(Editor’s note: This post was originally published in 2016 and has recently been updated for accuracy and relevance)
Choosing between an onsite and cloud-based phone solution is a big decision in terms of price, flexibility, and company growth. In this post, we’ll discuss the merits and downsides of both on-premise phone systems and their virtual alternatives.
What’s the difference between on-premise and cloud-based call centers?
When picking the right call center software for your business, it’s advantageous to have a complete understanding of the industry and your options. This article takes two opposing solutions and highlights their respective strengths and weaknesses.
These are the four most common types of call center software. Let’s take a look:
Onsite call center
This configuration means that your call center’s communication hardware, software, and infrastructure are all stored and operated within your place of business. The dedicated communication servers can take different forms, such as PBX or IP PBX.
Under this system, your IT team is responsible for installation, maintenance, and upkeep in every regard. Everything from phone servers, to headsets, to software support is controlled internally.
Cloud-based call center software
Cloud-based call center solutions are, unsurprisingly, hosted offsite in the cloud by a business phone service provider. Users access telephone service through an app installed on their computer or mobile device.
This solution relies on internet access with sufficient bandwidth to comfortably accommodate all users, plus other internet activity. Your business or call center’s data is hosted on the cloud, and the corresponding servers either belong to the service provider, or to a third party, such as AWS.
Hybrid hosted call center software
Hybrid software means that your call center’s software is hosted off-site and accessed through the internet or intranet. This solution combines the pros and cons of the previous two models, representing a middle ground between fully virtual and onsite. It may sound ideal, but hybrid setups have several potential drawbacks.
The startup costs are cheaper than on-premise solutions, and your business won’t need physical space to store servers. However, adjustments and troubleshooting still requires third-party maintenance, making an on-premise solution less flexible than a cloud call center system. Call routing structures can’t be changed on a moment’s notice, and users/numbers cannot be added as quickly. A combined onsite and virtual approach also has drawbacks in terms of security and overall expenses.
In order to avoid repetition, this guide won’t delve too deeply into hybrid solutions, since they’re less common and possess characteristics of both on-premise and cloud setups. Plus, hybrid setups are unique by nature and vary from company to company.
Browser-based call center software
Browser-based software is a type of cloud-based software. The advantages and drawbacks are mostly the same, the main difference being that users must access their phone system and dialer through an internet browser instead of through a separate installed app.
As a note, most cloud-based software solutions will offer both an in-browser version of the system and a downloadable app for convenience.
For the sake of brevity, this guide groups browser-based solutions under the umbrella of cloud-based call center software unless otherwise specified.
Comparing on-premise and cloud-based call center software systems
Here is a comparison of these two solutions’ pros and cons in ten different areas.
Set up time
The implementation of an onsite call center can take several months. Buying the necessary hardware, figuring out licensing, setting up the infrastructure, and finding compatible software is no easy task.
Setting up cloud-based call center software is usually no more difficult than installing an app on a computer. It will function right out of the box, no assembly required.
Costs and expenses
The cost of an onsite call center can be prohibitively high, especially for small and midsize businesses planning to outgrow their current office space. You need to purchase hardware (servers, headsets or phone, computers, etc.), licensing, and make the necessary arrangements for your physical office space to accommodate it all.
Moreover, you must consider the recurring costs of operating an intricate piece of machinery in your office. On average, onsite installations must be replaced every five to seven years due to the aging hardware and the software advances. This means heavy recurring fees over the long term.
Cloud-based phone systems can be set up and used without any investment in hardware or infrastructure other than a strong internet connection and devices with internet access (which most businesses will already have).
To reiterate, a strong internet connection, quality routers, and proper router configuration are absolutely necessary to have a crystal clear experience using cloud-based phones. Without decent bandwidth, your call center will be susceptible to router “congestion.” As a result, your representatives could experience call quality issues. (Note: There are measures your cloud phone service provider can take to help you alleviate these issues)
As for recurring costs, users are billed on either a monthly or annual subscription basis (annual should work out to be cheaper). Payments will be more frequent, but when you consider the maintenance costs of onsite solutions, cloud-based is more economical.
In short, switching to cloud-based call center software means shifting from capital expenditure to operational expenditure: a shorter billing cycle, but lowered costs.
Once installed, onsite call centers are difficult to adjust. For example, adding agents to your team involves purchasing new phones and modifying your hardware. These create added costs in the short term, but if you need to scale-down due to seasonality or unforeseeable events, you’ll be left with a surplus of unnecessary devices.
As for mobility, desk phones must be linked to the server in your office. Unless your customer service or sales representatives are physically at their desks, they’ll be unable to complete their tasks.
Cloud-based call center software is much easier to scale, manage, and customize. Adding or removing users is as simple as managing a Netflix subscription. There’s no extra hardware involved, and any changes to your monthly billing will be immediately transparent. Seasonal businesses and those looking to scale will find added value in features inherent to a cloud-based platform.
A cloud-based call center platform also allows agents to work remotely, provided they have a strong internet connection. Having a virtual call center can have many advantages for your business, including decreased costs and less agent turnover. Best of all, a cloud-based inbound contact center can help organizations improve customer satisfaction.
Many businesses trust onsite call centers to avoid latency or shaky call quality. While issues related to voice quality can potentially be avoided using traditional phone service, relying on physical hardware is a weakness in of itself. The equipment may break down, be phased out by your phone provider, or in the case of IP PBX, become incompatible with your software.
Cloud-based phone technology is immune from these hardware issues. Plus, most of the reliability and call quality issues commonly attributed to VoIP aren’t due to failings of the technology itself, but rather to a weak internet connection. Without sufficient bandwidth, packets will get lost, calls will be dropped, and the call quality will suffer. The solution is making sure that your internet link can comfortably support your activity.
These advancements build upon existing features with the help of new technology. For example:
- Live call monitoring is much easier to implement than in a brick-and-mortar setting, and easier to carry out as well. Calls are recorded, stored, and analyzed, and supervisors can access this intelligence from anywhere in order to make data-driven decisions.
- Smart IVR enables more precise filtering and routing of calls. VoIP improves on this by adding features such as voice recognition to boost the IVR’s accessibility. This way, your agents’ time is better utilized and first-call resolution increases.
- Click-to-call: A button lets customers also equipped with a VoIP system call your business without having to dial a phone. This lowers your customer effort score, which is an indicator of customer happiness.
Integrating your on-premises call center software with other services is possible, but between licensing and installation, it becomes a nightmare for even the most experienced IT professionals. Plus, implementation will take valuable time that could be better spent focused on business growth.
Service providers of cloud-based call center software have designed their products to integrate with other services to enhance your customer support. You can easily integrate your CRM system, call script generators, helpdesk tickets, survey templates, and much more with your phone software. This makes for a seamless, intuitive experience for your agents and therefore, a higher quality of support for your customers.
Collaboration & Productivity
Call center software should aim to help your agents work better as a team. Tools that aren’t cloud-based will inherently be disconnected from other communication tools, like chat, email, and customer relationship management platforms (CRMs). Cloud-based call center software improves the relationship between the phone and these other tools by easily sharing information across various softwares.
In the fully web-based model, integrated, real-time dashboards help managers monitor volume and keep productivity consistent.
Also, greater visibility makes for better support and sales onboarding. Managers can more easily shadow calls, or even jump-in when necessary. Similarly, agents can effortlessly transfer calls when additional information or escalation is necessary
The enhanced training offered through virtual call center software will eventually reduce agent turnover. Given the costly and time-consuming process of agent recruitment and training, this is a wise long-term investment.
IT staff reliance & Redundancy
Onsite hardware relies heavily on an IT team for maintenance, software updates, and general upkeep. The complexity of this setup means your business pays for a qualified team..
Implementing data backups and redundancy procedures is complex, and can be expensive if you are setting everything up on site. Downtime is very costly to your business, so mitigating its impact is a great concern. You’ll need space to store large, expensive equipment and stringent redundancy procedures.
Delegating the maintenance of your servers and hardware to a cloud provider eliminates many concerns for your business. Most notably, you no longer need to employ a full-time IT team. That is to say, the servers your business uses to operate the phone system exist offsite (e.g. AWS), and they will take care of any upkeep.
Cloud-based phone systems handle a huge volume of data. Therefore, they must deliver a higher quality of redundancy protection and disaster recovery. Downtime is less frequent for a cloud-based setup, and is fixed more quickly in case of a problem. Many providers boast greater than 99.99% percentage of uptime on their service level agreements upon signing up.
On top of this, you can use cloud services to back up not just your communications data, but also your operating systems, patches, programs, and more.
Security and privacy
One would think that onsite installations would be more secure than cloud-technologies. After all, if your servers and data are all stored safely onsite, they can’t be meddled with, right? Surprisingly, an overwhelming amount of data breaches are due to human error or intentional malice, which your business is more susceptible to with an onsite infrastructure.
Because many people have a hazy concept of the cloud, it receives a poor reputation in terms of security. However, this is not the case. Cloud providers make it their business to stay ahead of security threats. In the same way downtime redundancy safeguards are superior to what onsite IT teams can provide, so are the security measures.
Cloud computing boosts your security in a way that you will never be able to afford, because of the economies of scale.
Ian Apperley - writer and IT consultant at whatisitwellington.com
Due to the volume of data which they handle, cloud providers employ thousands of security experts that are constantly testing the system. These providers are able to be more vigilant and efficient than a small IT team.
Accumulating, replacing, and discarding hardware is not eco-friendly by any stretch of the imagination. Without infrastructure or equipment of your own, your business and others use the mutual resources of the cloud.
Though the move to a completely virtual call center is certainly not for everyone, adopting cloud-based call center software means taking small steps towards a greener operation.
The important part of setting up your call center is picking the software which best suits your needs and activity. The next step is learning how to implement cloud-based call center software and make the switch in the smoothest way possible.