The Inner Circle Guide to Cloud-Based Contact Centre Solutions

The Inner Circle Guide to Cloud-Based Contact Centre Solutions Written by Sponsored by

CONTENTS Introduction: Why is Cloud computing hot?... 4 Drivers for Cloud-based Contact Centre Solutions... 6 Financial... 7 Operational... 12 Functionality... 15 Strategic Considerations... 16 Inhibitors... 17 Cloud-based Contact Centre Solutions: Terminology... 23 Implementation and Use... 26 Deciding on cloud... 26 Choosing a vendor... 28 Estimating ROI and TCO... 31 Implementation Timings... 32 Results of Using Cloud-based Solutions... 33 Market Landscape... 34 Pricing and Contracts... 36 Key market sectors... 38 Conclusion... 40 NewVoiceMedia... 41 About ContactBabel... 43 2

Table of figures Figure 1: Capex and Opex changes in UK & US contact centres, 2011... 8 Figure 2: Contact centre operating expenditure in UK & US, 2011... 9 Figure 3: What concerns do you have about cloud or hosted solutions?... 17 Figure 4: Characteristics of businesses choosing cloud and CPE... 26 Figure 5: Have cloud-based solutions made any difference?... 33 Figure 6: If you use this functionality, is it delivered through a cloud/hosted solution?... 34 Figure 7: Pricing examples... 36 3

INTRODUCTION: WHY IS CLOUD COMPUTING HOT? Having technology provided and managed by a third-party away from a customer's premises is not a new idea, with service bureaux and ASPs (application service providers) being around for many years. PBX functionality through Centrex has been available since the 1960s, with IVR and ACD functionality often being offered through a network provider too. In the past few years, SaaS (Software-as-a-Service) solutions such as Salesforce.com offer desktop functionality for the contact centre, and many solution providers now offer convincing, rich-featured applications hosted in the cloud. That cloud-based contact centre 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. Additionally, the stranglehold that incumbent CPE 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. The maturity of Western contact centre markets, coupled with the high levels of mergers and acquisitions in industries such as utilities, telecoms, insurance and finance mean that many large companies are now in a position where they provide customer contact via multiple sites, often running on disparate technologies. Cloud-based contact centre solutions allow a way out of proprietary systems, lack of interoperability and the expense of maintaining many different systems without gaining from economies of scale. For example, only 28% of multisite UK operations ran as truly virtual contact centres in 2011, although the US equivalent was greater, at 49%. The main reason stated that 51% of US multisite operations stayed non-virtualised was that there were too many different systems at each location to work together: a problem that cloud-based contact centre solutions address. The general lack of investment within the past few years is now showing in many contact centres, yet capital expenditure is still not forthcoming. The avoidance of large capital investments, and reduced start-up costs associated with cloud solutions is of great interest to many organisations, as is the reduced risk of trialling new functionality, and inherent future-proofing that cloud offers through frequent technology upgrades. 4

Start Listening Personal and efficient customer service is the lifeblood of any organisation and NewVoiceMedia s ContactWorld and ContactWorld for Salesforce makes every customer s telephone interaction a great experience, at a fraction of the cost of traditional systems. Business Benefits of ContactWorld: Always available: Market leading 99.999% availability delivered from UK data centres. Greater flexibility: Customise, react, adapt and scale quickly and easily. Simpler management: No requirement for IT specialists and engineers. Increased visibility: Get a real-time window into your entire operation. Cost efficiency: No capital outlay, scalable contact centre that suits your business and budget needs. Multi-tenant infrastructure: Functionality available to all users. Improved support: Dedicated experts available 24/7 to respond to queries. NewVoiceMedia is currently active in 28 countries with over 140 customers. Let your customers do the talking www.newvoicemedia.com +44 207 206 8888

DRIVERS FOR CLOUD-BASED CONTACT CENTRE SOLUTIONS The many potentially-positive factors driving the uptake of cloud-based solutions can be grouped into four areas: Financial, Functional, Operational and Strategic: Financial: how does cloud affect the investment and ongoing expenditure connected with technology and the operations of the contact centre? Functional: what is the effect of cloud-based solutions on the functionality available to the contact centre? Operational: what are the changes in the way in which the contact centre is able to operate? Strategic: how are wider concerns of the business addressed by having contact centre functionality within the cloud? 6

FINANCIAL Cloud-based solutions are sometimes thought of as having a pay-as-you-go financial model that allows business of all sizes to move away from high front-end expenditures in favour of a more manageable operational expenditure approach without any overspending. While some solution providers offer this, to varying extents, it is by no means universal. It is perhaps better to consider the financial opportunities of cloud as being related more to shifting expenditure from capital expenditure (Capex) to operational expenditure (Opex) Small and mid-size companies in particular typically do not have the ready access to cash to make the necessary capital expenditures for expensive CPE. As a result, making the shift from Capex to Opex is especially relevant for these firms. Recently, poor economic conditions have affected companies and finances, and some organisations that would have been previously less likely to have considered Opex investments (e.g. public sector, utilities companies) are now doing so, as many large Capex projects have been shelved indefinitely. Cloud offers contact centres a way forwards without relying on capital investment: Businesses can scale down future customer premises equipment (CPE) investment, with a resulting decrease in capital expenditure There is also an opportunity to buy services using a pay-per-use or even pay-as-you-talk pricing model, which helps to keep operating expenses to a minimum Additionally, issues surrounding the total cost of ownership of CPE do not arise with hosted solutions: outright purchase of equipment isn t for everyone, perhaps for reasons of budget or the ability to maintain the systems Low-risk ability to start up or move or expand without risking existing business plans Business retain the freedom to downscale change targets and plans to meet demand, rather than commit themselves to long-term arrangements needed to justify the purchase approach of high value CPE. 7

Figure 1: Capex and Opex changes in UK & US contact centres, 2011 Capex and Opex changes in 2011 (UK & US) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 3% 6% 3% 1% 7% 8% 11% 10% 11% 20% 27% 24% 17% 25% 30% 49% 47% 12% 12% 6% 18% 16% 8% 13% 2% 2% 6% 6% UK Opex US Opex UK Capex US Capex Increased by 25%+ Increased by 10-25% Increased by <10% No change Decreased by < 10% Decreased by 10-25% Decreased by 25%+ Recent ContactBabel research carried out with more than 400 US and UK contact centre operations shows that investment levels and budgets are still in the doldrums. Almost 1 in 5 US operations had their investment budgets cut by more than 10% in 2011, even though many businesses believe that they have weathered the worst of the economic storm. These figures show that the cut in investment has not led to a loosening of the purse strings where Opex is concerned either, with a rough balance between those increasing and decreasing their ongoing spend. 8

Looking in more depth at Opex, we can see that it is typical for total salaries to account on average for around 70% of a contact centre's Opex, with much smaller elements spent on IT, telecoms, training etc. Figure 2: Contact centre operating expenditure in UK & US, 2011 Contact centre operating expenditure, US & UK, 2011 Recruitment 2.3% Utilities & local taxes 2.6% Training 3.2% IT maintenance 3.6% Telecoms charges 4.7% Rent 4.8% Other salaries (e.g. management & IT) 13.4% Other 8.5% Agent salaries 57.0% In current circumstances, we can see that for many businesses Capex is tight or non-existent, and Opex budgets are rising very slowly, if at all. The positive financial impact of cloud-based solutions is built on shifting from Capex to Opex, but the question is: if Opex is also closely-controlled, surely a business won't countenance a big jump in spend, even if it is shifted into a monthly operating budget? If this is true, it is worth considering how a movement from CPE to cloud-based solutions could impact on expenditure in each of these Opex categories, thus reducing or substituting existing expenditure within the Opex budget and freeing up budget with which to pay the cloud provider. Agent salaries: At 57% of Opex, any small change in salaries will make a large impact on overall spend. At first glance, shifting technology from CPE to cloud doesn't look like it will impact on agents at all. However, moving to cloud means that companies can be more flexible in their staffing arrangements, either through having agents in lower-cost locations (either onshore or offshore), and by supporting a more volume-driven staffing schedule (e.g. by having homeworkers log on for short shifts when they are needed, rather than the full eight hours). Seasonality is also addressed, through being able to add and shed agents as needed. Cloud offers various ways to reduce or otherwise manage overall salary costs, through contact centre virtualisation in all of its forms. 9

Other salaries (e.g. management & IT): Businesses can experience a decrease in development costs and attendant IT management salaries, as cloud solution providers will already have solutions up and running. Moving physical hardware off-site also means that maintenance requirements will no longer be an issue for the contact centre. Furthermore, for multisite operations, moving to the cloud will offer greater opportunities for having a singlecross-site management team in place, with call routing and self-service controlled at a single point, reducing management costs as well as improving consistency and increasing the available labour pool. Infrastructure and processes which are held in the cloud can avoid issues which CPE resources can experience, such as unnecessary duplication across multiple sites and a corresponding increase in management costs for configuration, administration and performance checking. Rent, utilities & local taxes: Although businesses are usually tied into contracts for their premises, a cloud approach to technology means that a growing business can look for value elsewhere if a new operation is to open; or a contract break occurs, without the upheaval and downtime associated with moving on-site hardware to another location. Moving equipment to the cloud will reduce energy expenditure. Telecoms charges: Call queuing at the network level also saves money. In multi-site operations - rather than pass a call down to a contact centre which may not have an agent immediately available to take the call it makes sense to queue the call at the network level until an agent is capable and available to take it. The call is then passed once to the agent in the specific contact centre. IT maintenance: Cloud-based solutions can mean that the need for large server farms is reduced or removed, lowering the cost of hardware and maintenance. Software upgrades are carried out at a network-level, reducing cost and upheaval. Training & Recruitment: Cloud does not offer a great deal of opportunity for saving costs on training, although there may be some opportunity for recruitment savings based on having the ability to locate contact centres or homeworkers anywhere, including in lower cost areas. 10

Other expenditure: Apart from these instances of reduced Opex, cloud offers other opportunities to cut down on unnecessary expenditure, including: Operations with fluctuating traffic (either on a seasonal or more frequent basis) do not have to buy sufficient software licences and telephone line capacity to cover the peaks, as many cloud providers offer the possibility of adding short-term licences on a pay-as-you-go basis The cloud allows users cost savings associated with not having to own or run their own hardware. Although servers may be a commodity purchase, the energy costs involved in running them can far outweigh the initial purchase and 85% of computing power generally sits idle in any case. End-user question: "Where do the biggest cost savings come from?" (Utilities company) Multi-tenancy and IP ownership offer the biggest cost advantage. The ability of the provider to deliver greater utilisation of hardware and operational costs through true cloud and multi-tenancy ensures a lower per customer cost. The cost for an individual company to build and maintain an infrastructure that delivers equivalent functionality is significantly more, not to mention the costs of redundancy, security and performance, which are all included in the Cloud providers pricing. True Cloud is also significant; True cloud providers build and maintain their own code base. This is important as there are no licence fees to pay to the software providers, allowing Cloud vendors to amortise development costs over their entire user base; in addition owning the software allows true cloud vendors to make continual feature improvements to their service, with updates as often as every 2 weeks. Companies who use a mixture from different vendors of on premise Contact Centre technologies will be paying (both time and cost) to keep software levels compatible between products, however using a single cloud provider this is a problem and cost that does not exist. Other cost savings come from administration, hardware and software maintenance, infrastructure costs (power, cooling, etc) and management (patches, upgrades, testing, etc), redundancy and security. 11

OPERATIONAL On a day-to-day basis, cloud-based contact centre solutions can theoretically offer a better service level and a simpler environment for businesses to operate in. Reduced need for IT support and implementation: Having hardware and software based in the cloud means that ongoing system maintenance is significantly reduced, as it is the duty of the cloud provider to handle such matters. This is also the case in terms of implementing new systems, with users generally stated to be up and running in days, although of course the level of customisation is often far less than that in a CPE environment with dedicated IT and business resource available. Larger pool of agents to choose from: Treating multiple contact centres as a virtual contact centre allows great efficiencies can be made through economies of scale. This is especially true where businesses are using skills-based routing. All agent competencies are displayed to the scheduler regardless of agent location - who can be more flexible, simply because the available resource pool is so much more deep. Short-term scalability: The cloud offers great flexibility in adding or shedding agents and user licences, of particular relevance to businesses which have substantial changes in call volumes over a year (such as the seasonality experienced by retailers and travel agents) or which have to react quickly to handle event-driven call spikes (e.g. an emergency weather-drive situation affecting utilities companies). Scalability is key: many contact centres want to be able to gear up and down to suit business demands and cope with peaks and troughs without unnecessary expenditure, and with cloud-based solutions they can do this on a daily basis if necessary, instead of spending on capacity that they may not use for months. Centralised management: In a multi-site, cloud-based environment, self-service and call routing scripts can be held centrally to increase the speed to alter these as required, and also to maintain consistency across sites. Infrastructure and processes which are held in the cloud can avoid issues which CPE resources can experience, such as unnecessary duplication across multiple sites and a corresponding increase in management costs for configuration, administration and performance checking. 12

Case Study SHL Shows a Talent for Customer Care using NewVoiceMedia Cloud Contact Centre Solution SHL provides behavioral and ability assessment tools and services in 30 languages. The company s mission is to demonstrably improve the effectiveness of organisations through objective measurement, and with operations in more than 50 countries and across more than 30 languages, SHL supports people decisions in more languages and more countries than any other talent management provider. Headquartered in the U.K., SHL was founded in 1977 and serves up to 10,000 customers globally each year. Historically, SHL supported its customers via service desks in more than 20 offices worldwide. This not only proved expensive to operate, it also made it very difficult to deliver a consistently compelling and rewarding service experience, and there was no analytical reporting mechanism to evaluate the effectiveness of the global operation. Provide consistency of support and optimise efficiency Challenged to restructure costs and revaluate service standards, SHL decided to bring its service desk offering in-house in a bid to provide consistency of support and optimise efficiency. Many of the offices had as few as two call handlers, and it was not commercially viable to sustain this modus operandi. To this end, SHL took the strategic decision to consolidate its service desks from the multiple, fragmented environments to just three: one in Stockholm (to service the Nordics customer base), one in the U.K. to support European, Middle east, and Asia Pacific customers and one in the U.S. dedicated to the North and South America market. A South African hub followed later and was brought on line in less than 48 hours. All would use uniform standards and processes. SHL also wanted a system which would process calls seamlessly round the clock from more than 20 countries into the U.K. hub; agents also needed the flexibility to recognise where the call was coming from prior to the customer engagement. However, according to Jag Tucker, Global Front Office Operations Manager, SHL, one of the most demanding requirements was time to market. To ensure we delivered a consistently rewarding service experience, we wanted the solution to be deployed within an eight weeks timeframe from design to implementation, he says. It also had to meet robust budget targets and disaster recovery objectives. SHL selected the ContactWorld platform, an enterprise class contact centre, delivered via a true cloud model, by NewVoiceMedia. The solution seamlessly integrates telephony to Salesforce CRM the bedrock of SHL s customer relationship management (CRM) strategy. Unlike a traditional contact centre, where the hardware can be expensive and takes months to implement, SHL s hosted contact centre implementation uses a remote cloud-based telephony system to provide the links and call plan intelligence between the caller and agent. SHL didn t need to pay out any additional capital expenditure; it was able to only pay for what it uses on-demand. There are also no hidden costs for maintenance as NewVoiceMedia takes full responsibility for the infrastructure. NewVoiceMedia s cloud computing approach made all the difference, says Jag. They could number source globally and port or redirect any of the existing SHL numbers to any one of their platforms. The company was willing to meet our time frame of eight weeks from design to implementation, and their costs were considerably less than traditional on-premise providers. Increased efficiency and improved caller experience Inbound calls are announced to the agent with a link to the caller s details; and customer data held in Salesforce is used to intelligently route calls to the most appropriate agent or team. This dramatically increases SHL s efficiency and improves the caller experience. The SHL UK agents collectively speak more than 30 languages; ContactWorld for Salesforce identifies the region a call is coming from and directs it to the appropriate agent which speaks that language. This allows SHL to provide a world class call centre to support their business. ContactWorld for Salesforce gives SHL agents a single, easy to use interface to manage calls and customer contact information, Jag explains. Value-based routing functionality gets the right agent talking to the caller the first time; returning callers can be prioritised in any queue; and the SHL agents can schedule tasks to make outbound calls. Moreover, individual caller treatments make the caller feel special and increase up-selling/cross-selling opportunities. Significant benefits from using ContactWorld By standardising on the NewVoiceMedia cloud-based contact centre solution, SHL has been rewarded with a raft of other benefits: Increased agent satisfaction: SHL has experienced only four percent staff turnover since introducing ContactWorld for Salesforce More than 90% of calls answered within 20 seconds globally Led to average 1.3 percent call abandon rate Reduced average call waiting time to only 14 seconds globally Achieved 95 percent first time resolution Led to speedier calls and informed greeting to a known customer before they have given any contact details All intelligent voice recognition (IVR) voice prompts have been transformed to a new streamlined approach with professional recording artists Reliable service delivery: calls can be redirected seamlessly anywhere in the world in a few clicks

End-user question: "Does cloud make it any easier to implement virtual contact centres or multichannel/ social media? If so, how?" (Retailer) The answer is a 100% yes. Typically a cloud based contact centre is the central location where all calls, emails etc are delivered to. Therefore distribution of calls to any sites can be achieved simply by knowing the phone number or browser where the agent is located. Once it has been established what skill is required for the call or other media type then it doesn't matter where the agent is located as long as a phone and network path exists to send the contact. 14

FUNCTIONALITY Cloud-based applications may allow businesses greater opportunities to implement new technology, a point of particular importance to the traditionally-overlooked mid-sized contact centre sector. Trial new applications quickly using a low-risk pilot: Contact centres can expand, move, increase size or try out new functionality without the high initial set-up costs. Using a pay-per-use model allows businesses to start a contact centre or move at low risk or increase for a temporary campaign or try out new functionality without having to spend excessive amounts of time and money first. This is especially true for new and usually expensive applications such as speech recognition which can be a very expensive solution to implement at a CPE level. The hybrid cloud model (a mixture of CPE and cloud) is often used to migrate existing applications to the cloud once the decision to upgrade or replace existing CPE functionality is made. Amongst the biggest gainers from cloud technology are mid-sized contact centres, a market which many vendors have been failing to address for a great number of years. Solution providers which have deep and rich functionality aimed at the high-end of the market have been reluctant or unable to offer similar features to smaller operations at a price point that is acceptable to both parties. Cloud-based solutions mean that this market becomes potentially profitable to vendors: for example, the customisation of cloud-based offerings can be far less, which means that overall cost for the smaller operations is less than in a CPE environment, as vendors gain from the economies of scale associated with multi-tenancy. Future-proof: A competitive, open cloud environment should mean that vendors will be motivated to innovate and provide better service. Cloud solution providers have continually to enhance and develop their services which bestows a competitive advantage to business users who can deploy the latest technology and the often inherent advantages of improved functionality, service and reduced costs, through their contact centres. In effect, a hosted solution removes the technology stranglehold experienced by many contact centres with CPE and allows them to concentrate on their core business as this release of frequent new functionality can be used to achieve a strategic service advantage. In a CPE environment, upgrades to applications are carried out under ongoing maintenance contracts. Upgrading one element may cause a knock-on effect requiring other applications to be upgraded as well, a task which can be long and expensive. Cloud-based providers update applications on an ongoing basis. 15

STRATEGIC CONSIDERATIONS Apart from the day-to-day improvements in the functionality and operations that cloud-based solutions can provide, wider impacts have to be considered as well. Disaster recovery: Ensuring business continuity during outages, facility emergencies and inclement weather is a critical requirement. Cloud-based contact centre models ensure business continuity by enabling agents to be connected to the technology platform and necessary applications from anywhere with Internet access. Even in an outage, companies maintain the ability to service and sell to the client base, undermining what could otherwise be a disastrous situation resulting in lost revenue, dropped calls and negative customer experiences. Cloud solutions eliminate the costly and time-intensive process of building and maintaining a back-up site from which to take calls and deal with emergency situations, and superior solutions are fully-redundant, with complete disaster recovery and business continuance delivered from multi-site locations. Cloud solutions can also provide back-up disaster recovery protection to centres which prefer on-site CPE or a hybrid model, as reserve protection. Cultural considerations: Making the move to cloud is a far bigger proposition than deciding whether to implement or replace a particular contact centre application such as call recording or workforce management. The decision can be as much cultural and political within an organisation as it is technological or operational. As the report will show, the perceived security and data privacy issues around cloud are always present in any such discussion, and a lack of confidence or understanding of the reality around these issues, especially in the higher echelons of decision-makers, can veto the move to cloud, regardless of the financial or functional arguments put in its favour. The move to cloud has similarities to the decision-making process around IP that many contact centres have been through in the past few years: it may not be related just to the contact centre, but other business areas too the technical elements of the decision may not be easily understood by business-focused executives concerns about security and reliability are frequently aired the general movement of control away from the enterprise to a third-party can cause uneasiness final decisions may not be made from within the contact centre environment. In the case of IP, 40% of contact centres in the US and UK state that the move to IP was a corporate decision, not a contact centre decision. Although the case for cost reduction via a single IP network was stated to be the most important factor in the final decision, corporate sponsorship (or lack of it) was placed at no.2. 16

INHIBITORS Despite the generally positive experiences that most users of cloud & hosted 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. 21% of non-cloud-based respondents state that data security in the cloud is of great concern to them, down on last year's figure of 30%, which shows that greater education and understanding about risks and successful cloud projects (e.g. CRM) is making an effect. Some cloud-based solutions allow clients to keep call recordings and sensitive customer information on their own site, whereas most others provide externally-audited and accredited dedicated security that can surpass on-premise offerings. The difficulty in integrating with existing systems, and to a lesser extent, loss of control is also of concern, although most respondents rightly do not consider a lack of reporting to be a deal-breaker. 47% had some concerns that existing investments would be wasted if they were to move to cloud, although many solution providers offer a solution that can work alongside existing CPE elements, such as a PBX. Solution providers should continue to focus their efforts on demonstrating the strength of their security measures, and reassuring potential users of cloud and hosted solutions that the security measures in place are actually stronger than would be feasible within a fully premise-based operation. Concerns about the practicality of integrating with existing systems should also be addressed. Figure 3: What concerns do you have about cloud or hosted solutions 1? 1 Data from "The UK Contact Centre Decision-Makers Guide 2012" (ContactBabel) 17

Security The greatest concern around cloud-based solutions - particularly in multi-tenancy, public cloud environments - is around security, both from attacks from outside or within the service providers' organisations, or through poorly-designed security allowing data leaks without a sinister motive being present. Allowing a third-party to be in control of a businesses' data security is a major cultural and technological change to the way most businesses and IT departments operate. Organisations should expect that data should be at least as secure in a third-party environment that is dedicated solely to providing a high-quality cloud-based service, as this is one of the factors by which the solution provider will succeed or fail. Potential cloud clients should look for: multiple levels of firewall protection continuous intruder detection systems a two-person rule for changes to code or hardware frequent scheduled password changes external testing and audit trails data encryption used both in storage and in transit, under the control of the user additional layers of user authentication and privilege vetting of employees with access to sensitive information or hardware internal traffic and server monitoring. Businesses should make sure to ask their cloud provider what data encryption levels are operated, and whether the customer is given control of the data encryption key. Data should be encrypted at all stages, when travelling over the network between business and the database, and also when it is in the database and any back-up databases too. US organisations may wish to check that providers are FIPS 140-2 certified, and compliant with PCI-DSS, Sarbanes-Oxley, IFRS, HIPA and any other regulatory requirements. Some elements to consider asking about include: Security: the cloud provider must have a strong security management system based on an internationally-accepted security framework Usage: make sure customer data is used only as instructed or to fulfil the cloud service provider s legal requirements and that governance and role-based access management policies, and ongoing process testing procedures are in place Data ownership: make sure the cloud provider claims no ownership rights to customer data Payment functionality: some providers (PCI DSS Level 1 compliant) can process payments themselves in the cloud via IVR, whereas others work with call recording companies to pause recording when relevant Disclosure: the cloud provider must only disclose customer data where required by law Geographical data location: the cloud provider must specify the locations and countries in which data will be stored. Physical protection of the data centre(s) should also be considered Auditing: the cloud provider must use third-party auditors to ensure compliance, both physical and technological. Readers may also like to be aware of the policies and aims of the Cloud Security Alliance (https://cloudsecurityalliance.org/). 18

End-user question: "How do we know customer data can t be shown to other clients or hacked into? Is browser-based technology really secure? What sort of guarantees / certification should we look for?" (Medium-sized financial services organisation) Companies should look for suppliers who have achieved accreditations such as PCI DSS Level 1 and if integration occurs between the Contact Centre technology and the CRM platform then both these suppliers should have set a security standard together and regular audit testing is completed. It is likely that the only real customer data a cloud based Contact Centre will store will be the voice recordings. It is advisable to use a payment solution that both stops recording and removes the advisor from hearing the payment details. All other data stored within the Contact Centre platform is usually only configuration based data that is the logic to determine what treatment to give callers and where to route the call, so really does hold a minimum risk. Therefore it is still necessary to only select Cloud based Contact Centres that can show a very comprehensive security layer between the internet and application, database and storage servers. Firewalls, Session Border Controllers and the ability to restrict access by users to only the areas of the system they should have access to are just a few basic requirements. The most common forms of security gap are caused by human error, therefore strict enforcement of the IT policy to regularly change passwords, enforce use of special characters in passwords, deactivate unused accounts and run regular security audits are all best-practice type processes which can be run on cloud based services in the same way as on premise platforms. 19

Integration Being able to continue using relevant existing CPE systems, and access databases and back-office systems is a minimum requirement for all businesses considering cloud-based solutions, and one which is of great concern to 1 in 6 contact centres, with a further 31% have some concerns. As all businesses are unique, there is no generic solution to this, but many cloud providers have pre-built integration with leading CRM applications such as Salesforce.com, MS Dynamics, SAP and Oracle CRM, and web service APIs enable customers and technology partners to create tightly-integrated contact centre applications. Potential cloud-users with multiple, complex systems should not underestimate the effort and potential cost associated with integrating these CPE systems with those in the cloud, and this should be factored into any TCO/ROI calculations. End-user question: "We have concerns that integrating with our CRM, back-office systems and bespoke applications may be very difficult." (Medium-sized insurance company) It is true that integration between a cloud platform and back end (on premise) systems can be challenging, therefore it is important to deploy a strategy that keeps data in the most suitable locations and can be linked through the use of unique identifiers. For example. An incoming caller can be identified through use of CLI or capturing an account code, and can be given dynamic routing treatment or self service functions through a web service layer (between the back end system and the cloud based contact centre). Of course this does usually require some software development unless you go for a strategy to move your CRM data into a platform that has native integration into the Contact Centre. The key thing is to try to avoid any complex CTI integration based on client/server proprietary protocols and use web based interfaces to transfer the CTI data between Contact Centre components to CRM components. 20

Control, visibility and reporting Loss of control is of as much concern to businesses as fears over integration. A service provider may not be as responsive as an in-house team, and it may take hours or even days to make changes to the system. It is also the case that the solution provider upgrades or implements new functionality as and when they wish, in the case of the multi-tenancy model, and backing up the system is also something that the solution provider becomes responsible for. It is vital that such issues form part of any agreement between the client and the cloud solution provider, with expectations of the provider's speed to react stated and agreed in writing before any contract is signed. Some cloud vendors provide complete visibility of their service availability and performance through web-based dashboards. Reliability and performance Cloud clients depend upon the solution provider to maintain a high level of service reliability, availability and uptime. This means there must be data centre redundancy and geographical separation, and enforceable service level agreements. Service providers will test their systems on an ongoing basis, and a few will even guarantee their availability to 99.999% (the '5 9s target of carrier-grade availability), backed by penalties if they do not achieve this. This level of reliability is the standard for very large contact centres which have paid significantly for this in a CPE environment, but is likely to be an improvement on what SMEs are used to, with their much smaller budgets. The nature of cloud-based systems - that they can be accessed from anywhere by anyone with a browser - means that problems at the client's premises can be circumvented by physically moving staff elsewhere. Potential users of cloud-based solutions should be aware of what they are comparing when they place vendors side-by-side for reliability assessment. Some vendors include the necessary downtime associated with maintenance and upgrades of an instance, others only count unscheduled downtime. Potential clients should make sure that the provider's infrastructure is load-balanced and over-provisioned relative to the number of users to ensure resilience and consistent levels of performance. There is a risk that some providers add new clients without adding new hardware or other supporting systems (which would obviously be more profitable), and this would negatively affect the response times of the applications. End-user question: "Do you require any software to be downloaded onto the agent desktop? If not, how do you guarantee the speed of a browser-based solution, especially in a scripted conversation which requires immediate processing?" (Outbound telemarketing company) Some cloud based contact centre platforms will require a download, but others will just use a standard internet browser, therefore speed is not an issue. Scripting tools can still be browser based and not require any download. Speed issues can occur as a result of poor internet links, if deploying cloud solutions it is good practice to ensure the supplier can run some quality of service testing with you to ensure the contact centre network traffic is routed for optimum performance. 21

Functionality It has been the case in the past that not all cloud-based applications have as much functionality as high-level CPE equivalents. This differs greatly from provider to provider, and of course businesses need to decide which pieces of functionality are vital, and which are worth foregoing to gain the benefits of cloud-based solutions. Customisation in multi-tenancy environments is obviously far more limited than with a CPE delivery model and the cloud provider may not be able or willing to support unique customisation requests. Having said that, the vast majority of functionality that contact centres require will be available through a cloud-based model, and the prevailing opinion is that with the level of competition in this area, cloud providers will be more likely to update and innovate to keep ahead of the game. The vendors' responses to this question can be seen earlier in this report, or in the Appendix. Potential clients should look closely at the vendor's financial position and backing to make sure that the quality of service and level of innovation can be maintained in the future, also that they have the technological expertise in-house to keep making these improvements. Cost It may seem strange to put 'cost' as a potential inhibitor, but hosting for long time (more than 3 years for example) may end up costing more than purchasing the technology outright. The truth of this will be determined in the TCO/ROI study that will be undertaken before any decision is made about cloud, and will need to include related elements such as the cost of system and application updates, as well as the greater benefit and lower cost associated with more frequent upgrades and recent functionality. The cost of terminating a contract should also be considered as a potential risk element in the cost equation, if the move to cloud does not work out. 22

CLOUD-BASED CONTACT CENTRE SOLUTIONS: TERMINOLOGY The modern contact centre has a multitude of applications supporting it, with hardware, middleware and networking equipment around and inside it. The traditional method of deploying these resources has been on a CPE basis, with the business's IT resource implementing and maintaining it. Now, the vast majority of this equipment, functionality and supporting resource is available in a third-party hosted environment, one of the various types of cloud-based delivery. Broadly, there are five types of technology that contact centres have, although not all subscribe to all of the functionality within them of course: Contact centre functionality: ACD/PBX-type functionality (including call routing and queuing), CTI, IVR (routing and self-service), outbound dialling Desktop applications: CRM, customer management systems, helpdesk applications, agent desktop, knowledge bases, multimedia response applications, scripting, web chat & collaboration Management applications: workforce management, QA/QC, call recording, speech analytics, reporting, MIS and business intelligence, elearning, workforce optimisation Enabling technology: security, databases, middleware, IP networks and other common architecture or hardware Other hardware: IP phones, PCs or desktop terminals, headsets etc. Cloud-based solutions are the latest in a line of alternatives for businesses to owning and running their own technology. Here are explanations of some of the terms that readers may have encountered in researching cloud-based contact centres. Cloud is the delivery of computing and storage capacity as a service to different business, organisations and individuals over a network. It is often said to consist of Infrastructure as a Service (IaaS) - servers and storage space, Platform as a Service (PaaS) - operating systems and web servers, and Software as a Service (SaaS) - the functionality of software available on demand without the need to own or maintain it. The Cloud is characterised by huge scalability and flexibility, shared resources, a utilities approach to billing (pay for what you use, for example) and an abstraction of obvious infrastructure. There are various deployment models: o Public cloud: applications, storage, and other resources are made available by a service provider, often offered on a pay-per-use model. Public cloud service providers own and operate the infrastructure and offer access via the Internet. o Private cloud: infrastructure operated solely for a single organisation, whether managed internally or by a third-party and hosted internally or externally. They require management by the organisation or its third-party o Virtual private cloud: a deployment model that pulls in public cloud infrastructure-as-a-service (IaaS) while running the application on-premise or in a private cloud, in order to improve disaster 23

recovery, flexibility and scalability and to benefit from Opex-based costing while avoiding expensive hardware purchases o o Community cloud shares infrastructure between several organisations from a specific community with common concerns (security, compliance, jurisdiction, etc.), whether managed internally or by a third-party and hosted internally or externally. The costs are spread over fewer users than a public cloud (but more than a private cloud), so do not gain as much from cost reductions. Hybrid cloud is a composition of two or more clouds (private, community or public) that remain unique entities but are bound together, offering the benefits of multiple deployment models. By utilizing "hybrid cloud" architecture, companies and individuals are able to obtain degrees of fault tolerance combined with locally immediate usability without dependency on internet connectivity. Hybrid Cloud architecture requires both on-premises resources and off-site (remote) server based cloud infrastructure. SaaS (Software as a Service) is a model of software deployment whereby a provider licenses an application to customers for use as a service on demand. SaaS software vendors may host the application on their own web servers or download the application to the consumer device, disabling it after use or after the on-demand contract expires. The on-demand function may be handled internally to share licenses within a firm or by a third-party application service provider (ASP) sharing licenses between firms. On-demand licensing and use alleviates the customer's burden of equipping a device with every conceivable application. It also reduces traditional End User License Agreement (EULA) software maintenance, ongoing operation patches, and patch support complexity in an organisation. On-demand licensing enables software to become a variable expense, rather than a fixed cost at the time of purchase. It also enables licensing only the amount of software needed versus traditional licences per device. SaaS also enables the buyer to share licences across their organisation and between organisations, to reduce the cost of acquiring EULAs for every device in their firm. Using SaaS can also conceivably reduce the upfront expense of software purchases, through less costly, on-demand pricing from hosting service providers. SaaS lets software vendors control and limit use, prohibits copies and distribution, and facilitates the control of all derivative versions of their software. The sharing of end-user licenses and on-demand use may also reduce investment in server hardware. Hosted solutions have similarities to SaaS in that the application is hosted off the customer's premises, but may not actually be managed by the ASP. A hosted solution may be an individual instance of an application running on a single server dedicated to the customer, restricted in scalability by its finite nature. Although this may allow greater control and flexibility, it can be more expensive and there is less redundancy. It may be thought that all SaaS solutions are hosted, but not all hosted applications are SaaS. Network-based solutions are marketed as solutions with equipment physically located in multiple locations, permitting users to access the various services via a combination of the contact centre s internet connection and the standard PSTN networks. This allows complete geographic independence and disaster recovery (DR) solutions. 24

Multi-tenancy is key to an understanding of cloud-based solutions. It refers to where a single instance of the software runs on a server, serving many customer organisations (tenants). Client's data and configuration are separated virtually but the same actual hardware, software versions and databases are used. Multi-instance occurs where separate software instances or versions (and possibly actual physical hardware) are provided for each individual business. Hardware virtualisation masks from users the physical characteristics of the platform, hosting multiple isolated instances of an application on one or more servers. The same image can be used on multiple sites, whether customer-owned or hosted. End-user question: "We've heard of community clouds, where the cost and resources are shared between several companies. How is this organised? Do we have to find our partners ourselves?" (Public sector) True cloud providers will be sharing the same technology infrastructure across multiple customers and therefore the ability exists to reduce costs to serve as a core benefit. 25

IMPLEMENTATION AND USE DECIDING ON CLOUD 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 fulfils the contact centre's need. 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 cloudbased solutions. Figure 4: Characteristics of businesses choosing cloud and CPE More suitable for Cloud More suitable for CPE Fluctuating call traffic (e.g. seasonality) that requires flexibility in adding & shedding agents Planned addition of new sites and/or homeworkers Looking to add functionality and/or have technology at end-of-life Multi-site locations that could benefit from consistency of technology and management Innovative and risk-taking culture aimed at gaining competitive edge Simpler reporting & routing More standardised back-office integration Willing to look at Opex model of funding Do not have enough experienced IT staff to implement, support and maintain desired systems Willing to cede some control over privacy and security to third-parties More predictable traffic that does not require changes in agent numbers Stable contact centre environment in terms of headcount and location Have made substantial and recent investments in technology Single-site location or no need to virtualise Conservative cultural approach to new technology and risk management Very complex routing & reporting requirements Sophisticated and deep integration with backoffice systems, developed over many years More comfortable with Capex model Have a lot of experienced IT staff Culturally unwilling to relinquish control over privacy and security 26