Cloud vs. CPE-based Contact Centers: How to Decide which is the Best Match for You


Cloud vs. CPE-based Contact Centers: How to Decide which is the Best Match for You

By TMCnet Special Guest
Steve Morrell, principal analyst at ContactBabel,
  |  December 11, 2012

This article originally appeared in the Nov. 2012 issue of CUSTOMER

Having technology provided and managed by a third-party away from a customer's premises is not a new idea, with service bureau and application service providers being around for many years. That cloud-based contact center 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, particularly those in the CRM sphere. Additionally, the stranglehold that incumbent customer premises equipment 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.

However, 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 fulfills the contact center's need. There may be a complex and highly bespoke technology infrastructure which business leaders are concerned about changing and integrating.

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.

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 center 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 virtualize

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 standardized 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

Many solution providers emphasize that the cloud/premises 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 organizations 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. Most of the momentum to move to cloud comes from senior people within contact center operations (e.g., contact center director) who want specific functionality but don't care how they get it, or senior management such as those at CFO, CTO or CIO levels.


Results of Using Cloud-based Solutions

A study of more than 200 U.S. contact centers that have actually implemented cloud-based contact center solutions finds that cloud has delivered significant advantages in most cases. The strongest experience was a reduction in cost, with 63 percent of respondents agreeing that the overall cost of ownership was cheaper. 68 percent experienced more powerful or extended functionality in a hosted or managed environment, with only 7 percent disagreeing. 66 percent found that making changes to the system was now easier, compared with 19 percent who felt the opposite.


Despite the generally positive experiences that most users of cloud 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. 30 percent of non-cloud-based respondents state that data security in the cloud is of great concern to them, although this figure is dropping year on year, which shows that greater education and understanding about risks and successful cloud projects (e.g. CRM) is having an impact. Some cloud-based solutions allow clients to keep call recordings and sensitive customer information on their own sites, whereas most others provide externally-audited and accredited dedicated security that can surpass on-premises offerings.

The difficulty in integrating with existing systems, and to a lesser extent, loss of control is also of concern, although most respondents do not consider a lack of reporting to be a deal breaker. 47 percent had some concerns that existing investments would be difficult to integrate if they were to move to cloud, although many solution providers offer solutions that can work alongside existing CPE elements, such as PBXs. 

Steve Morrell is principal analyst at ContactBabel (News - Alert), which recently published the free report “The Inner Circle Guide to Cloud-based Contact Center Solutions”, which is available at

Edited by Brooke Neuman
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