It is vital to understand their similarities and differences. The million dollar piece of equipment in your computer room, the ongoing Maintenance cost is examples of on-premise dialing solution. A common example is the Avaya Predictive Dialer hosted on your network. The commonality is that you own (or rather, technically license from the software vendor) the application and host it on-site at your place of work. In fact, if you read the fine-print of your on-premise license agreement, you’ll discover that rarely do you actually own the software.

What exactly is Call Center on Demand? In the Call Center on Demand delivery model, vendors host call center applications over the Internet and deliver them to customers for a recurring fee. Consumed in a one-to-many model by all contracted customers, at any time, on a pay-for-use basis, or as a subscription based on usage metrics.” One of the most common Call Center on Demand delivery models is the single instance, multi-tenant arrangement in which common call center applications are hosted at a central location and used by many different companies.

While on-premise has been the application delivery standard for decades, the Call Center on Demand delivery model in which you access applications through a secure Web browser is a more recent (and increasingly popular) application delivery option. Call Center on Demand enables companies to build powerful, highly secure, and flexible applications and then deliver them to a broad customer base.

There is much to love about Call Center on Demand. It is not for everyone, to be sure. But it certainly delivers technical, operational and financial flexibility that the smaller and midsized operation needs to service existing accounts and develop new revenue opportunities. Here are some of the key benefits that many Call Center on Demand users have experienced:

Call Center on Demand is always much cheaper to both evaluate and deploy. Customers who would have previously evaluated solutions in-house prior to purchase can now simply visit a Call Center on Demand vendor’s web site and arrange to try the solution before buying.

Call Center on Demand users will experience a sharp reduction in their infrastructure costs. That’s a very good thing. Configuration, maintenance, and updates/upgrades tasks disappear. You simply eliminate the need to maintain some of your infrastructure. To see what the savings might look like, do a quick cost calculation on how much you are paying for T1 costs and on going maintenance. Call Center on Demand users can redirect their scarce IT resources to strategic initiatives, such as business process improvement. Studies have shown that most IT managers spend over 85% of their time on maintenance instead of innovation.

With Call Center on Demand, you don’t have to buy or install additional software or hardware. You’ll avoid resource allocation issues. Reduced complexity with Call Center on Demand delivers important financial benefits in the short-term (through avoiding capital investments), as well as in the long-term (cheaper operating costs). Consider that the average on-premise deployment for a mid-sized company can take up to 12 months. An entire “plan-configure-run” cycle for a Call Center on Demand system can take less than a week. Much of this faster time-to-deployment is due to eliminating complex on-premise setup planning.

With Call Center on Demand, data backup is offloaded to the provider. This might sound scary but consider that the backup and data recovery strategies for most Call Center on Demand vendors are superior to many internal IT departments. Take the time to find out what they are. Call Center on Demand can deliver more than acceptable levels of availability, scalability and reliability a faction of the cost of on-premise options.

What happens if the application goes down? Can the Call Center on Demand vendor reboot the system faster than your own internal IT department or IT service partner? Again, ask about uptime performance and ask for customer references before you commit to one Call Center on Demand vendor over another. Contact existing customers to learn about historical performance. Ask to see their performance charts.

If your Internet access goes down, so does your access to your data. This could be as much an issue of the reliability of your network provider and your contingency plans. Realistically, if your Internet access goes down, however, you’ll likely have much bigger concerns about how this connectivity issue is suddenly affecting your order management, email, accounting, and other operational systems.

Call Center on Demand also conjures up security and IT management issues. As these applications are delivered by third parties, and are often championed by non-IT staff, the IT department can be worried about the extra work they perceive they may have to undertake.

Just because an application is web-based, it doesn’t mean it doesn’t have to adhere to a company’s security, privacy, and Internet use policy requirements. If you are considering Call Center on Demand, make sure you research the vendor’s security policies and practices.

As IT department become more familiar with the Call Center on Demand delivery model and Call Center on Demand vendors, IT departments will become more comfortable with integration and security issues when the data resides off-site.

Total cost of ownership is an issue regardless of what type of call center solution you use. Companies pay for applications in one way or another. You either pay through purchasing and licensing, as is the case with on-premise, or you pay some manner of subscription or usage fee, which is the Call Center on Demand model. Most often, those companies are paying a monthly subscription fee; that may be a flat fee, or it may be based on the number of system users on the system or some transaction or volume estimate.

You’re already paying for desktops, notebooks, and Internet access anyway. Internet access bandwidth for in-house and remote users usually carries a fairly fixed cost structure, especially due to the commodity and competitive nature of the industry.

On-premise solutions carries a variety of additional startup costs during the first year. You’ll have to budget for initial testing and evaluation of both the software and the necessary hardware to run it. You’ll have to buy the appropriate number of licenses for your site(s) and budget for user training, and tech support. In year two and beyond, you’ll have to pay either annual maintenance fees (usually 18-24% of the initial per-seat license fee), or just wait for the big software upgrade, which you can expect to face in year three.

When comparing the Call Center on Demand model against the on-premise option, the big question to ask is what does the solution need to do? Your decision should not just focus on the money. Certainly look at what each delivery model will cost, but also consider other factors such as what each solution option will allow your company to do now and become later. Consider the amount of evaluation, installation and implementation time you will need. Factor in cost estimates of lost time (and possibly revenue, too) from integration and, in the case of on-premise, of future upgrades. What will a couple of hours (or more) of downtime cost in the future?

Noncore business researchers predict that 25 percent of all new businesses will utilize Call Center on Demand by 2012. For call Center operations that need to improve their game (or those already operating strongly), take a serious look at the Call Center on Demand model and you’ll quickly see how it will help you deliver a lot more value to your business partners and customers.