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The Case for Cloud: Calculating the Hidden ROI of Cloud Migration

Let’s face it. Customer expectations for contact center interactions in 2021 aren’t the same as they were in 2019—and they’ll likely experience another leap by 2023. Over the last 18 months, we’ve witnessed new digital channels infuse greater flexibility and convenience into the customer experience than ever before, which in turn has created a competitive contact center environment predicated on innovation and agility. Cloud contact center solutions present an obvious advantage over their on-premises counterparts in this regard—providing an easily scalable architecture that allows businesses to keep up with the latest technology innovations and deploy new support channels quickly. So, the question for businesses becomes:

How do we decide if the migration to cloud is worth it?

If you’ve found yourself asking this same question, you aren’t alone. According to a recent Genesys Enterprise Connect survey, 64% of respondents cited price and total cost of ownership as top concerns when considering a move to a cloud-based contact center. These concerns have surrounded the move from on-premises to cloud solutions for years, yet exploration into cloud migration often captures an incomplete view of ROI. To solve the ROI question more holistically, let’s take a closer look at a few of the underlying factors that should weigh into any cloud migration decision.

Initial Cost of Investment

When it comes to a contact center migration, there are a couple common costs that come to mind: the cost of the technology, usually in the form of monthly or annual subscriptions per user, and the IT staff and labor that will be required to get your new solution up and running.

Tracking all of these changeover costs is a key part of any ROI projection, but these costs present a distorted view of the on-prem vs. cloud comparison. After all, your existing on-premise contact center solution can’t exist in its current state in perpetuity either. In other words, there’s also a cost to doing nothing. Additional software licenses, annual upgrades, server hardware, space, and power consumption will all be required over time to manage an on-prem contact center solution and implement the digital innovations customers increasingly expect when they engage your brand. These avoidable costs can quickly add up to serious savings, according to a recent Forrester and Genesys economic impact report.

$1.4 M

The average avoidable cost of upfront hardware and software investment for on-premise contact center solutions over the first three years of cloud deployment.

It can also be beneficial to assess both on-prem and cloud investment costs in relation to a set of future-state goals. Doing so will create a more apples-to-apples point of comparison for the initial cost of achieving your CX vision. After all, in the modern experience economy, failing to prioritize exceptional customer experiences simply isn’t an option.

Questions to ask:

1. What is the pace of innovation on my premise platform vs. the cloud?

2. How do the ongoing costs of on-prem server resources and software licensing compare to the projected monthly/annual subscription costs of a cloud solution?

3. Is there an opportunity to reduce our ongoing maintenance, system upgrade and administrative costs by moving to an SaaS cloud-based solution?

4. How quickly will I have access to new features and functionality as they become available on the platform?

5. How much more efficient will I be adding those features and functionality?

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Contact Center Productivity

Next, it’s important to consider current vs. future-state contact center productivity. At the core of what makes next-gen omnichannel customer experiences so intriguing for customers and agents, alike, is the power these robust solutions have to drive greater efficiency into every customer interaction. When agents can focus their attention on high-touch engagements—while AI, chat bots and automated navigation tools support customer self-service—wait times shrink, handling times are reduced and customer satisfaction skyrockets.

While both on-prem and cloud contact centers can achieve these CX goals in theory, cloud contact centers are much more likely to actually do so. According to one survey, 2 out of 3 on-premise contact centers feel limited by their current infrastructure. The same survey also revealed cloud contact centers are nearly 2x more likely to have implemented omnichannel engagement tools, such as social channels and chatbots, that align with changing customer expectations. Cloud-based contact solutions come with scalability and agility baked into their core—making it easy to capitalize on innovative solutions quickly and affordably through accessible APIs.

Unfortunately, even when on-prem contact centers do receive the green light to invest in new CX features, there is still often no guarantee the desired features will integrate smoothly with the legacy hardware. Clunky integrations can quickly lead to a perpetual break-fix cycle that drains IT staff resources and halts contact center productivity.

From an ROI perspective, productivity gains like greater call volume per agent, reduced average handle times, and increased first call resolution can translate into sizable agent cost savings that should be included in your cloud migration calculation.

$1.04 M

The average annual cost savings due to improved productivity, such as reduced handle times and reduced seasonal agent headcounts.

Questions to ask:

1. Does our current on-prem solution suffer unplanned outages?

2. How easy would it be to augment our current on-prem solution with innovative engagement strategies over time?

3. How easy is it to scale the platform to meet my growth needs?

4. Is there room to improve our agent productivity—including call volume, handle times and FCR? What is that worth?

Employee Retention

Finally, don’t underestimate the powerful impact agent turnover can have on your contact center bottom line. As the Great Resignation focuses new attention on employee churn, the costs are becoming clearer too. Retaining talented agents with tools and strategies that support their workstreams and enhance their ability to meet business goals is a small investment that can generate big savings. According to a 2018 McKinsey benchmark study, each new agent hire costed the average contact center $10,000 to $20,000 in training, recruiting and ramp-up time. Today, that number is likely even higher.

$102,600

The average annual savings created by reducing agent turnover from 30% to 15%.

More importantly, even amid rapid digital transformation, your agents still play a foundational role in creating positive customer experiences. Retaining talented employees on the frontlines helps ensure your customer experience is consistent and helpful across every channel in your omnichannel arsenal. Over the course of each customer’s unique journey, these positive agent-to-customers experiences have the power to become the last best experiences they remember—creating customers for life and unlocking valuable lifetime revenue potential.

Questions to ask:

1. What does it cost us to onboard a new hire?

2. Is there room to improve on our existing employee retention rates?

3. How do we measure the future value of customer loyalty and satisfaction?

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