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Four TCO Wins for Service Providers Using Multi-Tenant CCaaS

This post originally appeared at jackitessmer.ulitzer.com

For IT systems integrators (SI) selling networking, application and infrastructure solutions, and for telcos offering broadband and voice services, expanding into selling contact center software is a natural – and smart – choice.

For quite some time, communication service providers (CSPs) have offered a portfolio of applications to customers that complements their core telco services. A primary motivation for offering enterprise business applications, in addition to a bundle of broadband-based data and voice services, is to reduce churn on “less sticky” broadband service contracts and avoid customers shopping around at the end of their contracts for better rates.

CSPs may offer a range of business applications, including CRM, workforce optimization, and contact center solutions. In addition to creating stickiness, these offerings bring an attractive ratio of application revenue to broadband revenue; in some cases, one dollar of application revenue pulls in four or more dollars of broadband and telco services. Contact center solutions are particularly “sticky,” as switching out an application that works well and is such a critical component of a business is not something customers do lightly.

The same value proposition holds true for systems integrators that look to offer their expertise selling various hardware and software applications to clients, creating integrated business solutions. Expertise in business applications, particularly contact center solutions which have historically been deployed on-premise, have allowed savvy SIs to create tight relationships with their clients based on extensive knowledge gained about the client’s business.

Historically those contact center solutions were sold by the CSP or SI to the end-customer and deployed on premise. The end-customer owned the software application and most often the provider maintained and upgraded it. With the increasing attractiveness of cloud applications, shrewd CSPs have begun selling contact center as a service (CCaaS) offerings. Service Providers and SIs who do not offer cloud contact center solutions should consider adding this to their portfolio. It serves as a way to not only extend their reach within their clients and gain a deeper understanding of the customer’s business, and also serves as a way to pull more revenue from broadband or integration projects.

Why cloud contact center? Because applications delivered as-a-service are much more than hype. A broad set of contact center industry analysts report that implementations of traditional on-premise systems will be anemic, with low-single digit CAGR through the end of the decade. By contrast, cloud-based contact center seats have grown at impressive double-digit rates over the last several years. A strong indication that the adoption of the cloud model for contact centers is here to stay comes with the prediction that in the next 3-5 years the growth rate of CCaaS will continue at 17% to 25%. What is equally impressive is that among those that have already made the move to CCaaS, more than 90% report being satisfied, highly satisfied, or completely satisfied with their decision.

There are several factors leading to the explosion in CCaaS adoption. Here are four key drivers service providers should consider.

#1 – Lower Support Costs with Multi-Tenant

One of the primary differentiators with a contact center solution that is purpose built as a cloud application is that it uses a multi-tenant architecture, which means that a single instance of a software application services multiple customers (i.e. tenants). Through virtual partitioning, each tenant retains its own data access and configuration parameters, while at the same time sharing CPU processing, memory, network infrastructure and data storage resources. Using shared resources creates efficiencies and economies of scale, which are most notable during system updates. Unlike the old way of installing software on individual machines and manually touching each software instance during updates, operating a single shared system simplifies administration and maintenance operations. Multi-tenancy greatly enhances the cost effectiveness of the platform by enabling more efficient use of hardware and software resources as well as IT labor. Additionally, end users barely notice when a new version of the CCaaS solution has been implemented, aside from any new features that accompany the release.

#2 – Lower Customer Point of Entry Requirements

With single-instance “hosted” contact center solutions, the infrastructure investment, labor setup and ongoing operations costs lead to price points that end users with fewer than 250 to 300 contact center agents often find cost prohibitive. To combat price objections, service providers may settle for low single-digit margins and hope a customer will sufficiently grow agents in time, or it may turn away the sale altogether. A multi-tenant CCaaS solution, on the other hand, which shares compute resources and requires far fewer infrastructure requirements and IT resources to setup and manage, can be just as profitable for a 10-user deployment as it is for a 1,000-user deployment.

#3 – Easier Scalability

Despite companies experiencing an ever-increasing pace in their businesses, it rarely happens in a steady pattern. More often than not, there are peaks, valleys and setbacks along the way due to factors ranging from cyclical demand changes, competition, employee turnover and a host of other economic factors. Many single-instance contact center solutions simply cannot mirror these factors. In other words, companies have to decide up front how many agents they expect to have for the year, and they have to know their projected interaction volume and metrics related to sizing either an on-premise or single-instance hosted solution. Once these numbers are locked in, it is difficult to change those figures during lulls and spikes in business.

In order to ensure better uptime and offset customers’ unexpected growth, service providers may need to invest in additional hardware resources and software licenses. In a CCaaS environment, on the other hand, the experience works like a utility service, enabling service providers to easily remove or add seats and turn on or turn off product features as customers’ staffing and business needs evolve. This allows businesses to grow organically and places less pressure on service providers and their customers to have to predict the future.

#4 – Flexibility

Nearly every contact center software provider now offers some type of cloud offering. But there is a key distinction between a traditional contact center offering that was built for on-premise deployment then made “cloud ready” and an application “created for the cloud” CCaaS offering. One of the biggest telltale signs is seen in the communication flexibility of the two systems. Oftentimes, the legacy contact center software provider will support limited endpoint integration choices. For example, end users will be required to use only that provider’s desktop phones and/or its IP PBX. These situations put service providers in tough predicaments. For instance, a service provider may have to try to convince a customer into ripping and replacing perfectly good hardware to accommodate the proprietary contact center software. Or, the service provider may have to create a cumbersome workaround, which also drives up labor costs and lowers its margins. In a true cloud CCaaS scenario, on the other hand, end customers can leverage built-in IP softphones, connect to their unified communications platform such as Skype for Business, or use any IP handset.

True CCaaS solutions also feature web-based provisioning and administration, which service providers can easily extend to their customers to provide self-service capabilities. For instance, contact center managers could perform tasks such as adding new agents or changing call routing rules without relying on service provider personnel.

Do Your Due Diligence, Ask the Right Questions

Making the decision to sell contact center solutions is not something a service provider should take lightly. Moreover, defaulting to the “You can’t go wrong selling Big Blue” mentality can be a costly mistake in today’s cloud economy. It’s important to check multiple cloud vendor offerings and ask vendors about the support costs, target audience, scalability and flexibility of their offerings. For all the reasons outlined above and more, a cloud-based multi-tenant contact center solution will prove to offer several significant advantages over single-instance options, including a significant TCO advantage. Having a viable low-cost solution helps service providers pass along TCO advantages to their customers and achieve profitable margins on their CCaaS solution at the same time.

Read more about CCaaS in our datasheet.

Published in CCaaS Cloud-Based Contact Center Contact Center Service Provider Contact Center Solutions CosmoCom multi-tenant Service Provider

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