A guest post by Sheila McGee-Smith

Cloud contact center is a hot topic in 2018, but it’s not exactly news. I’ve been writing blogs about the contact center market for ten years now, about 25 posts a year for No Jitter. Looking back, it was in May 2009 that I began writing about the introduction of hosted solutions into the market and a few years later multi-tenant solutions.

While cloud contact center solutions have been available for over 10 years, based on the latest information from industry analyst firms like MZA and DMG Consulting, less than 15 percent of global contact center agent seats are currently supported with a cloud solution. Why have those that have made a move made it? Why have those that stay with on-site solutions made that decision? Finally, what types of companies and contact centers will be making the move over the next two to three years? We explore each of these questions in the sections below.

Reasons Companies Have Made the Move to the Cloud

Ten years ago, the talk consisted of the promise of cloud contact center deployment. Today, the conversation has shifted to the real results companies that have made the move to the cloud have realized.

In 2017, Dimension Data, in its Global Customer Experience Benchmarking study, asked over 1,300 contact center executives globally, “How has the use of hosted/cloud technologies affected your business?”

How Has Cloud Technology Affected Your Business

In the graphic, I’ve highlighted some of the most frequent responses:
Access to new functionality. While many on-site solution providers continue to offer periodic updates to their applications, those updates, by necessity, require an “upgrade” effort by a company. With cloud solutions, updates and new features can be seamlessly distributed to subscribers.
Future proofs our technology infrastructure. For several years, it has been clear that cloud is the future of software. The inverse of that statement is that continuing investment in on-site solutions has risks, both financially for the business and in terms of the quality of customer care that can be delivered.
Improved flexibility. Cloud contact center solutions typically come with web-based interfaces that allow supervisors and managers to make ad hoc changes – often required by changing business demands – without needing the IT department support. This is often not the case with on-site solutions.
Easier integration and customization. Cloud contact center solutions mean never having to say you’re sorry — sorry for asking for an account number the customer just inputted into the IVR or for a phone number when the customer just dialed from their registered home number. Screen pops and more sophisticated CRM data dips become a no-brainer in the cloud contact center API-driven world.
Improves our speed to market and ability to test new ideas quickly. It is clear to see the logic of these two realized benefits of moving customer experience to the cloud. Imagine the ability to add a new SMS-based service to support a new campaign within a day or two – when SMS has never even been an interaction channel in the past – and you see the power of today’s cloud contact center solutions.

Note that reduced costs make an appearance as the fifth most often mentioned advantage of moving to the cloud. Five or ten years ago, the rhetoric was all about cost savings. Now it is about more customer-driven business outcomes.

Why Staying On-Site Works for Some

The cloud versus on-site debate has been raging for years, as companies navigate the benefits and drawbacks of each approach and the changes to the speed and reliability of the underlying technology. Five years ago, IT leaders often cited concerns over security when deciding to keep IT functions on-site.

Over time, however, it has become clear that if companies conduct due diligence and keep security risks and regulatory standards in mind when choosing a cloud provider, security can be a non-issue. However, security is not the only potential roadblock when considering moving a contact center application from an on-site deployment to the cloud. An analysis of deciding whether a given application is best deployed in the cloud or on-site does not yield the same results for every organization. For example, both federal and local government officials, while moving some workstreams to the cloud, keep many on-site.

As described by a senior IT director at a US Department of Defense (DoD) contractor, “the main reason we don't do more in the cloud is because of strict DoD contract requirements for specific types of data.” In the same article, the New York Department of Transportation (DOT) Chief Technology Officer comments, "NYC DOT is one of the most sued entities in New York City, and we constantly need to search our corpus of emails. We have shown a net positive by keeping that application on-site to satisfy Freedom of Information Law requests as well as litigation."

Avoiding Cloud for the Wrong Reasons

Stagnation is undoubtedly a contributing reason for the continued use of on-site solutions by some companies. Some firms, particularly enterprise-size contact centers, have continued to stay with on-site solutions, mainly because that's the "way it's always been." Larger firms are traditionally risk and change adverse, so a movement of critical systems to the cloud is naturally met with skepticism and extended review.

The notion of “sweating the assets” often comes up in discussions of a potential move to the cloud. While getting additional years of service from an existing implementation seems to make sound financial sense, many companies are finding when they crunch the numbers that it is not always as compelling a business case as they imagined. Also, when business changes create a need for a time-sensitive capability, companies can find themselves forced to make 6- or 7-digit software upgrades to add the required functionality.

Increasingly, cloud contact center deployment is seen as an investment that is necessary to support digital and business transformation, even if the existing solutions could be classified as “good enough.”

Factors Driving the Next Wave of Contact Center Cloud Adoption

While there are often legitimate reasons for businesses to keep some of their applications on-site, factors that may have driven that decision in the past are becoming less and less relevant.  A few years ago, one of the hardest issues many organizations had to deal with in regard to moving to the cloud was avoiding the risk of getting locked-in with a particular vendor. Vendor lock-in made it difficult to switch or add another provider and made it harder to innovate when your cloud provider didn't offer exactly what your organization needed.

Application programming interface (API) developments in the past few years have done much to overcome “lock-in” concerns. Today’s multi-tenant cloud contact center solutions are being built using microservices. Microservices are business processes deconstructed to their most basic level by creating small, separate processes that take the place of large, single applications. New systems and applications can be quickly composed by combining functionality from a collection of services. Reliability is increased by limiting the impact failure any given service will have.

Each microservice communicates with every other microservice in the architecture, as well as with the applications and websites they power. They also interact with databases from which they draw real-time information, essential to their functioning. In the case of microservices-based cloud contact center solutions, this might include CRM or industry-specific applications.

Increasingly, contact center applications are being called upon to integrate not only with CRM applications, but also artificial intelligence engines like Salesforce Einstein and IBM Watson, or Internet of things systems. Most of these next-gen, innovative technologies are built using cloud microservices and will be inherently easier to integrate with like applications.

Time to Put Your Toe In

Five years ago, the answer to the question, "Is the cloud right for every company for every application?", was not always an unqualified “yes.” However, as companies have struggled with obtaining quick and easy access to new functionality, and with future-proofing their contact center technology infrastructure, it has become clear that the cloud is an essential part of the answer.

Organizations large and small understand why cloud migration needs to occur; the question has become how to proceed. Some will choose to add cloud applications on top of existing on-site deployments. The large proportion of companies that have already moved to a cloud-based CRM system shows the efficacy of that approach.

At the end of the day, the cloud is a driver of business, not a driver of technology for its own sake. Taking the step of moving from typically dated on-site applications to the cloud will enable an enterprise to take advantage of all the incredible technologies that will change customer care over the next few years. Artificial intelligence, the Internet of things, chatbots, etc. – the tools that will enable the digital transformation of customer experience – are almost, by definition, created and delivered from the cloud. It's never too early for your enterprise to dip its toe into the cloud pool.

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Digital transformation has become a top initiative for business and IT leaders. In today’s business world, sustainable market leadership is no longer based solely on which company has the best products or even the best people. Instead, organizations that are agile and can quickly adapt to rapidly evolving market trends will become market leaders.

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Sheila McGee-Smith

Sheila McGee-Smith

Sheila McGee-Smith, who founded McGee-Smith Analytics in 2001, is a leading communications industry analyst and strategic consultant focused on the contact center and enterprise communications markets. She is a frequent speaker at industry conferences, user group and sales meetings, as well as an oft-quoted authority on news and trends in the communications market. Sheila is a frequent contributor to No Jitter and serves as the Contact Center Track Chair for Enterprise Connect.

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