The Wall Street Journal recently reported that research and development spending is holding steady in the current economic slump. According to the Journal, companies spent nearly as much on R&D in Q4 2008 as they did a year earlier. Why? Because companies are wary of emerging from the recession with obsolete products. The reasoning is understandable, but it’s half-baked. What else should companies be wary about? Emerging from the recession without customers to buy their products.
Put another way, customer service is “the other R&D,” a business function that can’t be ignored in a downturn. Now, most enterprise organizations recognize the need to improve their customer service to be competitive. Fewer enterprises, however, have had the money to do so — until now. The rise of software-as-a-service (SaaS) solutions that improve customer service is giving companies a viable, reliable way to bolster that service without breaking the bank.
Traditionally, a company seeking customer service improvements would spend a lot of money up front on its telephony and contact center infrastructure before it started to reap any benefits. A company with 1,000 to 2,000 customer service agents could easily spend $10 to $15 million on contact center equipment over a 12- to 18-month period. And don’t forget the time and expense needed to hire and retain specialized technical personnel to maintain infrastructure.
Today, the global economy and competitive pressures are making companies think twice about those kinds of dollar investments and payback periods. Companies are looking for alternatives. Money for capital expenditure is harder to get. Even if a company can get the CapEx money, most projects won’t clear the ROI hurdle — producing enough ROI and producing it fast enough — to gain approval to spend the money. Actually, time to value may be the more important consideration. Companies that need to improve customer satisfaction need to improve it now, not in 12 to 18 months.
SaaS, or hosted contact center technologies, solve both the CapEx and the ROI issues. Provided as an on-demand service running securely in an off-premise location, the hosted contact center eliminates CapEx investments as well as staffing requirements to maintain the solution. The enterprise need only pay a monthly service fee for a solution that delivers the enterprise-class stability, performance, and service level agreements that used to be the exclusive domain of multi-million dollar, on-premise solutions. Better, the hosted call center delivers an immediate return.
Of course, the call center isn’t the first SaaS solution to arrive on the scene. SaaS has proven its enterprise capabilities through the pioneering efforts of on-demand service providers such as Automatic Data Processing (ADP) and SalesForce.com.
And SaaS popularity continues to surge. According to a recent Gartner survey, 90 percent of polled enterprises around the world are planning to maintain or increase their investments in SaaS, with the majority expecting to increase their use of SaaS. The driving factors? Cost-effectiveness and ease of deployment. Not surprisingly, Gartner says the current recession could push even more companies toward SaaS solutions, as firms cut discretionary spending in 2009 and 2010.
For the sake of the enterprise, customer service must be recognized as one of the core competencies — along with R&D — that can’t be ignored, in any economic environment. The rise of SaaS solutions ensures that companies can respond to the demands for improved customer service with an on-demand solution with no CapEx costs and rapid ROI.
