On-premise and cloud solutions are a growing part of the contact center market, especially for complex contact centers and large enterprises. Businesses considering changes to their contact center infrastructure must decide between an on-premise, private cloud, or public cloud solution.
Understanding the trade-offs is essential for making an informed platform decision. Irrespective of a long-held trend to migrate operations to the cloud, large enterprises are increasingly shifting back to on-premise or private cloud infrastructure. This ‘cloud repatriation’ isn’t necessarily based on whether or not the cloud is beneficial; it’s about understanding the full scope of costs, flexibility, and security, as well as its actual benefits and limitations.
The Evolving Landscape of Cloud Migration
Numerous companies were initially drawn to the cloud because they equated it with flexible resources and minimal upfront costs. One common misconception – specifically about cloud migration – is its affordability compared to on-premise solutions. Some quite notable companies that were “all-in” on the cloud have soured on it because of hidden costs and its unforeseen limitations. These brands are leading the cloud repatriation trend.
News that large enterprises like Barclays and medium-sized ones like Basecamp, who initially embraced the cloud, have since returned their operations to on-premise or private cloud solutions is fueling the discussion. Basecamp, for example, was spending over $3 million annually on cloud services before realizing the model wasn’t as cost-effective as initially thought. Migrating to a premise-based solution reduced their IT spending by a staggering 160% while offering them greater control and flexibility. Barclays also recognized the need for a more balanced hybrid approach that emphasized private cloud infrastructure by partnering with Hewlett Packard Enterprise to migrate over 50,000 workloads to a private cloud platform. These moves reflect a broader trend in the industry.
Despite their appeal, on-premise solutions (and, to a lesser extent, private cloud solutions) still require solid in-house IT expertise. In a pure cloud environment, this need doesn’t typically disappear but shifts to new requirements, and therefore, no cost benefits are realized. Meanwhile, more traditional solutions can offer a level of predictability and control that many enterprises both want and need.
A Comparison of Cost
A major factor driving the move toward on-premise and private cloud solutions is cost predictability. Cloud-based solutions may appear cheaper initially, but hidden fees, fluctuating pricing models, and unpredictable usage costs can lead to unexpected expenses over time. For example, egress fees are often overlooked, and businesses typically overspend on cloud services by an average of 30%. This is particularly challenging for large contact centers where data volume and complexity are substantial.
Conversely, on-premise solutions provide more budget-friendly and predictable costs for large contact centers. While the initial investment may be expensive, the long-term savings and stability make it a more sustainable option.
Customization & Integration Considerations
On-premise and private cloud solutions offer businesses the opportunity to customize their solution. This higher degree of control allows users to tailor solutions to their unique needs and requirements to align with business processes.
Alternatively, Contact Center as a Service (CCaaS) solutions present limitations on customization and flexibility. In multi-tenant environments, different businesses share the same infrastructure and resources, which restricts the ability of individual enterprises to modify the underlying architecture or features to suit their specific needs. Companies with specialized requirements or unique workflows may find it challenging to adapt to the standardized features and functionalities framed by the CCaaS cloud service.
Large enterprises with complex IT environments encompass legacy systems, business applications, and customer relationship management (CRM) platforms that all must function together seamlessly. Integrating these systems with a multi-tenant cloud solution can be challenging and time-consuming, particularly when the cloud platform doesn’t support certain integrations or protocols. On-premise and private cloud solutions provide greater flexibility in this area. Companies can customize their solutions to work with existing technologies, ensuring efficient operations and allowing them to leverage existing investments.
Concerns Over Security
Considering the inevitability of data breaches today, every contact center rates security at the top of its list of priorities. How a business approaches the decision to choose on-premise or cloud will most certainly impact its level of security.
Cloud environments are predicated on a shared responsibility model, where providers invest heavily in security infrastructure, and each business within it is responsible for its own security. The security of one company’s data is dependent on the practices of others, and a breach in one tenant’s system can expose other tenants to risk.
However, with on-premise or private cloud solutions, businesses have complete control over security. This is especially crucial for industries like healthcare and finance, where regulatory compliance must be considered. Enterprises can implement the strongest security protocols and ensure that their data remains locked down in a controlled environment.
The Debate Goes On
The on-premise versus cloud debate isn’t a single-issue decision. While the public cloud offers many benefits, it is not without its drawbacks. The need for control, security, and performance stability makes on-premise and private cloud solutions particularly attractive for enterprises that handle sensitive data or have specialized and complex operational needs.
The momentum behind cloud repatriation informs us that companies are looking to make a change, particularly those with large contact centers and those that need to consider the security of sensitive customer data. By evaluating their own unique, specific needs, they can better determine whether an on-premise or private cloud solution might offer a more sustainable, cost-effective, and secure path for their future.
About Rob McDougall
Rob McDougall is the CEO and driving force behind Upstream Works Software. Upstream Works provides enterprise-ready AI and omnichannel contact center solutions to increase customer engagement and agent success. Rob has a passion for enhancing customer experiences by prioritizing the agent experience with innovative and feature-rich desktop solutions.