Ask Steve: Can SMBs Benefit from Hosted Contact Center Solutions?

and keep your great e-mails and questions coming to Ask Steve! Heres this weeks question:

A: As illustrated in the script above, the role of contact centers for SMBs mimics that of larger enterprises, but scaling the solution affordably has proven difficult. This month, “Ask Steve” makes the call with insights from Ken Landoline, a program manager in Yankee Groups Enterprise Research group and one of the industrys foremost contact center experts with 25 years in the industry.

So were all on the same page, a contact center solution (commonly referred to as an ACD or automatic call distributor) is a customer service hardware and/or software-based application that provides a vital communication link between a company and its customers. From an operational perspective, it is a queuing network that receives customer calls (or faxes, e–mails, IM-based chat sessions, etc.) and efficiently routes them, based on business rules and parameters established by the corporation, to the next available and most appropriate customer service representative (CSR) to handle communications. Well-known premises-based ACD providers include Aspect Software, Avaya, NEC, Nortel and Siemens. Hosted contact center providers include Contactual, CosmoCom, Echopass, Five9, Genesys (acquired by Alcatel), Telephony@Work (acquired by Oracle) and UCN.

The hosted, on-demand contact center model is a viable solution for the SMB marketplace. On top of that, VoIP adoption will be a driver of hosted contact center solutions, especially for smaller centers. Only 5 percent to 8 percent of contact centers use a hosted solution today. After adopting VoIP, however, decision makers estimate a near tripling of hosted solutions in the smaller centers to somewhere between 13 percent and 18 percent. A Yankee Group survey on the adoption of VoIP in the contact centers of North America found that overall 47 percent of contact centers planned to have VoIP, to some degree, by early 2009. VoIPs ability to enhance connectivity, minimize the issue of distance and support remote home agents will foster increased interest in the hosted contact center solution.

Why the increased interest in hosted contact center solutions? Money, money and saving money. A rigorous Yankee Group analysis of the three-year total cost of ownership (TCO) shows significant savings in favor of a hosted model. Yankee Group estimates a 28 percent to 45 percent TCO savings when starting up a contact center. For example, in a 25-agent contact center the estimated costs amount to $369,000 for a premises-based solution versus $266,000 for hosted over the first three years of operations. The largest savings were in the areas of hardware and software, implementation and maintenance costs, technology upgrades and IT staffing.

Source: Yankee Group, Migration Costs, Vendor Loyalty and Need for Agents Anywhere Define Contact Center VoIP Adoption Plans

Source: Yankee Group, VoIP and Lower Stoke Hosted On-Demand Contact Center Trend October, October 2006.

Steve Hilton is the vice president of Yankee Groups Enterprise Research Group with an expertise in converged solutions for SMBs. Hilton manages a team of analysts delivering consulting, research and programs to help vendors and service providers better serve SMBs, midmarket enterprises and large enterprises globally. Visit Yankee Group online at www.yankeegroup.com.