So there is a lot of talk about hosted (SaaS) model. Of course everyone wants to jump on the Hosted bandwagon, but it may be a good idea to do one’s homework and find out whether it is well-suited to one’s business. Also, different strokes for different folks – some parts of your organizations may benefit more from hosted applications, whereas others may be more suited to the premise-based one.

No doubt, hosted model is an attractive proposition, especially if you are looking at reduced costs, flexibility, and accelerated implementation of customized applications. It is godsend for those who are looking at cutting back on investments on infrastructure and hardware, and yet providing comprehensive functionality for processes that are not yet “hardened”. What do I mean by that? Let’s take an example of a Call Center that gets a new Vodafone post-paid outbound campaign lasting three months. The margins are relatively thin, and fresh investment in infrastructure and technology may not be a good idea at this point of time. You can’t simply put all your eggs in one basket and expect that you will definitely get more business in the near future. So how do you go about it without burning a hole in your pocket?

Assuming you have the workforce and real estate all worked out, technology is the only consideration. Compromising on the quality of technology is definitely not a good idea, so you need the best technology to make sure you are profitable, or sustainable at the very least. So you talk to a good technology vendor (and there are plenty of good ones our there) and without spending a dime on expensive high-end servers, telephony cards, software licenses, databases, or applications (or tools), you get a good deal – a good hosted solution will cost you around $100/agent/month. You do need to have workstations, headsets, Analog/IP Phones (or Softphones), routers, etc, which can also be rented out. You are all set now…hook up, and get calling!

It’s all simple math if you think about it. And there is no doubt that hosted is a great idea in such cases.

However, all the industry experts concur on one thing – SaaS is going to catch on, but it is not overtaking the traditional premise-based model anytime soon, not be a far shot. And they have reasons to believe so. Plenty of reasons…

Hosted is a great proposition during the nascent stages of business. However, as you grow, your workforce grows and so the monthly payments increase. In case you started out with 20 agents, you are paying about $2000/month. Assuming you are in business for a year without increasing your workforce size, you have paid out 12x$2000 = $24000/year. Now, if I amortize the cost for a premise based system, and assume $600/agent as the cost, then it costs me half of that = $12000. Add support costs (at 20%) and the amount becomes $14400, excluding the hardware. If you extrapolate this to two years, and to five (that’s the shelf life of most technologies), you are more profitable going the premise route.

Other complexities include voice quality (not enviable in emerging countries), if I discount legal hassles around VoIP, and of course security. We have inherent and reasonable fears about trusting someone else, (who may also be serving a competitor), with our confidential data. Any data leak or security breach could break us.

However, there are as many merits of Hosted as well. In case I mentioned it already, I’ll mention it again – LOWER COSTS! The onus of updating the technology lies with the MSP or solution provider, and that means no management hassles for you and your business. Also, many MSPs incorporate redundancy which is crucial for your mission critical business.

As a call center owner, it is upto you to find out what’s best suited to your business. There are more options, but this is getting unbearably long, so I’ll talk about them in the next post.