Cloud Contact Centers Are More Than Hype

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When it comes to software, cloud-based anything is all the rage, and contact centers are no exception. In fact, DMG Consulting estimated the revenue size of the cloud-based contact center infrastructure market at roughly $2.8 billion at the end of 2016. Cloud contact center deployments, the firm found, represented only 11.4 percent of the total contact center seats, so the revenue potential of this market is easily in the tens of billions of dollars.

DMG also predicted that the number of seats will grow by 22.5 percent in 2018, 23 percent in both 2019 and 2020, and 21 percent in 2021.

Market research firm MarketsandMarkets’ numbers were even higher. It valued the worldwide cloud-based contact center market, including technologies like dialers, call distributors, interactive voice response systems, agent performance optimization, computer-telephony integration, reporting and analytics, and security, at $5.7 billion in 2016 and projected it to reach $20.9 billion by 2022.

With all of that momentum, it’s likely that many contact center operators are in the process of shifting from on-premises models to cloud-based ones, or at least considering doing so, and with good reason. Experts agree that when it comes to cloud-based contact centers, it’s finally safe to believe the hype.

Despite its rapidly gaining popularity, though, cloud contact center technology is still relatively new in the grand scheme of customer service technologies.

Girish Phadke, technology head for Microsoft and cloud platforms at Tata Consultancy Services, which specializes in information technology services and digital and business solutions, says that overall, contact center solutions have evolved from an “on-premises-based discrete collection of technologies for call routing, workforce optimization, call recording, and analytics” to an “integrated solution running on the cloud.” He goes on to say that adoption of cloud-based contact center solutions has increased significantly during the past four to five years, and he doesn’t expect it to slow down anytime soon.


Daniel Foppen, senior principal product manager at Oracle, proposes two separate timelines around contact center technology: one for the telephony infrastructure and another for the cloud.

The first contact centers were developed in the 1960s when private branch exchange (PBX) was invented. In the 1970s these contact centers became more sophisticated with the advent of automatic call distribution (ACD), which Foppen says enabled organizations to handle larger call volumes. Later that decade, he continues, interactive voice response (IVR) was developed, and it became widespread in the 1980s.

“All of these advancements required significant investments in on-premises hardware,” Foppen explains, and so not much happened until technologies such as Voice over Internet Protocol (VoIP), software-as-a-service (SaaS), and the cloud were born in the late 1990s and 2000s.

At this point, early entrants like Avaya and Genesys started feeling the heat from pure cloud players like Five9, “forcing them to move more and more of their product lines to the cloud and invest in data centers,” Foppen holds.

He notes that contact center system vendors entering the market in the late 2000s did not have to undertake the same investments because advanced wireless services had already become “cheap and ubiquitous.”

Then in the mid-2010s, web real-time communications (webRTC) “proved to be a disruptive technology,” allowing even more players to “offer viable communications via web protocols,” Foppen notes.

He also notes that CRM technology followed a similar trajectory, dating back to the 1993 founding of Siebel Systems (acquired by Oracle in 2005). At that time, there was “a range of vendors offering implementation-heavy, on-premises solutions,” he says.

In the 1990s and 2000s, Foppen continues, cloud CRM technology began to rise thanks to companies like RightNow Technologies (which was acquired by Oracle in 2011) and Salesforce.com, paving the way for “old, maintenance-heavy” on-premises solutions to be replaced by cloud solutions.

Taken together, the two timelines proposed by Foppen suggest a convergence of cloud contact center and cloud CRM technologies in the 1990s and 2000s.

Today, indeed, the two go hand in hand. According to Mike Asebrook, director of product marketing at CRM systems provider Pegasystems, the evolution of contact center technology “has accelerated considerably over the past few years.” He cites advancements in CRM systems and automation as well as demand from customers for more digital communication channels and overall better experiences as reasons for this acceleration.

He goes on to say that improvement in these areas “paves the way for contact centers to become revenue centers rather than cost centers.”


Experts are quick to enumerate the benefits of cloud contact center technology. For Guillaume Seynhaeve, vice president of business development and sales at call center solutions provider 3CLogic, they are threefold: flexibility, reduced cost, and enhanced functionality.

Seynhaeve notes that a number of specific benefits can fit under the umbrella of increased flexibility. One benefit, he says, is integration with CRM systems to improve agent efficiency via screen pops (a feature that automatically displays relevant caller information). Another benefit, he says, is “the day-to-day ability to administer a contact center environment through configuration rather than coding.” Administering a cloud contact center, after all, does not typically require one to be a certified VoIP engineer. Instead, simply having “an understanding of the business and desired business outcomes” is all that is needed. This enabled “a significant change in who is needed to operate the day-to-day logistics,” he says.

Multiple benefits also tie in to the cost savings, both in terms of money and time, according to Seynhaeve. One benefit, he says, is “the ability to bring to market more advanced contact center use cases without incurring significant development cost or elongated deployment time frames,” some of which can be measured in years.

Another is that organizations only need to pay for the infrastructure they require at the moment, “not the one they anticipate needing before it’s required,” Seynhaeve says.

As for enhanced functionality, he says that it is “perhaps one of the more understated” though increasingly important value-adds, particularly as companies seek to create a single platform through the unification of key platforms and services. This unification, he continues, can “drive a more informed employee base,” which often leads to a better level of customer service, which in turn translates to improved customer retention.

Asebrook breaks down the benefits into operational ones and business ones. The operational benefits range from faster deployment times and upgrades to shorter on-boarding of new agents to easier methods for agents to access the contact center regardless of their locations.

As for the business benefits, he says “the pay-as-you-go pricing model enables service teams to pick the plan that fits their usage model rather than overpaying for accounts and telco minutes that may never be used.”

Additionally, “the rapid ROI and lower cost of ownership benefits appeal to the bottom line of any organization,” he points out.

Foppen notes that cloud contact centers also offer the benefits of being omnichannel and more secure than on-premises systems. “Having phone and email service channels doesn’t cut it anymore,” he says, adding that customers “want to engage via chat, self-service, asynchronous messaging, social [media], and other channels.”

On-premises setups “integrate poorly with these modern channels,” while cloud-based solutions typically work with them “out of the box,” he says.

And the security aspects cannot be overstated, according to Foppen, who calls it “an important focal point nowadays.” He points out that “organizations that deal with their own infrastructure, systems, or even data centers will simply never have the level of expertise and security personnel head count that large cloud vendors have.”

Arvind Parthiban, director of marketing at CRM solutions provider Freshworks, adds that with cloud deployments “scalability is never an issue,” as upgrades are delivered in a timely fashion, often free of cost. He also notes that “one can access cloud services anywhere, thereby ensuring business connectivity on the go,” and that “data is not dependent on hardware, as there are networked backups.”


Deploying a cloud contact center, especially when switching over from an on-premises solution, is not without its challenges, experts agree. According to Rich Fox, vice president of contact center solutions at Evolve IP, a cloud phone and unified communications systems provider, these challenges tend to fall into three buckets: organizational, technical, and operational. From an organizational standpoint, it can be difficult to identify who owns which channels and develop a united goal. From a technical standpoint, organizations need to address issues that stem from having multiple CRM systems and routing and reporting engines, and whether data will be available in real time. Operationally, “agents must be considered,” Fox says, with special consideration given to whether agents will work remotely, how agents are selected and supported, and how many simultaneous interactions each agent can handle.

Paula Ridley, cloud product strategy manager at customer engagement systems provider Verint Systems, identified another major challenge: shifting IT resources from a focus on hardware and application support to a focus on supporting broader business initiatives.

Organizations will need to create in-depth training programs, she says, “to ensure that employees are well-versed on the company and its various offerings, along with the ability to use the technology.”

Ridley also emphasizes communicating the company strategy and ensuring that the technology deployed can keep pace with customers and competitors.

Then there is often a political hurdle to overcome, according to Foppen. “For many organizations, their IT departments have grown comfortable with managing in-house systems and architecture, along with the corresponding budgets and head count. Unfortunately, we often see department owners get frustrated with the pace of IT. In response, they often start projects by themselves, which can result in another set of challenges. Contact center leaders need to ensure that their IT department understands the strategic priority of working together, to make the necessary business transformation that benefits the entire organization,” he says.

Companies might also need to deal with what Foppen calls a “technical debt,” which can occur, for example, when a company uses a number of different CRM systems that could be part home-grown and part licensed from different vendors. In those cases, “it will be difficult to consolidate data, especially to get a single source of truth or a customer master data repository,” he says.

When deploying cloud contact centers, companies also need to be aware of geographical availability and regulatory compliance issues that could affect service, according to Tata’s Phadke.

With these and other challenges in mind, experts agree that the best way to shift from an on-premises solution to a cloud-based one is to do so over time, rather than in one fell swoop. “You will hear cloud vendors talk about ‘rip-and-replace’ tactics, where a company switches all at once from an on-premises system to the cloud. For most cases, I would advise against that, and recommend a gradual approach to a cloud-based system,” Foppen says.

“When planning your deployment of the cloud solution, make a detailed list of the minimal functionality your agents will need to be able to perform their basic duties,” he continues. “This is called an MVP—minimal viable product—in the world of software development. Test the MVP setting with a small group of agents, make any necessary changes, and roll out the MVP to the rest of your team.”

Then, once the MVP is laid out, “you can implement more functionality with amazing speed. Whereas in the past this may have taken six months, you could now potentially roll out new functionality weekly or even daily,” Foppen adds.

He also advises organizations to consult their IT departments to “sort out their data” or, more specifically, “to make changes to their customer master data mart and prepare their contact center for the future.”

Furthermore, he says, it is “imperative that businesses don’t view their contact center as a stand-alone silo in the organization” and that they “think about how information from other parts of the business may augment agents’ experience, and vice versa.” After all, when deployed properly, agents can “be viable stakeholders in their marketing or product development departments,” he argues.

For Ridley, having a cohesive cloud strategy is most important. “When making the shift from an on-premises to a cloud-based solution, organizations need to have a strategy that aligns business goals with potential benefits,” she says. More specifically, organizations must determine end goals “that make sense for the enterprise mission,” while at the same time ensuring that IT leaders understand and define their ideal rollout and adoption plans as well as the organization’s expectations. Then it is important to secure executive buy-in on the strategy.

Darrin Bird, executive vice president at cloud contact center solutions provider TCN, advises organizations to identify the areas that would benefit the most from moving to the cloud and then move them first.

“Oftentimes a hybrid mix between on-premises and cloud is ideal for companies at first,” he says, recommending that organizations make sure their IT and operations teams are in alignment.

Ultimately, though, Bird says that organizations should “embrace new technologies and the flexibility that the cloud offers.”

After all, it’s definitely moved out of the hype stage.

Associate Editor Sam Del Rowe can be reached at sdelrowe@infotoday.com.

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