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For Contact Center Infrastructure, Hosting Becomes the Life of the Party
A new study from DMG Consulting finds the market will rapidly expand, with 30 to 35 percent of all new contact center seats being hosted by 2011.
Posted Apr 23, 2008
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While the projected slowdown in the U.S. economy has many companies wondering just how much their operational and capital budgets may be slashed, customer service executives may have just found in a new friend in the hosted contact center infrastructure market. According to new research from DMG Consulting, a slowdown would drive an ever-increasing share of the market toward those solutions, due to enterprises' decreasing funds for capital investments in order to prepare for the economic crunch. Donna Fluss, president of DMG Consulting, explains that the study, "2008 Hosted Contact Center Infrastructure Market Report," only examines one aspect of the hosted contact center market -- namely infrastructure, the core automatic call distribution functionality which is of paramount importance to any well-run contact center operation. Fluss goes on to stress the hosted contact center market has been in existence, but adoption has not been high thus far. According to statistics from the study, there are approximately 385,352 seats of hosted contact center infrastructure currently in use around the world, a market penetration rate of 3.2 percent. The DMG study concludes that we can see a quick jump in this statistic -- in 2008, the number of hosted contact center infrastructure seats is forecasted to increase by 20 percent to 25 percent. Looking even further, 2009 is forecasted to realize more growth -- DMG predicts a 25 percent to 30 percent increase. The relatively small penetration rate has great potential to grow now in a slowing economy because capital budgets, according to Fluss, are primarily used to fund technological investments. In times of a recession, these capital budgets are tightened, causing executives to make tough decisions as to what to pursue and what to cut. However, in a business world increasingly differentiated by who provides better customer service, cutting funding for contact centers would be a tough pill to swallow. "In a recession, you still need core [technology]," Fluss explains. "In the case of the hosted and SaaS markets, you can rent instead of purchase. Then you don't have to use the capital budget, but rather the operational budget which generally does not have to receive approval by corporate investment committees."
Approvals aside, the DMG study also finds that payback and ROI come quickly with hosted contact center solutions. Statistics conclude that the average payback for these solutions are between two months to six months, and the "quantifiable benefits, when compared to costs, can produce a return that is two to three times the original investment," according to the study. Fluss explains that being able to hit these key thresholds will also put the hosted contact center infrastructure in the forefront of executives' minds -- and wallets. "[The quick payback and ROI] is another reason why [the hosted market] is very compelling," she says. "In a recessionary economy, investments must pay for themselves much quicker." Cost savings and quick returns on investment are huge stimuli for the market, but Fluss maintains that the improvement of IP-based solutions and the feature-rich nature of hosted contact center infrastructure solutions, which can be leveraged over multiple sites and multiple channels, are also of paramount importance to the market's rise. The study notes five vendors in the hosted contact center infrastructure space that are, as Fluss describes, the "best of the mix." The vendors are:
  • Aspect Software;
  • Cisco Systems;
  • Oracle;
  • United Carrier Network; and
  • the West Interactive division of West Corp.
Fluss is quick to note that there are many players fighting for market share in this space, but that these five vendors are the true "movers and shakers." However, there is no de facto leader in the hosted contact center infrastructure space -- yet. "There is no one leader in the pack," she adds. "[Each vendor's] offering is very diverse."

Related articles: Contact Center Surveying Is Essential The surveying market may be fragmented, but that doesn't diminish its importance. Ahead of the Innovation Curve: On-Demand Contact Center Platforms LiveOps' Spring 08 On-Demand Call Center Platform comes amid widespread thinking in the industry that customer service's future lies with hosted and managed contact centers. Oracle Explores the Power of One Single-tenant architecture for the on-demand world gets a powerful enterprise advocate in a new edition of Oracle's Siebel. Australia: Leading the Asia-Pac Pack Contact center consolidation, voice portals, hosted contact centers, and unified communications are driving much of the movement. Re-shoring Contact Centers A rise in customer dissatisfaction with offshore contact centers has many companies looking to relocate closer to home.
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