The Truth about the Cloud in Small Contact Centers
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1 The Truth about the Cloud Paul Stockford Chief Analyst Saddletree Research Gina Clarkin Market Solutions Manager Interactive Intelligence, Inc.
2 Contents Introduction... 3 Who is Using Cloud-Based Contact Centers?... 4 Why (or why not) Move to the Cloud?... 6 The Myths and Realities of Data Security in the Cloud... 7 Common Myth #1:... 7 Common Myth #2:... 8 Common Myth #3:... 8 Cloud Hybrid or 100% Cloud: Configuration Considerations... 9 The Return on Investment (ROI) for the Cloud Contact Center... 9 Factors to Consider when Selecting a Cloud Vendor Conclusion The Authors Copyright 2014 Interactive Intelligence, Inc. All rights reserved. Brand, product, and service names referred to in this document are the trademarks or registered trademarks of their respective companies. Interactive Intelligence, Inc Interactive Way Indianapolis, Indiana Telephone (800) Publish date 08/14, version Interactive Intelligence, Inc. 2 The Truth about the Cloud
3 Introduction The concept of the contact center cloud refers to a model in which contact center functions and applications are hosted by a third party, and the organizations using these contact center functions and applications access them over the public internet. Cloudbased contact centers have received increasingly greater attention from the contact center industry in recent years as organizations have begun to recognize the benefits of the cloud arrangement. Many of these will be discussed in this paper. Cloud contact center providers deliver voice and data applications and services to their customers, who only pay for the applications and services they use. The expense associated with premise equipment purchases and maintenance is off-loaded to the cloud contact center providers. This frees working capital and other resources to be deployed in other areas of the business. Users of cloud-based contact centers can cut costs without sacrificing features or functionality. As a result, the industry s interest in cloud-based contact center alternatives has been growing exponentially over the past two years. Despite growing industry interest, a great deal of misinformation and misunderstanding regarding cloud contact centers still exists. This paper will focus on presenting the facts and dispelling the myths surrounding cloud contact centers with a particular emphasis on cloud-based contact centers for smaller operations contact centers with 75 or fewer seats. The data cited in this paper is drawn from Saddletree Research s most recent annual survey of contact center professionals. The objective of the survey is to gauge the interests, attitudes, and intentions of these professionals toward a number of contact center industry trends and issues. This annual project is undertaken in conjunction with the National Association of Call Centers (NACC) at The University of Southern Mississippi. Survey results are statistically valid at a 95 percent confidence level Interactive Intelligence, Inc. 3 The Truth about the Cloud
4 Who is Using Cloud-Based Contact Centers? The first data collection regarding the contact center cloud occurred at the end of In that survey, respondents were asked to rate their interest in or intentions toward cloud contact centers in the year ahead. The results are illustrated in Figure 1. Figure 1: Intentions/Attitudes Regarding Cloud-Based Contact Center at Year-End 2012 Source: Saddletree Research According to these results, only 9.2 percent of the industry was using a cloud-based contact center at the end of In addition, five percent indicated that they planned to move to some-or-all of their contact center to the cloud by the end of Thus, we would expect to see approximately 14 to 15 percent of contact centers to be in the cloud by the end of Figure 2 represents the 2013 responses to the same question regarding cloud-based contact centers. Clearly, many contact center professionals experienced a change in plans during Figure 2: Intentions/Attitudes Regarding Cloud-Based Contact Center at Year-End 2013 Source: Saddletree Research 2014 Interactive Intelligence, Inc. 4 The Truth about the Cloud
5 As illustrated in Figure 2, migration to the cloud in 2013 was more than double what was expected at the end of The reasons for this migration will be discussed in separate sections of this paper. Figure 2 does not address the characteristics of the contact centers that have made the move to the cloud, only total number of contact centers that have made the move. In order to better understand those characteristics, Figure 3 adds another dimension to the picture by illustrating contact centers moving to the cloud by seat size. Figure 3: Contact Centers Moving to the Cloud Sorted by Seat Size Category Source: Saddletree Research As seen in Figure 3, two contact center size categories are running virtually neck and neck in terms of cloud contact center adoption. While the mid-size contact center (151-to-400 seats) has made rapid adoption advancements in 2013, it is interesting to see continued interest in the cloud from contact centers with 75 or fewer seats. The research conducted in 2012 revealed that those in the low end of the market were clearly early adopters of cloud contact centers. Of all contact centers in the cloud at the end of 2012, nearly 55 percent were those in the 75 or fewer seats category. The next closest size category in the cloud was the 151 to 400 seat size, with about nine percent in the cloud. The low end of the market was the first to recognize and act upon the benefits of the contact center in the cloud. While the mid-range market has made significant inroads into cloud adoption, this paper will focus specifically on the issues and opportunities surrounding cloud contact center with 75 or fewer seats Interactive Intelligence, Inc. 5 The Truth about the Cloud
6 Why (or why not) Move to the Cloud? With about half the U.S. contact center market expecting to have a cloud presence within the next 24 months, it is reasonable to surmise that there are a number of benefits to having some or part of the contact center in the cloud. Conversely, with around 32 percent of the market claiming to have no intention of moving to the cloud at any point in the future, there are clearly some issues to be addressed. Once again, we turned to the end-user community to determine the motivators and benefits of moving the contact center to the cloud. Filtering responses to include only those contact centers with 75 or fewer seats, we asked those with all or part of their contact center in the cloud to rate the factors involved in their decision to make the move to the cloud. Figure 4 below illustrates the results of that query. Figure 4: Importance of Factors behind the Decision to Move to the Contact Center Cloud Factor Rated Highly Important Somewhat Important Neutral Somewhat Unimportant Not a Factor Disaster Recovery 65% 25% 5% 5% 0% No Maintenance Worries 60% 20% 20% 0% 0% Ease of Management 50% 35% 15% 0% 0% Hardware Cost Savings 45% 35% 10% 10% 0% Ease of Scalability 40% 35% 20% 5% 0% Ease of Implementation 40% 40% 15% 0% 0% Usage Cost Savings 35% 35% 20% 5% 5% Automatic Software Upgrades 30% 45% 25% 0% 0% Source: Saddletree Research While benefits such as ease-of-management and maintenance tend to get a great deal of focus in pro-cloud discussions, the authors were somewhat surprised to see that disaster recovery topped the list of factors behind the decision to move to the cloud contact center. Not unexpectedly, lack of maintenance concerns and ease of software management also ranked high among factors behind the decision to move. On the other side of the argument, we asked respondents who had not yet moved to the cloud or indicated their intention to never move to the cloud what they perceived as drawbacks in moving to the cloud. The top answers are depicted in Figure Interactive Intelligence, Inc. 6 The Truth about the Cloud
7 Figure 5: Perceived Drawbacks to the Cloud Contact Center Figure 5 leaves no doubt about the greatest concern of those not moving to the contact center cloud. The issue of data security in the cloud is addressed in the following section. The Myths and Realities of Data Security in the Cloud The authors understand the reasons behind the concerns for data security in the cloud contact centers. Many of these concerns are based upon what can best be described as common myths surrounding cloud delivery of contact center solutions. This section will directly address some of the most common myths regarding the cloud-based contact center. Common Myth #1: On-premises is always more secure than the cloud. A commonly held belief is that data stored on premises is always more secure than in the cloud. The reality is (and security experts confirm) that most security breaches are due to unauthorized physical access to in-house systems. Also, the cloud vendor should provide technology that is located in hardened data centers with policies, procedures, and data protection that assure security. It is important to thoroughly look at the certifications associated with the data center. SAS70 and SSAE 16 are the most robust. Most CIOs would find that the security at the cloud provider s data center will be more robust than what they would find at most enterprise server rooms. Additionally, cloud based vendors adopt security best practices from many companies so they often employ the best of the best Interactive Intelligence, Inc. 7 The Truth about the Cloud
8 Common Myth #2: A cloud vendor won t know our business as well as we do, and they couldn t possibly provide the same level of security to meet our requirements. This is true a cloud vendor probably would not provide the same level of security you could. Typically, a cloud vendor can provide better security. The cloud vendor s success is dependent upon its ability to effectively provide the highest levels of security. Because the vendor has a broad client base, they are ready to address a variety of security and compliance issues (PCI, HIPAA, PHI, PII, etc.). Leading vendors will maintain the latest certifications industry certification at the corporate (SOX, ISO 9001, ISO 27001, JITC), cloud services (SSAE-16, SAS70, SOC2, PCI DSS 2.0 Level 1), and data center levels. Also, leading cloud vendors will have the physical facilities (Network Operations Center NOC) to proactively monitor potential security issues with dedicated resources. Companies should also look at the movement and location of their media traffic and data. It should be a given that media traffic is encrypted and recordings are stored in an encrypted format. Isolation of customers on their own virtual servers in the data center can also reduce risk. Common Myth #3: The vendor is responsible for compliance. No one party shoulders the entire responsibility for compliance. Both the cloud vendor and the customer have skin in the game. For example, there is lot more to achieving and being considered in compliance than simply being in a vendor s PCI zone and getting their Record of Compliance or the actual certificate. Processes, implementation guidelines, and business practices are all part of compliance and the customer is responsible for these areas. PCI DSS provides an actionable framework for developing a robust payment card data security process including prevention, detection, and appropriate reaction to security incidents. Credible cloud providers will be able to provide information about their PCIcompliant practices and prospective customers should ask for this documentation. However, it is important to remember that the cloud provider is only part of the equation. The processes in the contact center, performed by the agents, also come into play in evaluating overall PCI compliance. In general, organizations concerned about cloud security should ensure any cloud vendor can detail how its architecture protects their unique system, data, and certifications Interactive Intelligence, Inc. 8 The Truth about the Cloud
9 Cloud Hybrid or 100% Cloud: Configuration Considerations Our research indicates only about three percent of all contact centers with 75 or fewer seats are 100 percent in the cloud. A hybrid configuration is preferred by the vast majority of the market. A hybrid configuration, with part of the contact center solutions in the cloud and other contact center systems remaining on premise, often behind the firewall, seems to be preferable to users in order to overcome many of the perceived drawbacks to the cloud contact center as detailed in Figure 5 and discussed in the previous section. Workforce Optimization (WFO) is a natural contact center solution for residency in the cloud. We define WFO as a solutions suite with the following individual products: Workforce Management (WFM) Quality Monitoring/Management Performance Management E-Learning About 60 percent of cloud contact center centers with 75 or fewer seats have all or part of their WFO solution residing the cloud with the remaining 40 percent choosing to retain their premise solution. The majority of contact centers in our focus market have chosen to go with their cloud contact center provider for their WFO solution. Slightly more than 70 percent of survey respondents indicated that flexibility is a clear advantage to the cloud contact center. This flexibility is ideal in terms of addressing contact center solutions such as WFO that continue to evolve and grow as new applications are developed. Analytics solutions such as speech analytics, performance analytics, and text analytics represent solutions ideal for residency in the cloud as they are among solutions most frequently cited as requiring fast scalability due to rapid increases in usage. There is no right or wrong answer in terms of hybrid versus 100 percent cloud configurations. Given the conservative nature of the contact center industry, it is not surprising that the majority of the industry prefers to move into the cloud in a stepwise manner. The Return on Investment (ROI) for the Cloud Contact Center Long-term service agreements probably aren t the best approach for the small to mid-size contact center since market dynamics are different for these firms than they are for larger organizations. There are two customer profiles we see today. One is the small business (SMB) with a customer service component (department / team). Their objective in evaluating a cloud solution is typically to add contact center functionality that will co-exist with their current phone system. Or, they are looking to replace a legacy phone system with a cloud platform that supports both business users and the contact center. The other customer profile we see is small of large a small contact center that is part of a much larger enterprise but the requirement for a small-seat count may be difficult to justify with an on-premises solution Interactive Intelligence, Inc. 9 The Truth about the Cloud
10 In either case, many are just getting started with the customer service team but have big plans for growth. In fact, they don t anticipate being a small center for very long and have concerns about getting locked into a contract based on user counts will scale quickly. For most, flexibility is critical, and the ideal situation is a simple one-year contract. In general, a cloud based contact center infrastructure solution is beneficial if your organization: Is capital constrained Plans to take advantage of new functionality in order to gain a competitive advantage Needs many people to maintain an on-premises solution Needs to scale up and down throughout the year Uses or has plans to use multiple sites, which may include at home agents Factors to Consider when Selecting a Cloud Vendor Ultimately, the contact center will be measuring one thing: Will implementing this solution help deliver a great customer experience? But in terms of specifics, there are probably six key areas to investigate with any solution. 1. Proven Are the applications and services offered mature? Are they proven and reliable? Are there documented success stories, and what other companies trust their business to this solution? 2. Breadth of functionality Will you be able to access a wide array of applications and services, including more advanced solutions like multichannel (not just voice, but also and chat), real-time speech analytics, mobility, and tight integration to applications like Salesforce? Can the same cloud platform support both contact center and unified communications? 3. Simplicity Is it easy to understand the offering in terms of services and pricing? Will it be straightforward to implement, configure, and manage? What will be required of your IT resources, and what level of customization is required? 4. Reduced risk Can you try before you buy? Is there a guaranteed implementation period? Will there be a dedicated vendor resource managing the implementation? What training is available, and how is it delivered? Are 1-year contracts available? (Beware of long-term contracts!) 5. Scalability Will you be able to add users and features and enjoy long-term investment protection as your business grows? Are there upgrade paths? 6. Vendor What is the vendor s industry experience? Who are their customers? How long have they been in business and what is their financial position? What is their track record of innovation/r&d investment? What do industry analysts say about them? What are the physical facilities of their operations center like? 2014 Interactive Intelligence, Inc. 10 The Truth about the Cloud
11 Conclusion The data presented in this paper suggests the market is embracing the cloud contact center faster than all expectations, including the expectations of the market itself. The advantages of the cloud contact center far outweigh the perceived drawbacks, many of which exist in myth only. The cloud offers contact centers of all sizes the ability to quickly deploy customer service capabilities equal to those of the largest, most well-funded contact centers with minimal capital outlay and without the worry of maintenance and future software upgrades. For the smaller contact center, this is an advantage that cannot be overlooked or undervalued. While the data in this paper validates the growing acceptance of cloud solutions in the contact center, and in particular among smaller contact centers, there is also a growing understanding of strategic and tactical advantages provided by the cloud contact center. Together, these factors add up to a market that is ready to fully embrace the cloud contact center today and in the years ahead Interactive Intelligence, Inc. 11 The Truth about the Cloud
12 The Authors Paul Stockford is the President and Chief Analyst at Saddletree Research based in Scottsdale, Arizona. An industry analyst for the past 24 years, Paul has also done contact center research and analysis at Cahners In-Stat Group, Vanguard Communications and Dataquest. Paul is currently a member of the board of directors at the National Association of Call Centers (NACC), a 501(c)(6) notfor-profit industry organization based at The University of Southern Mississippi. He also serves as research director for the NACC where he is directly involved in research activities on behalf of the NACC membership. Gina Clarkin is a Solutions Marketing Manager for Interactive Intelligence and has been with the company since With nearly 20 years of experience in software and advanced technologies, her background includes roles in product marketing, product management, program consulting, and business development. Gina s current focus is on innovative technology solutions and best practices that help organizations optimize business processes for an exceptional customer experience. As a solutions marketing manager at Interactive Intelligence, Gina is responsible for the marketing strategy for the company s Business Automation offerings. Gina holds a bachelor s degree from James Madison University and an MBA from The Lally School of Management and Technology at Rensselaer Polytechnic Institute Interactive Intelligence, Inc. 12 The Truth about the Cloud
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