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Cloud Native vs. Hosted: Organizational Impact

Contact center leaders who are looking to move their customer experience applications from on-premises technology to the cloud generally go for two main options: cloud native or cloud hosted. In my my previous No Jitter post, I looked at the basic differences between these two approaches, including where each can be beneficial depending upon specific business needs. But how do differences between cloud-native and cloud-hosted applications play out within different organizations -- namely IT, operations, and finance?
Here are some of the ways a decision for cloud native or cloud hosted can reverberate throughout these departments.
IT leaders aren’t just tasked to design the best technology stack, they’re expected to drive true business value and business disruption through innovation. But these are beyond the basics of keeping the lights on -- i.e., maintaining and running IT systems. IT leaders are constantly looking at ways to minimize time and effort on maintaining systems so they can focus more on innovation. Here’s where the decision between cloud native and cloud hosted starts to make a difference.
Take disaster recovery and business continuity, for example. In the event of an emergency, cloud-native applications have built-in redundancy to get everything up and running with minimal effort. While a hosted model also provides redundancy, it comes with an additional investment in infrastructure and management. The hosting provider would need to build a secondary replica of services, doubling (if not more) costs. And, of course, you have to consider the management overhead that comes when working with a hosting provider.
The same holds good for scalability. Cloud-native applications enable users to instantly scale up or down based on business seasonality, ensuring that businesses are only paying for what they use. A hosting provider can deliver this, but it’s still going to be dedicating equipment to a specific customer, which impacts the time and cost of scalability.
IT leaders are under pressure to keep systems up to date and in compliance with evolving standards. With an open, cloud-native customer experience platform, staying compliant and making upgrades can be instantaneous, effortless, and seamless. By contrast, delivery of upgrades and compliance from hosting providers can be lengthier and more costly, disrupting the business.
IT leaders want their teams to be more innovative and not end up shackled by vendor lock-in that makes creating anything new near impossible. Because they’re built on open API platforms, cloud-native applications allow developers to customize for a company’s particular requirements. This not only boosts innovation, but also dramatically improves developer productivity.
From an operations perspective, efficiency and effectiveness are key. Beyond the basics, staying competitive in the experience economy requires contact center operations to create exceptional customer engagements -- ones that drive loyalty, advocacy, and revenue. The logistics of providing personalized experience, however, can be complicated. Consider the real-time customizations needed, like changing IVR scripts or routing rules to address business needs. The cloud-native model provides the flexibility for the operations team to take action effortlessly without waiting for IT. Hosted systems are more rigid when it comes to real-time customization, sometimes making them outright impossible. The same applies to real-time scaling.
There’s also the agent perspective to consider. Agents are among the most valuable assets for contact centers, and their experiences will differ based on whether they’re working in a cloud-native or cloud-hosted environment, with the latter potentially inhibiting productivity or the ability to serve customers quickly and effectively. The consequences of this can’t be understated.
In fact, a benchmark study shows speed is among the top indicators of positive customer experiences among consumers. A cloud-native contact center can facilitate the integration of different applications into a single desktop. Within a cloud-hosted contact center, agent applications are often cobbled together, leading to decreased productivity, loss of motivation, and an inability to solve customer issues because pertinent data isn’t readily available.
In addition, the cloud-native model streamlines rollout of a remote workforce. Unlike with hosted models, there’s no need for dedicated set-ups and connectivity requirements. As long as agents have Internet access, they can start taking calls and serving customers.
CFOs and their organizations often balance cost savings with long-term investments that yield strategic results. While the capital expenditure vs. operational expenditure argument remains relevant for native vs. hosted cloud models, there are several other nuances to consider. Each cloud option, hosted or native, eliminates upfront investment in resources -- infrastructure and people. Under the hosted model, however, the hosting service provider still must invest in hardware and software dedicated to each customer. You might end up paying for unused seats based on a contract, rather than benefiting from the cost efficiency of a pure pay-per-use model.
Along with cost efficiency, predictability is important to finance organizations -- being able to anticipate exactly what the costs will be each year enables them to plan effectively.
Within the hosted model, unexpected costs for scaling, upgrades, or integrations can arise, making it more difficult for finance to anticipate spending over longer periods of time. Hosted models hit an ROI floor for very small contact center operations, since there’s investment in a dedicated set-up. Costs typically outweigh benefits in these situations. The cloud-native model guarantees ROI for contact centers of any size.
Ensure Everyone Has a Voice
The decision to opt for either cloud native or cloud hosted isn’t isolated. It’s an investment that will have resounding effects across the entire organization. With this in mind, when considering providers, make it a wider conversation involving all potentially involved parties. Invite senior leadership from each department to consider the pros and cons and how their individual teams will be impacted.