When you read about all of the innovation taking place in the communications space, one debate that’s hard to miss is that between proponents of hosted and on-premises solutions. No doubt, each has its benefits, and which is the best solution for any particular businesses is largely dependent upon available resources, including existing equipment and infrastructure and in-house expertise. For some, it certainly makes sense to invest in an on-premises IP PBX (News - Alert) and other requisite equipment — and it certainly is an investment in the future of the business.
On the other hand — especially in this economy, with budgets as slim as ever — cost immediate cost savings is often the first priority, which is where hosted solutions offer a tremendous value, since the initial capital investment is largely eliminated. Brian Smits, head of marketing for TouchStar, who also heads up its hosted call center business, agreed that, especially today, most businesses are looking at core functionalities and cost, as opposed to added features and intangible benefits, which had taken a front seat as little as a year ago.
He notes that TouchStar’s hosted call center leads have shifted heavily towards its hosted business. Prior to July 2008, he says, the majority of call center leads were for its on-premises systems (hosted lead volume was about 75 percent of on-premises leads), but since that time, hosted call center leads have easily outnumbered on-premises leads — a trend Gartner (News - Alert) predicts will continue to the tune of 2:1 (hosted vs. on-premises) during the next few years. TouchStar’s January 2009 leads, in fact eclipsed that mark, with hosted opportunities more than doubling on-premises inquiries.
He also says those leads have translated into significant business for TouchStar.
“In the last few months, we’ve set sales records and are doing larger deals than ever,” he said. “The hosted model has been excellent for us, and we’re seeing significant growth in that business.”
Of course, the revenue model is different on the hosted side, but so is the potential client base, since many smaller businesses simply aren’t able to adopt an on-premises solution. But, Smits says TouchStar’s success has been evident not only in the small business space, but in the entire under-500-seat call center world, which has been its traditional strength. In fact, that market — under 500 seats — represents the majority of the call center world, as it does the overall business market, so TouchStar really isn’t limited all that much by leaving the very large centers to the players that have traditionally played in that space. It certainly has proven itself more than capable in its comfort zone.
But, by offering a lower cost alternative to traditional telephony players — which Smits says it can do with either solution model — it’s hard for even the enterprise space not to at least give TouchStar a look, because cost savings is on the minds of executives at every business today.
“Being able to offering the same functionality at a lower cost has really driven revenue for us, because the economy is forcing people to look at price much more than they have in the past,” adds Smits.
He also notes that TouchStar recently closed its largest hosted deal to date, which is easily beyond its traditional market, and speaks to its willingness to tackle any opportunity.
It’s certainly not that TouchStar can’t provide services to the largest businesses — with its NMS (now Dialogic (News - Alert)) cards providing an all-VoIP solution running on Dell servers, and with the newly installed infrastructure, TouchStar has the scalability to meet the needs of even the largest clients. Smits adds that the new hosted infrastructure has also helped grow margins
“With new Dell enterprise servers, newly gained density from new telecommunications boards, and new Cisco (News - Alert) network equipment, we’ve been able to reduce hosted business operating expenses by 50 percent in 2009.”
That, in turn, allows TouchStar to focus more on its customers. Ultimately, what it all amounts to is, regardless of client size, the hosted business has taken off for TouchStar in the past nine months, a trend the company expects will continue well after the economy recovers.
“It’s a result of market demand,” explains Smits, adding that, across the industry, revenues are not as high as they once were, but from a customer perspective, TouchStar is doing better than it expected to be. “That’s the story here,” he added.
That’s testament not only to the continued commitment to quality TouchStar was founded on a decade ago, but also to the benefits of a hosted model. Even when the economy rights itself — perhaps in 2010 — it’s not likely that businesses will shy away from a business model that offers the functionality of an in-house solution, but with recurring cost savings and without the need for additional in-house system management.