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Hosted contact center and on-premises centers demystified

Let's get straight the differences between hosted contact centers and on-premises facilities. What are the pros and cons of each model?

When implementing a contact center, one of the most important decisions is whether a company should choose an on-premises...

or a hosted contact center -- and it isn't helped by the fact that misconceptions and debate abound about the differences between the two and what hosted and on-premises even mean. Let's examine the differences and benefits of each.

Courtesy of your host

When a company chooses an on-premises system, it takes on responsibility for all call center tasks. An on-premises contact center usually owns its own hardware and software to manage and distribute calls. It's up to the organization to evaluate, purchase, install and maintain all those systems.

With a hosted contact center, a company outsources its contact center infrastructure to a network that manages these systems externally. Because the company doesn't own any infrastructure components, it may reduce up-front costs. The call center "hoster" is responsible for all maintenance and management of the system. However, do not confuse a hosted contact center with a virtual contact center, which also features an outsourced team of call center representatives. A virtual contact center will cost more, but could be a good option for an organization that would rather outsource all its customer care operations to a company that specializes in CRM.

Some companies benefit from the hosted contact center model. If a company has multiple contact centers or remote employees, a hosted service eases representatives' scheduling among different centers and regions. Because up-front costs and maintenance fees are lower, a hosted contact center could mean better return on investment for a business. A hosted contact center is generally an all-in-one package, which some companies prefer. Also, for fast-growing organizations, it can be beneficial to offload managing scalability to the hoster.

On-premises: Under one roof

However, an on-premises contact center has benefits as well.

Once the initial investment in tools and equipment has been paid off, an on-premises contact center shouldn't incur much additional cost. With an on-premises approach, companies can avoid monthly hosting payments and contract negotiation fees. After a few years of paying hosting fees, costs could grow to be on par with that of equipment in an on-premises contact center.

An on-premises system is also easier to customize. Rather than doing things the way a vendor wants to, a company has greater latitude to make its own decisions.

While some argue that it's harder to deploy a contact center on-premises, proponents of on-premises systems say all that's needed is a high-speed Internet connection -- the company can purchase what it is needed to meet the needs of the business. This task is relatively easy given the available information on contact center equipment.

A business can also benefit from the peace of mind of owning its own equipment and have all their resources centralized under one roof. A 2013 IDG Enterprise cloud computing survey found that 42% of cloud-based projects are eventually brought back in-house due to security concerns. The decision might change at different stages of an organization's lifespan -- for example, in the startup phase, a company might prefer hosted infrastructure to avoid high costs, but then switch to an on-premises system once it can afford to make the investment in the contact center.

Let's get on-premises and hosted straight

If an organization is comfortable with offloading its customer information and management to a hoster, it might consider a hosted system; but if ownership isn't put off by an initial investment and likes the do-it-yourself approach, an on-premises system might be a better fit. This is also true if there are security concerns that cannot be alleviated through hosting.

So, let's get this straight. An on-premises contact center is a contact center where the equipment is in-house, hosted contact centers feature outsourced infrastructures, and virtual contact centers are outsourced completely. Now the differences between each of these methods of call center management should be straight.

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