2020 will go down in History as a seminal Year for so many reasons, the key one being the impact that Coronavirus has had on Society and upon its impact on how business will work in the future.
As they go forward into an uncertain economic World, organisations will be acutely conscious that every purchasing decision will need to be even more closely assessed than before, and that – if they can – they would rather not spend any money at all.
Furthermore, faced with the sort of economic problems being forecasted such as low or non-existent growth, high redundancies and job losses, and even businesses – and therefore, their clients – going bust altogether, it would not be surprising that a retrenchment or even total cessation of investment would be the order of the day.
However, organisations must still give excellent customer experience to maintain, retain and grow their client base – even more so in a downturn.
So here is the paradox – how do you invest in your customers whilst also looking to reduce costs?
Whilst it is too soon to talk about a “Post-COVID” work environment, several trends that were taking shape have been exacerbated and accelerated by the pandemic.
One of those trends, accelerated by both the financial crash of 2008/09 and the forecasted economic crisis caused by the Pandemic, is that organisations are less prepared to invest heavily in Capital Expenditure – or CapEx.
The ROI from a CapEx investment can take a relatively long time to be achieved, negatively impacting an organisation’s cashflow and balance sheet; this is because such an investment is accounted as a depreciating asset and is written off after a number of years.
By way of contrast, by deploying an Operational Expenditure – or OpEx – financial model for purchases, an organisation can pay as usage increases. This more flexible model helps the organisation by improving cash flow and by not having a depreciating asset on their books.
So, how will this preference for OpEx affect Customer Communications Management (CCM) solutions, and impact Customer Experience?
First, the movement of CCM solutions being implemented from On Premise to the cloud will increase.
This is because the deployment of a solution in the cloud allows for organisations to be able to utilise state of the art capabilities to help improve customer experience, without the need to purchase increasingly more expensive software licences, hardware and support contracts.
It also means that they no longer need to recruit or re-train staff who have the skills and experience effectively run and maintain those software applications, activities which are both expensive and time consuming.
Second, a cloud implementation lends itself much better to an OpEx pricing model, either via a mix of subscription and SaaS (or click charging), or just a SaaS model.
By deploying an OpEx pricing model, an organisation can control and plan their expenditure with much more flexibility, and can therefore be able to manage fluctuating usage (such as peaks at year end) and weather longer term downturns in demand much more easily and effectively than if they had paid a fixed price for a solution which couldn’t pay its way.
In addition, an OpEx pricing model also enables the licencing terms to be more flexible, even to the extent that whilst a contract of a specific length can be negotiated, it can include break points and escape clauses. At the other end of the options, an alternative could be a rolling monthly contract; this demonstrates that with an OpEx model, flexibility is the key.
Finally, organisations deploying a cloud solution will reduce the cost of ownership and maintenance of a solution.
This is because by deploying both a cloud implementation and an OpEx pricing model, when new features and functionality are developed by the software partner these can be rolled out simply and inexpensively to the organisation.
This contrasts where with an on-premise solution, organisations require long, expensive and painful migrations and or software upgrading – time that can better spent in getting new business or in giving better customer experience.
By Steve Narancic, Head of Service Providers Business Development