How to Choose Between a On-Premise vs. Cloud Contact Center

Choosing between an on-premise vs cloud contact center is a business decision that will shape the future of your customer service function for many years.

Getting it right entails making financial decisions, such as evaluating existing contracts and determining an immediate return on investment, but also considering features, integrations, and long-term benefits for your contact center agents and customers.

Factors like improvements to average handle time (AHT), first call resolution (FCR), and the potential introduction of self-service are all considerations when deciding between on-premises and cloud contact centers.

We’re talking about more than just where to host your technology. You must also consider the type of customer experience you want to provide.

Before you jump in feet first, make sure you’re familiar with the pros, cons, and comparisons between these two types of technology: on-premise vs cloud contact center.

What Is an On-Premises Contact Center?

An on-premises contact center is a collection of phone system hardware stored and maintained on-site. Usually stemming from an in-house PBX, like an Avaya or Mitel system, extension modules and custom configuration are required to turn your phone system into an inbound call-handling operation.

When using an on-prem contact center, the typical model starts with an inbound call center and builds on extra components as you need them. This gives you the flexibility to add features, but you risk being stuck with these modules for the duration of your contract (and they may incur up-front and installation costs).

Benefits of an On-Premise Contact Center

There are two major benefits of choosing an on-premises contact center:

1. You leverage existing on-premises technology

If you’re already using on-premises hardware to make and receive calls in the rest of your business, you can extend that functionality by purchasing call center modules.

For example, if you use a Cisco UCM to enable internal and external calls in your business, there’s a ready-made UCCE or UCCX module you can add on. Likewise, with many on-premises phone systems, these on-premises call center modules allow you to enable contact center features without replacing your existing phone system.

2. You have in-house, granular control over data security and privacy

When your contact center technology remains on-premises, it has physical barriers to the outside world. Data gets stored and can only be retrieved by on-site personnel with appropriate access.

You may still choose to upload this data to the cloud, but this requires manual processes or hybrid models that are often time-consuming and complex to manage.

If your industry has a rigid stance on data governance, an on-premises contact center may be the only option you have.

Disadvantages of an On-Premises Contact Center

Now let’s take a look at the disadvantages.

Hardware-based and expensive to maintain

When you rely on on-premises technology of any kind, you’re stuck with what you’ve got until you buy more add-ons. When these add-ons are physical units, it means an up-front investment and expensive installation costs.

On top of this, you usually must pay a maintenance fee to ensure you’re covered if the hardware becomes faulty.

Limited functionality

When you install a new module for an auto attendant, all you’re getting is that auto attendant. It doesn’t come with any extra functionality, and there’s no way to subscribe to new features when they become available. Instead, you must buy new hardware every time you wish to upgrade.

In general, enabling features other than voice-based features is difficult, expensive, or impossible, depending on your call center provider.

Scalability limitations

When you hire 25 new call center agents, your existing setup may be at capacity. In this case, you need to buy extra extension modules to enable those new users.

If, for example, you bought an on-premises contact center for 45 users, you may have had call center equipment that supported up to 50. This was fine for your original 45 but is insufficient for your new total of 70 agents. Upgrading to a new 100-user module or two 50-user modules is not cost-effective compared to the cloud alternative.

Now let’s move on to the other side in our on-premise vs cloud contact center comparison.

What Is a Cloud Contact Center?

A cloud contact center, often referred to as Contact Center as a Service (CCaaS), is a web-based customer service solution that eliminates the need for on-premises hardware and software. It uses the internet and cloud computing to provide businesses with a scalable, cost-effective, and feature-rich platform for managing customer interactions.

Cloud-based contact centers are hosted in the cloud and help agents handle all types of inbound and outbound calls and customer communications — including voice, email, SMS, social media, and the web—in a single, user-friendly platform on mobile devices and desktops.

The best part is that agents can access cloud contact center platforms from anywhere with an internet connection, allowing for greater flexibility and remote work opportunities.

In addition, cloud contact centers offer advanced features like call routing, call recording, performance analytics, and integrations with customer relationship management (CRM) software that might not be found in traditional on-premises setups.

As organizations add more support channels, a cloud contact center solution helps them respond to every customer request and optimize agent productivity.

Benefits of a Cloud Contact Center

When you choose a cloud contact center, you’re opening the door to a feature-rich, scalable, and cost-effective way to provide better customer experiences. Here’s what you can expect when you move away from an on-premises setup:

A predictable monthly fee for all costs

Rather than having to piece together your own hardware solution, cloud contact centers are packaged in an easy-to-consume monthly fee per user.

If you have 50 customer service reps and five supervisors, you only pay for 50 contact center licenses and five supervisor licenses. Simple, right?

When you need to enable a new user, you just add one more license and pay the added monthly fee. As there’s no hardware involved, you no longer suffer from at-capacity equipment or installation and maintenance fees. All of the technology is monitored in your service provider’s cloud environment.

New features as soon as they’re released

When your contact center service provider releases new functionality or discovers a new workflow is possible thanks to artificial intelligence (AI), you can start using it immediately.

Possibly the biggest benefit of cloud deployments is that your contact center software is always up to date. Of course, you can apply certain in-house restrictions to what gets used and when — in case you wish to train users or communicate changes.

However, when you have immediate access to new features like smart IVRs, self-service chatbots, and new channels like WhatsApp and Facebook Messenger, you’re constantly ensuring you’re ahead of the competition when it comes to enabling better customer journeys.

Enhanced functionality from day one

When you choose cloud, you can turn your voice-only call center into an omnichannel contact center.

Here, you’re enabling support for email, web chat, SMS, social media, and voice. With two-way communications across all these channels, you can serve customers more efficiently and on their channel of choice.

Expect call center metrics like volume, hold times, and AHT to plummet when customers can use online and asynchronous communication methods.

With modern contact center technology, you can expect AI features like speech analytics, intelligent call routing, and automated quality monitoring. Enabling these features in an on-prem model would require multiple providers, endless equipment, and complex integration.

Scalability at the click of a button

With all this functionality at your disposal, you might assume that adding more users is difficult. It’s not!

Let’s say you merge with a new company and need to enable a new bank of agents. To do so, you just have to subscribe to X number of new agents and generate their login details.

They get mirrored functionality to your existing agents and can start immediately. The cloud takes care of the infrastructure, and you can get on with the rest of your day.

Disadvantages of a Cloud Contact Center

As great as cloud contact centers sound, there are a couple of disadvantages we must flag. In the interest of a fair comparison, look out for these when making your final decision:

Data stored in the cloud may breach dated retention policies

In some industries, like finance and legal, compliance may dictate that customer data must not be stored in the cloud.

While it’s true that most cloud software is more secure and reliable than on-premises alternatives, sometimes there may be no getting around legislation.

Experienced agents may need training for new features

With the variety of features available and the number of channels supported, some call center agents may need coaching on how to use this new functionality.

Although it’s expected that all agents can handle calls, type up post-call notes, and have a wide range of soft skills, they may not be versed in handling multiple web chats or receiving AI assistance mid-call.

On-Premises vs. Cloud Contact Center Comparison

Here’s a comprehensive comparison of what you can expect when choosing an on-premises contact center versus a cloud contact center:

Function	Cloud Contact Center	On-Premises Contact Center
Setup	Affordable, out-of-the-box installation that can work with existing devices	Months-long process that requires hardwiring each device to a central system
Scalability	Near-infinite scalability; can add new lines in a few clicks	Additional on-premise setup required for each new line
Reliability	Enterprise-level reliability with excellent uptime and speed improvements through software upgrades	Reliability dependent on existing hardware, which will deteriorate over time
Improvements	Ever-expanding set of key features using developing technologies like AI and predictive analytics	Limited to existing capabilities
Features	All traditional features plus modern improvements like IVR, natural language processing, and live call monitoring	Traditional features like hold, call logging, and wait music
Integrations	Extensive integrations across digital channels and tools	Limited integrations that can be difficult to set up due to installation and licensing issues
Cost	Minimal upfront cost and lower monthly cost per user	High up-front costs and additional ongoing costs for system maintenance
Remote work flexibility	Agents that work from anywhere in the world	Agents restricted to the system’s physical location
Customer engagement	Seamless conversations across channels and departments	Each channel handled separately

When to Choose On-Premises vs. Cloud Contact Centers

Choose on-premises contact centers when:

• You have an existing on-premises phone system contract in place and it makes financial sense to sweat the asset but only if this doesn’t come at the detriment of advanced features and the ability to provide a superior customer experience.
• Your industry demands that customer data must be stored on-premises and there’s no flexibility for cloud storage or download and retrieval.

Choose cloud contact centers when:

• You value scalability and advanced features; knowing this will put you ahead of the competition when providing efficient customer journeys.
• You’re planning a merger or acquisition and need to enable new agents to serve your expanding customer base.
• Your customers use (or wish to use) more than voice to contact you. Consider easing the burden on real-time calls by introducing email and SMS support.
• You’re a forward-thinking company that appreciates the productivity gains automation and AI can bring to your contact center operation and wider business.
• You have remote workers who need access to systems and their customers.
• Cost-efficiency is a priority and you need a predictable monthly figure to factor into your budget.
• You need to integrate with other modern cloud tools, such as CRM, workforce management, and line-of-business solutions.
• You don’t have the physical space or in-house expertise to manage on-premises equipment.

Choose Nextiva: The Best Cloud-Based Contact Center

If a cloud contact center is the option you choose, make sure you’re in the right hands.

While the contact center industry is full of hype about AI and automation (and rightly so), your chosen provider must check off the basics as well.

We could tell you about all the features Nextiva provides:

• Speech analytics and sentiment analysis
• Omnichannel contact management
• Smart IVRs and auto attendants
• Intelligent call routing
• AI agent assistance
• CRM integration

But the list would go on and on.

Instead, we must flag one of the most important factors when moving to a cloud contact center for the first time:

Support!

In addition to providing multilingual 24/7 customer support, you can also get help at the implementation stage. Whether it’s your first time dealing with the cloud and you need advice or you’re ready to pull the trigger and need professional services for complex deployments, we’re always on hand.

So, while we’ll happily talk about our AI-powered contact center that wins awards year after year, you probably want to ensure we can genuinely help your business.

Don’t run before you can walk. Check out Nextiva Contact Center here. 👇