Saturday, 26 March 2016

How to pay your call center solution (Financial Model)



There are growing number of call center solutions. , and prospective buyer must address strategic issues before carefully analyzing product functionality. You should begin by selection the appropriate financial model for your company, as this will determine the range of products available for exploring and analysis. Investing in a new ACD , for example , can be expensive – ranging from less than $40K for a small system to millions of dollars for a multi site contact center.

Hosting is a viable call center solution option for companies that are either unable or unwilling to make a large up – front investment. As recently as a few years ago, enterprise that chose to host via the network or another application service provider (ASP) had to sacrifice functionality. This is no longer the case; network and ASP base offering are feature rich today. The business model selection should be based on financials, timing and staff availability. Enterprise should conduct an ROI analysis comparing the different options and select the one with highest ROI and lowest total cost of ownership TCO . There are three basic ways to acquire your core contact center solutions and its infrastructure.

1.     Purchase: In this case, you acquire your own infrastructure. If you intend to use the same equipment for more than 3 years. , it is almost always cheaper to purchase. This also gives you fill control and in house expertise. If you are in it for the long haul and can afford it, this is the way to go.
2.     Rent / Host:  When you rent or host, you contract with a hosting company to provide access to the infrastructure you need. The advantage of hosting are that it can be implemented quickly and does not require your company to have or acquire a staff to support the equipment. The disadvantage are that (1) If you need the infrastructure for more than a year or two, it is usually cheaper to build it in house. (2) You need to depend on outside expertise to optimize the environment as your requirement evolve and (3) it many complicate your data security.
3.     Lease Leasing contact center infrastructure is more like negotiation a financed purchase than a pure lease. The main reason to lease rather that purchase are (1) You need a short term 2 years or less upgrade to an existing environment, (2). Your firm has no cash available for a critical infrastructure investment.  Or (3) your firm has a very high after tax cost of capital 15% or more. If you do lease, make sure that you have a reasonable prices end of lease purchase option preferred a fixed price in your contract. Otherwise, if you are not ready to replace your infrastructure exactly when your lease expires , you will likely over pay to extend the current lease.


Which payment option is right for your company to purchase , lease or host call center solutions?


1.       If your company is planning on keeping the call center for 5 years or longer, purchase is recommended.
2.       If your company own other ACDs and can get a large discount by buying a new one and will be keeping it for 3 years or longer, purchase is recommended.
3.       If your cost of capital is low , generally with is a couple of points of what you will be charges by the bank and are playing to keep the technology for 3 to 4 years , purchase is recommended.
4.       If you are putting up a temporary environment that will not be required after 12 months, hosting is recommended.
5.       If you are going to greatly change your configuration and replace your initial investment in less than 2 years, hosting is recommended.
6.       If you do not have the cash to make the initial investment but still require the functionality for a high ROI, hosting is recommended.
7.       If you your company requires new or advanced ACD capabilities but does not want to carry the financial asses on its books or has a very high cost of capital, leasing may be the right choice.
Making the selection more complicated, it’s possible to compile these financial models. For example, a company may choose to purchase a new contact center switch and then host it off site for security or contingency reasons.   

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