The Pitfalls of a Hardware-Based Contact Center

Jerry was evaluating options between a hardware-based contact center, and a cloud-based option.

He thought that the hardware solution would be less expensive than the cloud based alternative and decided to go that route. Fast forward a few years, and he ended up spending over 4 times the amount of the purchase price of the hardware solution. Additional gear for expansions, full time technical admin, miscellaneous support contracts, and other costs kept adding up.

Don’t be Jerry.

Let’s walk through the total cost of ownership between hardware and cloud-based contact center solutions, and see where he went wrong.

Understanding the Total – and Real – Cost of Ownership

Jerry believed, as many others do, that an upfront CapEx investment would be ultimately less expensive than the monthly recurring costs associated with a cloud-based service. While this may seem logical, it’s not a true reflection of the difference between the purchase price, and the actual total cost of ownership.
Some key questions that can uncover the hidden costs of hardware-based systems are:

• What happens once the equipment is purchased and installed?
• How much will the space and power required to host the equipment cost on a monthly basis?
• Who will install the hardware and ensure its ongoing maintenance?
• Will new resources be required? How much of your IT personnel’s manhours and corresponding salaries need to be allocated to supporting – and learning how to support – this new system?
• What happens if a break occurs, and replacements or upgrades are required?

Capital investments depreciate over the years, but the associated costs, and operational expenses do not. Jerry discovered this first hand, when he realized that he had to pay for additional modules every time he needed to support new customer care functionalities that were emerging in his industry. He also did not account for the IT maintenance costs, plus supporting technical personnel that were required to administer and manage the system. These costs were amplified over the implementation process, which was significant, given the size of the organization Jerry was supporting.

IT maintenance and related personnel salaries represents an estimated 17% of a typical contact center’s operating expenses. Contact Center as a Service (CCaaS) solutions enable organizations to reduce these ongoing operating expenses, not only because of simple all-inclusive licensing models, but also due to the rapid implementation timelines of days, as opposed to months for hardware.

Let’s take a look into Jerry’s options:

• This chart represents the breakdown of all the costs associated with a 50 seat contact center, and give examples of total costs over a 10 year period.

• This example represents a total cost of $700,000.00 if you go the hardware route, about $200,000.00 more than a cloud solution over the same time period (a savings of 28.6%).

• This won’t just save Jerry money, but will not make him shell out all those upfront costs associated with a hardware based solution, giving him more flexibility with his budget to focus on other revenue generating activities for him and his team.

Other Factors to Consider:


Another issue that Jerry ran into, was supporting the growth and slow seasons of his organization. Scaling his hardware-based system meant purchasing more equipment and licenses, then implementing the expansions. However, when the company hit their slow seasons and staff reductions were required, Jerry was still paying for all the equipment and licenses he purchased previously to accommodate growth.
Seamless scalability, in both directions, is another hallmark of industry leading CCaaS solutions. With Telax, for example, Jerry would simply have emailed or called his Telax Channel Partner and requested additional seats, or a reduction in seats, and he would be operational with the changes in a few days.

Business continuity & Survivability

Something that Jerry also needs to consider is that if his equipment fails or the power goes, or his location is snowed in, he is at the mercy of his corporate network. Cloud contact centers can leverage the public telephone network and public Internet, as your method to get calls to your agents – as opposed to Jerry having to build and maintaining all that equipment, voice lines, and staff. They also allow you to transfer/forward to a mobile device, something that can’t be done with tradition hardware-based systems. Agents can be 100% functional from a remote location, the same as they would be in the office.
Then there are upgrades. Upgrades to a traditional contact center system can require quite a bit of prep work that can put Jerry’s operations on hold, time and time again. Some disruptions may include technicians needing to clear access paths, creating space for large tools and equipment, setting up the new system space in a specific way, requiring for your power to be switched off or even changes to your air-conditioning and fire protection systems. With cloud-based alternatives, there are none of the above hindrances. With Telax, upgrades are literally a phone call away, or an email away.

Jerry learned critical lessons from his experience with hardware-based contact center solutions. Lessons that can help you not make the same mistakes he did. So remember, don’t be Jerry. Welcome to the Cloud.

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