In part one of the blog series, we looked at a framework for building a business case to invest in customer experience technologies. In part 2, we looked at KPIs that drive enhanced customer experience and in part 3, we looked at how contact centers can increase customer lifetime value. This blog will focus on true financial value of moving from a premise or hosted to a cloud native platform.
We have seen enough of the argument on Capex vs Opex pop in every premise to cloud migration. But there are more nuances to it. It is not just about the financial structure; and it might not necessarily be dramatic cost reduction. It is all about the clear cost reduction in certain aspects as well as benefit uptakes that aren’t typically quantified in a classic TCO model. Here are some of the most critical areas that need to be analyzed:
Infrastructure refresh – When your license is up for renewal with on premise software, you are looking at a complete refresh of infrastructure. This cost is not just infrastructure but the professional services (PS) around this which is people, time, money. This cost along with professional services is completely eliminated in cloud native models.
Deployment – We generally see cloud native models having quicker deployment cycles - days compared to months for the exact same scenario. This essentially translates to lesser people from customer side which gives them the ability to repurpose existing resource for high value projects.
Software Upgrades – There is no more paying to get the latest updates. Cloud native delivers scheduled updates to all customers with no parity for the ones ready to pay. A huge element of PS is immediately eliminated as well.
Maintenance – We see upto 20% of the license fee going to on premise maintenance. This is completely eliminated in cloud native models. There might be a monthly customer success fee from cloud native model but it is generally much lower and more importantly predictable.
Scale– If there is one thing that every contact center leader has to manage, it is seasonal spikes or other cyclical aspects of business. Scale in premise and hosted world is typically achieved through heavy investment in hardware, software, people and time. The hassle of getting it all executed is completely eliminated by the elastic and pay by drink cloud native model and more so brings in an agility and time to market benefits that will map to lost opportunity cost.
Disaster recovery – For large enterprises disaster recovery is one of the most critical elements in true business design. Premise based disaster recovery is achieved with a complete replica and is a 2X investment in data center. This is totally eliminated in a cloud model with a self redundant model.
Integration – Connecting data with various applications can deliver magic. The cost of integration is huge for premise given the vendor lock-ins. But with open, extensible platform cloud native enables you to have prebuilt or easy to build integration across multiple contact center systems.
IT team efficiency and innovation – Premise definitely involves more IT resources involved in managing and operating your data centers. Sheer keeping lights on operations. Cloud native takes care of IT operations and helps you reinvest some of your key IT resources in high value, innovative work with an easy to use, productive contact center platform.
Predictability - Finance leaders definitely look for predictability, it is as important as returns. True linear monthly costs are assured in cloud native model compared to various non linear costs in a premise model.
NICE CXone commissioned Forrester Consulting to build a Total Economic Impact (TEI) model for NICE CXone cloud customer experience platform. For a composite organization with 1,100 seats, CXone delivers a three-year total benefit of $25.9 million, which includes a cost savings of $22.4M. Forrester captured and aggregated feedback from companies that migrated from on-premises contact center technology to NICE CXone. In addition, we hear from customers that cloud deployments are much more flexible, light, and easy compared to on-premises deployments.
As you start building your business case for customer experience platform, think through every element that can drive financial impact – Improved KPIs, Increased customer lifetime value and enhanced technology platform. Build that strong business case today and invest in customer experience platforms, your true differentiator to acquiring, retaining and growing customers.
