The Hidden Costs—and Risks—of Staying On-Premises for CX

The Hidden Costs—and Risks—of Staying On-Premises for CX

I have talked to hundreds of contact center leaders who scoff at the suggestion that they consider moving to a cloud platform, or at least using cloud-based applications. And I understand their issues.

You can’t flip a switch on a large, complex, customized on-premises contact center, and move it to the cloud. Not only is the infrastructure itself highly customized, but the staff supporting it typically has years of experience using technology to meet business and customer demands.

The CX leaders in this space feel they have things under control and operating very smoothly. They also are well aware of the momentum behind moving to the cloud. In fact, many are fighting against it in their own organizations, where CIOs have mandated that all technology move to the cloud. Contact centers are different, they say, because customer service is a big differentiator and we need the ability to control our technology.

In fact, controlling technology is the top reason companies stay on-premises. In our upcoming Customer Engagement Transformation: 2020-21 Research Study, 42.6% of participants say maintaining control over contact center security is why they stay on-premises, while 37.8% cite the need to maintain control of applications—the top two reasons for staying on-premises.

Risks of On-Premises

Based on years of research, advising, and discussions, I’m not one to say there is a one-size-fits-all technology solution for delivering stellar customer experience. Some companies are a natural fit for Contact Center as a Service (CCaaS), others do better in a hybrid environment, and others with hosted cloud.

What our data does show is that cloud-based services—at some level—can provide agility and potentially cost savings unavailable with pure on-premises solutions. CX leaders should evaluate and leverage cloud-based services where they make sense. Otherwise, they may be putting their companies at a competitive disadvantage.

There are a few key areas CX leaders should consider as they are evaluating contact center platform architecture, along with associated applications:

  • Support costs: On-premises contact center platforms are 5.5% more expensive to operate, according to data from our study
  • Global expansion: As companies want to expand globally, they must have the customer support available to complement the expansion. Establishing and managing an on-premises contact center is time-consuming and costly. Meanwhile, competitors could be expanding in the same area, and be up and running much more quickly with a cloud service. Does this mean they must change the entire, company-wide platform to cloud? No. They simply integrate the cloud service into the existing on-premises platform.
  • End-of-life equipment: Many contact centers are showing their ages, and it has become difficult to find replacement equipment. When that happens, the cost to replace the on-premises equipment is often prohibitive. So, IT staffs use the duct tape approach to keep equipment working, or they scour eBay and other public marketplaces for replacement parts. This puts the company at risk by potentially losing contact center functionality.
  • Agility: Many companies have cyclical business cycles, and they need to scale up and down their customer support in response. On-premises solutions typically require a full license purchase, vs. the ability to pay monthly when needed, and to cancel when not needed. (Some companies are trying to streamline pricing to be subscription-based, regardless of architecture). What’s more, it typically takes longer to roll out new features on-premises vs. from the cloud.
  • Advanced applications: Advanced Artificial Intelligence (AI) and analytics applications take more time to add when companies must spin up their own servers and conduct testing of the infrastructure and apps. Nearly 50% of companies using cloud services have AI in place now, vs. 25% of those on-premises.

Of course, in many cases, companies have good reason to stay on-premises, whether it’s the investment in the contact center equipment, reluctance to relinquish control of technology, the lack of customization, and concerns about cost or connectivity. But even those committed to keeping their on-premises platforms are finding benefits in adding cloud-based licenses for remote workers, or over-the-top, cloud-based advanced applications.

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