the cloud provider must only disclose customer data where required by law Geographical data location: the cloud provider must specify the locations and countries in which data will be stored. Physical protection of the data centre(s) should also be considered Auditing: the cloud provider must use third-­‐party auditors to ensure compliance, both physical and technological. Readers may also like to be aware of the policies and aims of the Cloud Security Alliance (https://cloudsecurityalliance.org/). 19 End-­‐user question: "How do we know customer data can’t be shown to other clients or hacked into? Is browser-­‐based technology really secure? What sort of guarantees / certification should we look for?" (Medium-­‐sized financial services organisation) Modern data-­‐use is distributed in nature and, as such, the controls that protect this data must also be distributed. Too often security controls focus on location alone to protect the perimeter of the building. However, as telecommuting is becoming more conventional and workers may access data from laptops outside of normal business hours, considerable data access exists outside the office walls. Modern data protection controls must be data-­‐centric rather than location-­‐centric. They must follow the data out of the buildings to protect it no matter where it resides. LiveOps agents operate from distributed locations, as such we have created defense-­‐in-­‐depth data-­‐centric controls to follow, and protect the data, and not just the conventional walls of the building. These include such controls as our distributed audit and fraud programs, Secure Exchange to control what data agents can hear or view, PC Protection to manage the agent’s desktop, and Screen Recording, which provides full visibility into the agent’s conversations and desktop. This enterprise security model focuses on building value-­‐add distributed controls that provide actual security, as opposed to the perceived value of often legacy controls surrounding an agent’s desk. Integration Being able to continue using relevant existing CPE systems, and access databases and back-­‐office systems is a minimum requirement for all businesses considering cloud-­‐based solutions, and one which is of great concern to 1 in 6 contact centres, with a further 31% have some concerns. As all businesses are unique, there is no generic solution to this, but many cloud providers have pre-­‐built integration with leading CRM applications such as Salesforce.com, MS Dynamics, SAP and Oracle CRM, and web service APIs enable customers and technology partners to create tightly-­‐integrated contact centre applications. Potential cloud-­‐users with multiple, complex systems should not underestimate the effort and potential cost associated with integrating these CPE systems with those in the cloud, and this should be factored into any TCO/ROI calculations. 20 End-­‐user question: "We have concerns that integrating with our CRM, back-­‐office systems and bespoke applications may be very difficult." (Medium-­‐sized insurance company) The success of a call center project often hinges upon successful integration with agent desktop applications, back-­‐office applications, and enterprise data sources. LiveOps has developed a rich infrastructure supporting integration during all phases of a call, from initial caller segmentation through call delivery and presentation at the desktop. Further, LiveOps has the technology and experience to support integration with the breadth of modern and legacy enterprise technologies found in many large call centers. The platform's integration infrastructure is designed for extensibility beyond any single integration. Many of our customers require routing based on data extracted directly from an enterprise data source, or interaction with a custom web service or Java API. LiveOps has built an integration infrastructure that allows rapid integration with any web service, data source, or native API required by a given call center implementation. 21 Control, visibility and reporting Loss of control is of as much concern to businesses as fears over integration. A service provider may not be as responsive as an in-­‐house team, and it may take hours or even days to make changes to the system. It is also the case that the solution provider upgrades or implements new functionality as and when they wish, in the case of the multi-­‐tenancy model, and backing up the system is also something that the solution provider becomes responsible for. It is vital that such issues form part of any agreement between the client and the cloud solution provider, with expectations of the provider's speed to react stated and agreed in writing before any contract is signed. Some cloud vendors provide complete visibility of their service availability and performance through web-­‐based dashboards. Reliability and performance Cloud clients depend upon the solution provider to maintain a high level of service reliability, availability and uptime. This means there must be data centre redundancy and geographical separation, and enforceable service level agreements. Service providers will test their systems on an ongoing basis, and a few will even guarantee their availability to 99.999% (the '5 9s target of carrier-­‐grade availability), backed by penalties if they do not achieve this. This level of reliability is the standard for very large contact centres which have paid significantly for this in a CPE environment, but is likely to be an improvement on what SMEs are used to, with their much smaller budgets. The nature of cloud-­‐based systems -­‐ that they can be accessed from anywhere by anyone with a browser -­‐ means that problems at the client's premises can be circumvented by physically moving staff elsewhere. Potential users of cloud-­‐based solutions should be aware of what they are comparing when they place vendors side-­‐by-­‐side for reliability assessment. Some vendors include the necessary downtime associated with maintenance and upgrades of an instance, others only count unscheduled downtime. Potential clients should make sure that the provider's infrastructure is load-­‐balanced and over-­‐provisioned relative to the number of users to ensure resilience and consistent levels of performance. There is a risk that some providers add new clients without adding new hardware or other supporting systems (which would obviously be more profitable), and this would negatively affect the response times of the applications. 22 End-­‐user question: "Do you require any software to be downloaded onto the agent desktop? If not, how do you guarantee the speed of a browser-­‐based solution, especially in a scripted conversation which requires immediate processing?" (Outbound telemarketing company) We do NOT require any native software to be downloaded to the agent desktop to use our solution. By leveraging a modular, multi-­‐tenant architecture and Web-­‐ based delivery model, the LiveOps on-­‐demand solutions enable organizations to rapidly deploy, configure, and maintain business applications — and empower business users to take control of their software assets. Functionality It has been the case in the past that not all cloud-­‐based applications have as much functionality as high-­‐level CPE equivalents. This differs greatly from provider to provider, and of course businesses need to decide which pieces of functionality are vital, and which are worth foregoing to gain the benefits of cloud-­‐based solutions. Customisation in multi-­‐tenancy environments is obviously far more limited than with a CPE delivery model and the cloud provider may not be able or willing to support unique customisation requests. Having said that, the vast majority of functionality that contact centres require will be available through a cloud-­‐based model, and the prevailing opinion is that with the level of competition in this area, cloud providers will be more likely to update and innovate to keep ahead of the game. The vendors' responses to this question can be seen earlier in this report, or in the Appendix. Potential clients should look closely at the vendor's financial position and backing to make sure that the quality of service and level of innovation can be maintained in the future, also that they have the technological expertise in-­‐house to keep making these improvements. Cost It may seem strange to put 'cost' as a potential inhibitor, but hosting for long time (more than 3 years for example) may end up costing more than purchasing the technology outright. The truth of this will be determined in the TCO/ROI study that will be undertaken before any decision is made about cloud, and will need to include related elements such as the cost of system and application updates, as well as the greater benefit and lower cost associated with more frequent upgrades and recent functionality. The cost of terminating a contract should also be considered as a potential risk element in the cost equation, if the move to cloud does not work out. 23 CLOUD-­‐BASED CONTACT CENTRE SOLUTIONS: TERMINOLOGY The modern contact centre has a multitude of applications supporting it, with hardware, middleware and networking equipment around and inside it. The traditional method of deploying these resources has been on a CPE basis, with the business's IT resource implementing and maintaining it. Now, the vast majority of this equipment, functionality and supporting resource is available in a third-­‐party hosted environment, one of the various types of cloud-­‐based delivery. Broadly, there are five types of technology that contact centres have, although not all subscribe to all of the functionality within them of course: x
x
x
x
Contact centre functionality: ACD/PBX-­‐type functionality (including call routing and queuing), CTI, IVR (routing and self-­‐service), outbound dialling Desktop applications: CRM, customer management systems, helpdesk applications, agent desktop, knowledge bases, multimedia response applications, scripting, web chat & collaboration Management applications: workforce management, QA/QC, call recording, speech analytics, reporting, MIS and business intelligence, eLearning, workforce optimisation Enabling technology: security, databases, middleware, IP networks and other common architecture or hardware Other hardware: IP phones, PCs or desktop terminals, headsets etc. x
Cloud-­‐based solutions are the latest in a line of alternatives for businesses to owning and running their own technology. Here are explanations of some of the terms that readers may have encountered in researching cloud-­‐based contact centres. x Cloud is the delivery of computing and storage capacity as a service to different business, organisations and individuals over a network. It is often said to consist of Infrastructure as a Service (IaaS) -­‐ servers and storage space, Platform as a Service (PaaS) -­‐ operating systems and web servers, and Software as a Service (SaaS) -­‐ the functionality of software available on demand without the need to own or maintain it. The Cloud is characterised by huge scalability and flexibility, shared resources, a utilities approach to billing (pay for what you use, for example) and an abstraction of obvious infrastructure. There are various deployment models: o
o
o
Public cloud: applications, storage, and other resources are made available by a service provider, often offered on a pay-­‐per-­‐use model. Public cloud service providers own and operate the infrastructure and offer access via the Internet. Private cloud: infrastructure operated solely for a single organisation, whether managed internally or by a third-­‐party and hosted internally or externally. They require management by the organisation or its third-­‐party Virtual private cloud: a deployment model that pulls in public cloud infrastructure-­‐as-­‐a-­‐service (IaaS) while running the application on-­‐premise or in a private cloud, in order to improve disaster 24 o
o
x
recovery, flexibility and scalability and to benefit from Opex-­‐based costing while avoiding expensive hardware purchases Community cloud shares infrastructure between several organisations from a specific community with common concerns (security, compliance, jurisdiction, etc.), whether managed internally or by a third-­‐party and hosted internally or externally. The costs are spread over fewer users than a public cloud (but more than a private cloud), so do not gain as much from cost reductions. Hybrid cloud is a composition of two or more clouds (private, community or public) that remain unique entities but are bound together, offering the benefits of multiple deployment models. By utilizing "hybrid cloud" architecture, companies and individuals are able to obtain degrees of fault tolerance combined with locally immediate usability without dependency on internet connectivity. Hybrid Cloud architecture requires both on-­‐premises resources and off-­‐site (remote) server based cloud infrastructure. SaaS (Software as a Service) is a model of software deployment whereby a provider licenses an application to customers for use as a service on demand. SaaS software vendors may host the application on their own web servers or download the application to the consumer device, disabling it after use or after the on-­‐demand contract expires. The on-­‐demand function may be handled internally to share licenses within a firm or by a third-­‐party application service provider (ASP) sharing licenses between firms. On-­‐demand licensing and use alleviates the customer's burden of equipping a device with every conceivable application. It also reduces traditional End User License Agreement (EULA) software maintenance, ongoing operation patches, and patch support complexity in an organisation. On-­‐demand licensing enables software to become a variable expense, rather than a fixed cost at the time of purchase. It also enables licensing only the amount of software needed versus traditional licences per device. SaaS also enables the buyer to share licences across their organisation and between organisations, to reduce the cost of acquiring EULAs for every device in their firm. Using SaaS can also conceivably reduce the upfront expense of software purchases, through less costly, on-­‐demand pricing from hosting service providers. SaaS lets software vendors control and limit use, prohibits copies and distribution, and facilitates the control of all derivative versions of their software. The sharing of end-­‐user licenses and on-­‐demand use may also reduce investment in server hardware. x
x
Hosted solutions have similarities to SaaS in that the application is hosted off the customer's premises, but may not actually be managed by the ASP. A hosted solution may be an individual instance of an application running on a single server dedicated to the customer, restricted in scalability by its finite nature. Although this may allow greater control and flexibility, it can be more expensive and there is less redundancy. It may be thought that all SaaS solutions are hosted, but not all hosted applications are SaaS. Network-­‐based solutions are marketed as solutions with equipment physically located in multiple locations, permitting users to access the various services via a combination of the contact centre’s internet connection and the standard PSTN networks. This allows complete geographic independence and disaster recovery (DR) solutions. 25 x
x
x
Multi-­‐tenancy is key to an understanding of cloud-­‐based solutions. It refers to where a single instance of the software runs on a server, serving many customer organisations (tenants). Client's data and configuration are separated virtually but the same actual hardware, software versions and databases are used. Multi-­‐instance occurs where separate software instances or versions (and possibly actual physical hardware) are provided for each individual business. Hardware virtualisation masks from users the physical characteristics of the platform, hosting multiple isolated instances of an application on one or more servers. The same image can be used on multiple sites, whether customer-­‐owned or hosted. End-­‐user question: "We've heard of community clouds, where the cost and resources are shared between several companies. How is this organised? Do we have to find our partners ourselves?" (Public sector) We have not implemented any community clouds at this point but the option is available. The details of how this would be organized would need to be discussed with our Operations Department and yes, you would have to find partners yourselves. 26 IMPLEMENTATION AND USE DECIDING ON CLOUD Not all businesses are ready for cloud-­‐based solutions. Perhaps culturally there are too many concerns about security within various areas of the business to carry the argument. It may be that there has just been a major capital investment in CPE which fulfils the contact centre's need. Moving to cloud is not a 'no-­‐brainer'. Below are some of the characteristics that mean some businesses will choose CPE while others will migrate to cloud-­‐
based solutions. Figure 4: Characteristics of businesses choosing cloud and CPE More suitable for Cloud More suitable for CPE Fluctuating call traffic (e.g. seasonality) that requires flexibility in adding & shedding agents More predictable traffic that does not require changes in agent numbers Planned addition of new sites and/or homeworkers Stable contact centre environment in terms of headcount and location Looking to add functionality and/or have technology at end-­‐of-­‐life Have made substantial and recent investments in technology Multi-­‐site locations that could benefit from consistency of technology and management Single-­‐site location or no need to virtualise Innovative and risk-­‐taking culture aimed at gaining competitive edge Conservative cultural approach to new technology and risk management Simpler reporting & routing Very complex routing & reporting requirements More standardised back-­‐office integration Sophisticated and deep integration with back-­‐
office systems, developed over many years Willing to look at Opex model of funding More comfortable with Capex model Do not have enough experienced IT staff to implement, support and maintain desired systems Have a lot of experienced IT staff Willing to cede some control over privacy and security to third-­‐parties Culturally unwilling to relinquish control over privacy and security 27 Many solution providers emphasis that cloud/premise decision is just as much about attitudes and commitment to internal IT as it is about cost. Few see the IT department as one of the initial instigators of the decision to move to cloud, as this carries a perceived threat about its role and even ongoing existence. For many organisations however, the IT department is freed from its role of ongoing maintenance and management, and can look at other projects of more strategic benefit to the business. Some solution providers do often report a lack of enthusiasm within the IT department, who are used to premise-­‐based solutions and may feel threatened by such a radical change, although vendors report that it is rare for jobs to be threatened as a result. Most of the momentum to move to cloud comes from senior people within contact centre operations (e.g. Contact Centre Director) who want specific functionality but don't care how they get it, or senior management such as those at CFO, CTO or CIO level. Solution providers report that interest in their cloud-­‐based offerings received a big boost from the economic downturn, where Capex generally disappeared. This is said to be much less the case now -­‐ it is still important, like any purchase or rental -­‐ but is less frequently the main driver in any decision. End-­‐user question: "What happens to our IT department? Have you found that it is cut?" (Public sector) In many cases an existing IT department is retooled to support a variety of new functions supporting the cloud instance. In most cases IT departments are not cut, just repurposed but the many of them do shrink in size due to taking on a less expansive role in maintenance, etc. 28 CHOOSING A VENDOR Security: There are various accreditations and certifications used by providers of cloud-­‐based solutions, some aimed at demonstrating the security of the datacentre (whether physical or virtual security) including SSAE16 and SAS70. Others focus on the process of processing payment card data (PCI DSS), whereas others are around information security controls (ISO 27001). Other interested parties include the Cloud Security Alliance, a not-­‐
for-­‐profit organization with a mission to promote the use of best practices for providing security assurance within cloud computing as a whole. The importance and concern about security has been seen earlier in this report. The solution providers interviewed for this report were confident that the dedicated security procedures and architecture in place within their solutions were likely to exceed those found in their clients' previous contact centre operations, having full-­‐time dedicated security resources and a vested interest in keeping client data safe. A security breach for in-­‐house contact centre is damaging and embarrassing; for a cloud provider to suffer a similar failure would impact very severely on their credibility and the future of the very company. However, as the National Institute of Standards and Technology (NIST) states in its Guidelines on Security and Privacy in Public Cloud Computing, security should not be left simply to the solution provider. Functionality: Solution providers state that moving from a premise-­‐based deployment to the cloud should not reduce the functionality available to users -­‐ at least, as long as complex customisation is not required. Potential cloud users are responsible for carrying out an audit of all existing and required functionality, and how it relates to defined business processes, before asking solution providers to guarantee that any move to cloud will include the required depth of functionality. It is not enough to accept that solution providers have 'workforce management' or 'outbound' capabilities. There is a great deal of upgrading and increased sophistication happening in the cloud world, which in some cases is from quite basic functionality, so potential users should have a list of specific processes and functionality that any solution should be able to deliver, and make sure that the chosen solution can deliver that. It is also important to understand the opportunities for scalability. Adding and shedding agents when required is one of the big advantages that cloud computing has over its premise-­‐based equivalent, but potential users should put real-­‐life scenarios in front of bidding suppliers to make sure that the required level of scalability is possible and that no hidden costs or nasty surprises are associated with it. 29 Reliability: Multi-­‐location datacentres are ubiquitous amongst cloud providers, providing redundancy and disaster recovery as part of the deal. Stated levels of availability amongst interviewees range from 99.7% to 99.999%, and most if not all are backed with performance-­‐related guarantees, with reimbursement of fees if targets are not met. While this is somewhat reassuring, it will do little to assuage the loss of revenue or customer goodwill if the cloud-­‐based contact centre solution is unavailable for any amount of time. Potential clients should investigate the exact levels of redundancy built into solutions, including the use of alternative network providers and mirrored datacentres if the problem occurs outside the software providers' purview. Cost: Most cloud solution providers operate a per-­‐agent/per-­‐month option to pricing, with a minimum number of logged-­‐on agents per month being the baseline minimum cost. To this, the cost per minute of calls made or delivered should be added, although many providers will offer this as part of the package, to make fees more predictable. Additional costs for customisation and integration should also be investigated. More detail on costing can be found in the 'Pricing and Contracts' section towards the end of the report, and the role of cost in assessing TCO and ROI is found in the next main section. Integration and customisation: Cloud vendors will keep APIs up-­‐to-­‐date, with screen-­‐popping into a home-­‐grown CRM system, look-­‐up of call recordings in a CRM systems, and sending reporting and recordings to a third-­‐party application being mentioned as some of the more frequent integrations requested. Some providers have very close relationships with specific CRM vendors, and as a general maxim, cloud-­‐based contact centre solutions can be seen to be following in the footsteps of cloud-­‐based CRM. Some customisation in existing operations may have come about as an ad-­‐hoc 'work-­‐around' that has over time become the way in which things are done. It is important to revisit the business processes that the technology is there to facilitate, to see if there are easier ways to achieve this rather than reproducing the same method in a cloud-­‐based environment. 30 Suggested process for choosing a cloud-­‐based provider: The selection of most IT solutions is normally carried out in a similar way, but some steps you may wish to consider for cloud-­‐based solutions include: x
x
x
x
x
A selection team should be chosen with responsibility for all of the areas affected, including contact centre operations, IT, business operations and probably sales and marketing While bearing in mind the underlying business processes that the technology supports, select the specific technologies that are to be hosted, and also those bespoke applications that are to remain in-­‐house, such as specific complex reports. Take the opportunity to consider 'ideal world' functionality as well Research the types of solution available in the market, and understand the actual differences between premise-­‐based and cloud-­‐based functionality. Provide vendors with specific instances of complex functionality required to meet your own particular requirements and challenge then to prove that they can be met. This should include all instances of existing back-­‐office functionality that the solution needs to integrate with and where possible, a wish-­‐list of functionality in the future Investigate publically-­‐available referenceable sites from cloud-­‐based providers that are similar to your own requirements, and submit an RPF (request for proposal) to the long-­‐list. Request a detailed product roadmap along with timescales in order to assess whether this solution will meet your demands along the line. You may wish to invite solution providers informally to demonstrate their product before offering an RFP Any response to an RFP should include service level agreements over availability, call delivery, voice quality, speed to make requested changes, details of security and redundancy offered, prices for customisation, contract length options, implementation times and contract cancellation penalties and notice periods. 31 ESTIMATING ROI AND TCO Before being able to calculate return on investment, it is necessary to understand the total cost of ownership of cloud-­‐based solutions compared to their CPE equivalents. These can include: x Reduction or redistribution of agents expanding the agent pool and service levels without increasing agent numbers x Impact of increased functionality on call handling times and FCR x The in-­‐house cost associated with the maintenance and management of on-­‐premise hardware and software, compared with that spent monitoring cloud-­‐based systems (although minimal, businesses will still want to be aware of what is happening, when upgrades are scheduled, supplier liaison, etc) x Initial cost of CPE and the structure of financial payments, effect of depreciation etc. x The value of staying current with technology, both in terms of reduced licence fees and the impact of superior systems on agent performance. Include the cost of more frequent training requirements in a frequent release environment x Whether additional functionality provided by the cloud provider over time is included in the fixed monthly payment, and if so, what would be the cost of upgrading on-­‐premise solutions to include this functionality? x Compare the cost of staffing for seasonal volumes and spikes (licences, recruitment, training, staff salaries etc) compared to cloud-­‐based PAYG and homeworkers or short-­‐shift workers, as well as attendant additional hardware fees for major on-­‐premise volume increases (e.g. adding an extra server). The distribution of payments is very different, as well as the overall fee paid. Although there may be an initial fee associated with cloud-­‐based solutions (connected with the discovery and implementation phase, as well as a payment in advance), this upfront cost is likely to be far lower than with traditional on-­‐premise purchases, although the latter may be alleviated somewhat in the case of a leasing arrangement. TCO assessments of cloud vs on-­‐premise deployments generally reach a conclusion that cloud-­‐based cost savings are proportionately larger with increasing contact centre size, and also where the level of functionality is greater too. However, some solution providers report that longer-­‐term, the depreciation associated with on-­‐
premise solutions means that the TCO gap narrows, so that after 7 years or more, the difference is much less, if not wiped out totally. As expected, there is no single right calculation to the ROI question, although payback is expected within 12 months in virtually all cases, and in many, a considerably shorter timescale (perhaps 3-­‐6 months). The actual figure depends on factors such as number of seats, the number of contact centre locations, the functionality employed, the costs of integration or customisation and other such factors. Most vendors have an ROI calculator for prospective clients to use. Any choice not to move to cloud is less frequently financial than for many other types of technology decision (except perhaps in cases where there has been large recent capital investment made), but may be more concerned with cultural issues, existing IT infrastructure and expertise, and other concerns which may or may not be entirely justified. 32 IMPLEMENTATION TIMINGS Once the decision to proceed with a specific vendor's cloud solution has been made, the next step is to implement. While every project is different, and depends upon the size, functionality and complexity of any integration, most solution providers report that cloud-­‐based contact centres can be operational within a matter of days or a few weeks. It may be divided into the following stages (some of which may run concurrently), which will differ greatly in length due to the size and complexity of the organisation and its required functionality: x
x
x
x
x
x
Discovery: 2-­‐6 days Build, training and reporting: 4-­‐8 days Implementation and testing: 3-­‐6 days Fine tuning and adoption: 2-­‐4 days Bespoke agent and management training: 2-­‐6 days eLearning and after-­‐sales support as appropriate. End-­‐user question: "Is it best to wait to move everything to the cloud or should we do it piecemeal?" (Large outsourcer) The cloud option allows you to the flexibility move at your own pace, either all at once or piecemeal. LiveOps offers an a la carte menu of Contact Center Applications so you can select the pieces you want and implement them in a fraction of the time and for a fraction of the cost of on-­‐premise systems. 33 RESULTS OF USING CLOUD-­‐BASED SOLUTIONS A study of UK contact centres which have actually implemented a hosted or managed solution have generally found that it has delivered significant advantages in most cases. The strongest experience was a reduction in cost, with 54% of respondents agreeing that the overall cost of ownership was cheaper. 57% experienced more powerful or extended functionality in a hosted or managed environment, with only 12% disagreeing. 44% found that making changes to the system was now easier, compared with 31% who felt the opposite. Figure 5: Have cloud-­‐based solutions made any difference 2? Have cloud-­‐based solutions made any difference?
100%
90%
2%
4%
11%
8%
6%
25%
80%
70%
31%
34%
60%
25%
Strongly disagree
Disagree
50%
Neutral
40%
30%
Agree
41%
43%
25%
Strongly agree
20%
10%
11%
16%
19%
More powerful or extended functionality
Easier to make changes to the system
0%
Cheaper overall cost of ownership
2
Data from "The UK Contact Centre Decision-­‐Makers' Guide 2012" (ContactBabel) 34 MARKET LANDSCAPE Currently, around 38% of UK contact centres report that they use some cloud-­‐based functionality. Respondents to The UK Contact Centre Decision-­‐Makers' Guide 2012 were asked about whether they used specific functionality, and if so, how it was delivered (i.e. through CPE, or cloud/hosted deployments). IVR and call routing functionality were the most likely to be deployed through cloud-­‐based solutions, with hosted CRM and automated dialler functionality also used in a significant minority of instances. Many of the early examples of cloud-­‐based solutions (including those that were called hosted or managed services) were aimed at the outbound market, providing dialler functionality. As times and customer requirements have changed, inbound and blended functionality has developed. Figure 6: If you use this functionality, is it delivered through a cloud/hosted solution? Use of cloud-­‐based functionality
35%
31%
30%
27%
25%
23%
21%
20%
16%
15%
11%
11%
10%
5%
0%
IVR /speech recognition
Call routing CRM / customer Automated functionality management outbound (ACD)
software
dialling
Workforce Other software
management
Multimedia software
In terms of usage by contact centre sizes, large operations (200+ seats) were more than three times as likely as small and medium contact centres (<50 seats & 51-­‐200 seats) to have cloud-­‐based IVR and automated dialler functionality, and twice as likely to have cloud-­‐based routing capabilities, as we would expect. Small contact centres lead the way in the use of cloud-­‐based CRM systems, with many cost-­‐effective solutions available in this space. Solution providers often comment that initially, those applications that don't require close monitoring or the highest levels of security can go into the cloud, to test how this deployment model works in a live environment before considering it for more ingrained and mission-­‐critical functionality. 35 Many cloud solution providers are focusing upon the 50-­‐250 seat contact centre market -­‐ the mid-­‐market -­‐ which has traditionally been less-­‐well served than the top end of the industry. However, some providers report agent numbers in the thousands. Contact centres below 50 seats, while having the potential requirements for more sophisticated functionality without capital expenditure, are reported by some vendors as being the most difficult to dislodge from their incumbent technology. In such operations, especially stand-­‐alone contact centres (i.e. not a departmental operation, or part of a larger overall contact centre), there can be significant inertia coming from the IT management (often under-­‐resourced and fearful of their own future) and the contact centre management (focused entirely on day-­‐to-­‐day operations without the time or perhaps remit to look strategically at alternative options). Only 5% of UK contact centres solely rely on cloud solutions, with 33% using hybrid cloud/CPE and 62% CPE only. Unsurprisingly then, new business for solution providers tends to come not from replacing competitive incumbent cloud companies, but from replacing on-­‐premise technology, and from entirely new start-­‐ups. 36 PRICING AND CONTRACTS Some vendors say that cloud-­‐based solutions don't impact particularly positively on their profitability, as revenues from contracts are recognised over a number of years, rather than immediately in the case of many on-­‐premise sales. It does however provide a guaranteed income stream and help cashflow forecasts, allowing them to run their business with a greater confidence and stability, which is obviously helpful for their customers as well. For most vendors, especially those offering a multi-­‐tenant model, the cost of maintaining and upgrading the solution is lower, which impacts positively upon their own costs. Contract lengths vary, but are generally in place for at least a year, more often two or three. Some vendors provide a zero-­‐commitment option but these are likely to work out pro-­‐rata perhaps 40-­‐50% more expensive than long-­‐term contracts. Solution providers differ widely in their contract offers, with some operating a very flexible 'per logged hour' billing system, whereas others will want an agreed minimum number of agents per month, with additional users billed as required. Pricing will of course depend on the features and functionality that client choose to use, although the following table gives some idea of what users can actually expect to pay: Figure 7: Pricing examples Functionality / size Price (£ per agent per month) Small contact centre -­‐ voice only £80 -­‐ £120 (typical £95) Small contact centre -­‐ full blended and multichannel £125 -­‐ £200 (typical £150) Enterprise -­‐ voice only £35 -­‐ £90 (typical £60) Enterprise -­‐ full blended and multichannel £60 -­‐ 140 (typical £100) 37 Further notes on pricing: x
x
x
x
x
Potential cloud clients should also check and include the cost per minute of delivering and making calls Non-­‐standard service requests (such as customisation, extra reporting etc) will also usually be charged for separately, with a rate of £70-­‐£100 per hour being typical Multichannel functionality may be added on a per-­‐seat basis, including email, social media and chat. Extra pricing of £20-­‐30 per agent per month per extra channel can be expected Most cloud vendors offer pricing on a per-­‐seat/per-­‐month basis, but some offer the even more granular approach of per logged hour, which is of particular interest to outbound telemarketing companies and outsourcers, for whom this directly impacts upon profitability, with daily viewing of billing offered by some vendors Standard service level agreements start at around 99.7% guaranteed availability, with some vendors offering 99.999% on a premium contract. If these SLAs are not met, vendors will offer reduced rates as compensation. Service levels offered by some vendors may differ depending on contact type, although with the true multi-­‐tenancy approach, everyone gets the same service levels. 38 KEY MARKET SECTORS The suitability of cloud-­‐based solutions by vertical market segmentation is perhaps less relevant than some other contact centre functionality, being more a factor of the individual organisation's requirements for flexibility, access to Capex funding, attitude to IT and the state of their existing systems. Having said that, the outsourcing sector has been very quick to embrace cloud technology, with the very nature of their business is a cultural fit with the idea of letting a third-­‐party take control of non-­‐core activities. The ability to add and shed agents very quickly, coupled with the definite knowledge of the associated cost appeal to the way in which these organisations do business, which also enables them to produce very aggressive and detailed bids for new work without fear of long technology implementation times. The movement away from high-­‐volume outbound campaigns into more of a blended environment has also put pressure on certain types of outsourcer to include new functionality, and cloud offers a quick and integrated way to do this. Formerly a major growth pool in the industry, public sector contact centres have seen investment budgets slashed in recent years with little hope of a reversal in the near future. Many local government IT departments have been decimated in cost-­‐cutting exercises. Cloud-­‐based solutions offer a way to maintain a good level of functionality without having a large in-­‐house IT operation, while keeping costs low and predictable. However, some vendors report that this is a very difficult market sector to sell into at the moment, with a high degree of inertia due to the defensive attitude towards any new expenditure and the shedding of knowledgeable and experienced resources. Seasonal contact centres (such as retail, travel and outsourcing) are also a major target for cloud-­‐based solution providers, who can add pay-­‐as-­‐you-­‐go functionality almost immediately. Even paying a premium for a short-­‐term usage contract will be far cheaper for a contact centre which would otherwise have to buy extra full licences at a far higher cost. Departmental contact centres have also been quick to consider cloud-­‐based solutions, as their IT operations may not fit with the rest of the organisation and can be a burden rather than a strategic asset. Cloud offers them a chance to take control of their own destiny, rather than be a small part of a much larger whole that may be moving in another direction. Such departmental contact centres may be in the sales and marketing function, which means that outbound functionality is of great concern to them. The SME (small-­‐medium enterprise) sector is particularly interested in cloud-­‐based solutions, particularly the 50-­‐200 seat sector. Their desire for the rich functionality available to large enterprises has been dampened by the cost of implementation, as well as the general lack of IT in-­‐house resource available to fine-­‐tune and customise it so as to get the most of the solution. Previous years have seen numerous attempts by leading on-­‐
premise solution providers to cut down their top-­‐level offerings to suit the mid-­‐market, but it has been difficult to offer something of real value at a reasonable price without alienating their existing customer base or cannibalising their own revenue streams, despite the large proportion of operations industry-­‐wide being in the SME bracket. Cloud-­‐based solutions alleviate much of the requirement for in-­‐house resource, as well as offering an Opex solution at a lower price point for sophisticated functionality, and is a hugely attractive option for this sector of the market. The SME sector is far more likely to take up cloud-­‐based solutions wholesale, whereas many solution providers report that large enterprises will evolve into cloud piece-­‐by-­‐piece. 39 At an enterprise level, organisations that are young and rapidly-­‐growing that don't have the experience or incumbent team to run their own contact centre are prime candidates to consider cloud. Where the contact centre is dynamic: adding and shedding agents as required, whether contract-­‐based or seasonal -­‐ cloud is also a good fit. Organisations where finding Capex is difficult are of course also more likely to look at cloud-­‐based solutions. Many solution providers report that enterprises have shown significant growth in interest in cloud-­‐
based solutions over the past 12 months, with some former CPE providers now stating that the majority of new sales are for their cloud-­‐based solution, even at the top-­‐end of the market. Cloud-­‐based solutions are finding their way into even the most risk-­‐averse verticals, such as finance and healthcare, for which the importance of customer/patient data security cannot be overestimated. Standards such as HIPA and SSAE 16 must be complied with, and many cloud providers have made it part of their strategy to meet or exceed the prescribed levels of security and audit in order to be able to address these markets and take away one of the most pressing issues faced by these clients. 40 CONCLUSION The general view from the vendor community is that cloud-­‐based contact centre solutions are an evolution in the industry, rather than being revolutionary. At the top end of the market, the sunk costs, complex processes and in-­‐house expertise held by the largest and most-­‐established contact centres make it very unlikely that a wholesale move to cloud will happen in the short-­‐term. However, at the technology end-­‐of-­‐life stage even in these large operations, cloud is now a credible option to take. The power that switch providers used to have over the contact centre industry has been long broken, and even the most risk-­‐averse and conservative companies are exploring other options to the traditional on-­‐premise model. For many established operations, cloud-­‐based solutions are an addition to their armoury, not a complete substitution. It is thought that the majority of current new implementations have at least some element of cloud-­‐based solutions involved and most vendors report very significant growth in cloud deployments, certainly compared to their premise-­‐based offerings, although the proportion of contact centres using only cloud technology is still proportionally small. A recent study of UK contact centres found that while 38% of respondents were using some cloud-­‐based functionality, the proportion of cloud-­‐only contact centres was 3
below 5% . In terms of functionality, the core contact centre functionality is well-­‐entrenched in the solutions studied in this report. There is a great deal of focus generally upon adding real-­‐time analytics, social media management as part of a wider multimedia functionality set, and in improving the reporting capabilities offered. Large enterprises in particular will demand the delivery of calls via MPLS (Multiprotocol Label Switching, an initiative that integrates information about network links -­‐ bandwidth and latency -­‐ into IP in order to improve IP-­‐packet exchange and thus call quality), and this is something that future cloud-­‐based solution providers will have to address. Much of the existing hosted market used to be about billing call minutes, but this has already changed, with the commoditisation of call traffic meaning that solution providers have to look elsewhere for their differentiators. A major driver for cloud-­‐based contact centre solutions is that more and more of the CRM market is moving to the cloud. As ingrained cultural and technical inhibitors to outsourcing enterprise IT are broken, it is dragging contact centre functionality along with it, with the presence of tight integration between contact centre and CRM functionality already present in many cloud providers' solutions. Despite cloud-­‐based contact centre solutions offering smaller operations the biggest potential jump in functionality and performance, there is still a reluctance to engage with vendors to understand the reality of what cloud can bring. This segment of the market (sub-­‐50 seats) is the largest by number of operations, but a mixture of overwork at an IT and operational level, the view of senior management that such contact centres may not be strategic and the reassurance of having technology in place that already works satisfactorily means that the functional gap between small and large operations is in danger of growing further. 3
ContactBabel, "The UK Contact Centre Decision-­‐Makers' Guide 2012" 41 LIVEOPS The LiveOps Solution: The LiveOps cloud contact centre solution is divided into three parts, LiveOps Platform, Applications and Talent. LiveOps Platform provides turnkey contact centre functionality in the cloud. LiveOps Applications provides agents and managers integrated multichannel interaction capabilities across voice, email, web chat, social media (including Twitter and Facebook) and SMS, all backed by intelligent multichannel routing, real-­‐
time reporting and recording across every channel. LiveOps Talent provides access to LiveOps’ community of 20,000+ home-­‐based, US-­‐based, independent contractors for outsourcing services. The LiveOps cloud contact centre solution is pre-­‐integrated to work with on-­‐premise TDM telephony hardware, as well as SIP, with APIs to thirdh party solutions such as NICE, Monet, Salesforce.com and others. The solution is accredited PCIh compliant (for payment card data), HIPAA-compliant (for healthcare markets), with Sarbanesh Oxley and SAS70 typeh 2 compliance (finance). LiveOps currently has three data centres in New York, Las Vegas and London, with a fourth opening shortly in Singapore. LiveOps' product roadmap for the second half of 2012 includes further integration with Salesforce.com's latest Open CTI release (which includes Mac support), international expansion further into Asia with Singapore datacentre supporting LiveOps' APAC customers and new business, and enhanced reporting (real-­‐time and multichannel visibility for both agents and contact centre managers). Customers and implementations: LiveOps operates the largest cloud contact centre in the world supporting 250+ external customer operations as well as its own community of 20,000+ independent contractor agents. Named clients include Amway, Symantec, Salesforce.com, Proflowers, Pizza Hut, Royal Mail and AAA. LiveOps is keen to point out that it offers more stringent service levels than most other cloud contact centre solution providers, with its 99.99% availability including scheduled maintenance time. Its active-­‐active architecture allows customers to switch seamlessly to another instance without interrupting operations, and the company states that prospective customers should take note of this benefit when comparing availability. LiveOps offers a 90-­‐day opt-­‐out to new customers, within which time clients may cancel their contract if they find that cloud solutions aren't for them. Typically, reported installation times are in the 2-­‐3 week range. LiveOps has a varied client base, with significant verticals including finance, hi-­‐tech (including media and communications), retail and healthcare. Although it has several customers running thousands of seats, the vast majority are within the 75-­‐500 seat range. 42 Opinion on market: LiveOps states that SMEs tend to embrace the cloud wholesale, whereas enterprises tend to evolve into the cloud, with selective implementations of functionality, or at a departmental-­‐level. Finance, technology, retail and healthcare are all growing quickly in terms of cloud take-­‐up, despite most of these sectors being extremely risk-­‐averse where security over customer data is concerned. The growing importance of multichannel support, with the further push from the uptake of social media as a customer service channel is focusing enterprises' decision-­‐making on how to manage these interactions strategically, with cloud offering more of a turnkey alternative to the difficulty of managing and reporting such interactions in multi-­‐location on-­‐premise deployment. LiveOps sees the adoption of cloud contact centre a natural evolution that follows successful cloud implementations around CRM, back-­‐office and HR processes. Contact: w: www.liveops.com 43 ABOUT CONTACTBABEL ContactBabel is the contact centre industry expert. If you have a question about how the industry works, or where it’s heading, the chances are we have the answer. The coverage provided by our massive and ongoing primary research projects is matched by our experience analysing the contact centre industry. We understand how technology, people and process best fit together, and how they will work collectively in the future. We help the biggest and most successful vendors develop their contact centre strategies and talk to the right prospects. We have shown the UK government how the global contact centre industry will develop and change. We help contact centres compare themselves to their closest competitors so they can understand what they are doing well and what needs to improve. If you have a question about your company’s place in the contact centre industry, perhaps we can help you. Email: [email protected] Website: www.contactbabel.com Telephone: 0191 271 5269 44