Dave Paulding, Regional Sales Director, UK and Middle East, Interactive Intelligence
The top priority for any CFO must be the financial security and viability of the business. They must work to ensure that an organization has the tools to generate or save money, while at the same time investing wisely in new solutions. Moving to the cloud is a prime example, as it can offer significant cost savings and the potential for new revenue streams, but it may also be accompanied by a fear of the unknown.
A survey by Interactive Intelligence suggests that many are setting aside this fear and making the leap to the cloud. It shows that nearly three-quarters of businesses operating a contact center are looking to move to the cloud. So, with many of their competitors likely taking advantage of the benefits the cloud offers, what do CFOs need to consider if they want to level the playing field?
Not All Expenditures Are Equal
When an organization moves to a cloud-based solution, such as communications as a service, the first difference CFOs will notice is that spending on these services shifts from being primarily CapEx to being mostly OpEx. The business will no longer need to purchase most of the hardware associated with IP-based communications, such as servers, distribution boxes, etc.; instead, the functions of these devices will be provided remotely.
There are numerous advantages to this, but perhaps the most important one for a business today is flexibility. Using OpEx to procure key functions requires less administration than CapEx, meaning decisions can be made more quickly and services implemented more rapidly. This also provides business agility, allowing solutions to be scaled up or down overnight at little cost.
The extent to which a cloud solution is funded through CapEx and OpEx depends on the type of solution procured and the portion of the IT infrastructure that businesses wish to transfer.
All-in or Hybrid?
Some might think that basing all their telephony systems in the cloud would save money, since services are accessed through a public network or VoIP, meaning there is no on-site carrier relationship. This would completely eliminate CapEx costs for their phone system, requiring only a monthly subscription fee or pay-as-you-go payment.
While this appears to offer better long-term budgeting, it is worth noting that if the VoIP connection is lost, so is all access to data or calls, which can be very costly indeed. This is particularly true for businesses that rely on telephony for purchases or financial transactions, such as retailers or banks. Every minute a customer cannot be reached is lost sales time. Research from CA Technologies estimates that the global revenue lost to IT downtime amounts to $26.5 billion annually, and sales and finance are among the departments most affected.
The safest option is to create a private cloud by purchasing and installing infrastructure on-premises. However, this requires a significant capital investment and can be very costly in terms of both installation and ongoing maintenance, making it suitable only for the largest organizations.
The most cost-effective option is a hosted hybrid model that offers the best of both public and private cloud networks: infrastructure operated by the vendor is deployed on a company’s local network, with voice and data kept on-premises to ensure continuous access and security, while the logic and routing are in the public cloud and offer the public cloud pricing model.
When transitioning to a hybrid solution, CFOs need to be aware of who owns the on-site equipment and its cost. Some vendors may simply rent out the equipment for a monthly fee that could be in addition to the service charge, while others may offer the option to purchase the equipment for a lump sum or through an installment plan spread over a certain period. Again, it’s worth checking how these options are priced.
Only by having a complete understanding of the situation can CFOs effectively advise on and approve the most appropriate cloud solution for their enterprise. This ensures the procurement of innovative technology at an affordable price that will streamline the business.
