October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Erik J. LaurenceVP Product Management & Business Development

CosmoCom, Inc.

October 7, 2004

The ROI Case for Hosted Contact Center Services as an Alternative to Premise-Based Systems

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Business Case Review

• Two Perspectives

• Two Business Cases

• End User– Why Will They Subscribe?

• Service Provider– How Does the SP Profit?

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

What’s In It for End Users?

• Capital Expenditure Avoidance– Pay As You Go “Utility” Pricing

• Focus on Core Business– Not Managing Technology

• Capacity Management– Pay for Actual, not Peak Usage

• Virtualization– CCOD is Inherently Location Independent– No Extra Costs For Multi-site or Home Workers

• Cost Effective Access for All to “Large Enterprise Technology”

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

End User Survey

• Why Did You Subscribe to Contact Center On-Demand?

Implementation Speed 15%

Utility Pricing, No Capital 41%

Inherent Virtualization 6%

Small Center Affordable 5%

Bandwidth Reduction in Offshore 5%

Integration with CRM Application 7%

Overflow Peak 2%

Multi-Channel 2%

Multiple Languages 5%

Satellite Friendly 2%

Other 9%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Approach for End User Business Case

• Total Cost of Ownership Approach

• Comparison– Owning & Operating

vs.

– Subscribing

• Key Points– Telco Manages The Technology so You Don’t Have To– Actual Usage, Not Peak

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Service Provider Manages Technology

Premises-BasedPremises-BasedContact CenterContact Center

Contact CenterContact CenterOn-DemandOn-Demand

System System & Licenses& Licenses

Subscription Subscription FeesFees

Customization & Customization & IntegrationIntegration

HardwareHardware

IT PersonnelIT Personnel

MaintenanceMaintenance

TrainingTraining

Customization, Customization, Integration Integration

& Training& Training

Save Money By Letting the Pros Manage the

Technology!

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

End User 3-Year TCO• Basic Apps Only

• Basic + Advanced

Totals Premises CCODACD Inbound (single site) 1,398,721$ 933,225$ CRM Integration 826,191$ 412,325$ IVR 384,310$ 78,269$ Outbound Predictive 1,027,802$ 316,075$ E-mail Management 410,557$ 99,323$ Live Internet 471,951$ 33,108$

4,519,532$ 1,872,324$

Savings from Contact Center On-Demand 2,647,208$ Savings as % from CCOD 59%

Totals Premises CCODACD Inbound (single site) 1,398,721$ 933,225$ CRM Integration 826,191$ 412,325$ IVR 384,310$ 78,269$

2,609,222$ 1,423,819$

Savings from Contact Center On-Demand 1,185,403$ Savings as % from CCOD 45%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Inputs to ModelGeneral Inputs and AssumptionsMaximum ACD Inbound Seats Required 150 Average of Peak Concurrent ACD Inbound Seats per Month 100 Maximum IVR Ports Required 30Average of Peak Concurrent IVR Ports per Month 20Maximum PD Seats Required 75 Average of Peak Concurrent PD Seats per Month 50 Maximum E-mail Mgmt Seats Required 45 Average of Peak Concurrent E-mail Mgmt Seats per Month 30 Maximum Live Internet Seats Required 15 Average of Peak Concurrent Live Internet Seats per Month 10 Home Agent Seats Required 30

Annual Salary for IT Personnel 60,000$ Salary Loading Factor 30%Conventional Platform Annual Maintenance 20%Installation Daily Fee 1,800$ Analysis period (years) 3 Discount Rate for Present Value (PV) Calculations 12%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

ACD Inbound Phone1. ACD Inbound Phone (single site, no integration to other components)Maximum ACD Inbound Seats Required 150 Average of Peak Concurrent ACD Inbound Seats per Month 100

Conventional Premise-Based System Conventional ACD Base Price 80,000$ Conventional ACD Per Seat Price 2,000$ Installation Days Required 26IT Personnel Required 4Hardware and Software 380,000$ Installation Fee 46,800$ PV of Annual Maintenance Over Analysis Period 189,126$ PV of IT Personnel Over Analysis Period 782,795$ Total Cost of Ownership Over Analysis Period 1,398,721$

Next Generation Contact Center On-DemandACD Provisioning Fee (per seat) 200$ ACD Monthly Fee (per seat) 300$ PV of Provisioning & Monthly Fees Over Analysis Period 933,225$ Total Cost of Ownership Over Analysis Period 933,225$

Savings from Contact Center On-Demand 465,496$ Savings as % from CCOD 33%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

ACD Inbound Phone: Multi-Site1a. ACD Inbound Phone (multi-site, no integration to other components)Maximum ACD Inbound Seats Required (all sites) 150 Avg of Peak Concurrent Inbound Seats per Month (all sites) 100

Conventional Premise-Based System Number of Sites (assume total # of seats as above) 2 Conventional ACD Base Price 80,000 Conventional ACD Per Seat Price 2,000 Installation Days Required 46IT Personnel Required 6Hardware and Software 460,000$ Installation Fee 82,800$ PV of Annual Maintenance Over Analysis Period 228,942$ PV of IT Personnel Over Analysis Period 1,174,193$ Total Cost of Ownership Over Analysis Period 1,945,935$

Next Generation Contact Center On-DemandACD Provisioning Fee (per seat) $200ACD Monthly Fee (per seat) $300PV of Provisioning & Monthly Fees Over Analysis Period 933,225$ Total Cost of Ownership Over Analysis Period 933,225$

Savings from Contact Center On-Demand 1,012,710$ Savings as % from CCOD 52%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Integration to CRM2. CRM Integration

Conventional Premise-Based SystemCTI Package for Integration to ACD 90,000$ Professional Services to Integrate CRM to ACD 300,000$ IT Personnel Required 2Integration to ACD 390,000$ PV of Annual Maintenance Over Analysis Period 44,793$ PV of IT Personnel Over Analysis Period 391,398$ Total Cost of Ownership Over Analysis Period 826,191$

Next Generation Contact Center On-DemandCRM Integration Provisioning Fee (per seat) 75$ Professional Services for Integration 100,000$ CRM Integration Monthly Fee (per seat) 100$ PV of Setup & Monthly Fees Over Analysis Period 412,325$ Total Cost of Ownership Over Analysis Period 412,325$

Savings from Contact Center On-Demand 413,866$ Savings as % from CCOD 50%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

IVR – Integrated to ACD3. IVR (single site, including integration to ACD)Maximum IVR Ports Required 30Average of Peak Concurrent IVR Ports per Month 20

Conventional Premise-Based SystemConventional IVR Base Price 25,000$ Conventional IVR Per Port Price 1,000$ Installation Days Required 6Add-on to CTI Package for Integration to ACD 27,000$ Professional Services to Integrate IVR to ACD 55,000$ IT Personnel Required 1Hardware and Software 55,000$ Installation Fee 10,800$ Integration to ACD 82,000$ PV of Annual Maintenance Over Analysis Period 40,811$ PV of IT Personnel Over Analysis Period 195,699$ Total Cost of Ownership Over Analysis Period 384,310$

Next Generation Contact Center On-DemandIVR Provisioning Fee (per port) 100$ IVR Monthly Fee (per port) 125$ PV of Provisioning & Monthly Fees Over Analysis Period 78,269$ Total Cost of Ownership Over Analysis Period 78,269$

Savings from Contact Center On-Demand 306,041$ Savings as % from CCOD 80%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

TCO Summary – Basic Apps

Totals Premises CCODACD Inbound (single site) 1,398,721$ 933,225$ CRM Integration 826,191$ 412,325$ IVR 384,310$ 78,269$

2,609,222$ 1,423,819$

Savings from Contact Center On-Demand 1,185,403$ Savings as % from CCOD 45%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Predictive Dialing4. Outbound Predictive (Single Site, including ACD integration)Maximum PD Seats Required 75 Average of Peak Concurrent PD Seats per Month 50

Conventional Premise-Based SystemConventional PD Base Price 100,000$ Conventional PD Per Seat Price 2,500$ Installation Days Required 22CTI Package for ACD Integration 15,000$ Professional Services for Integration 143,750$ IT Personnel Required 2Hardware and Software 287,500$ Installation Fee 39,600$ Integration to ACD 158,750$ PV of Annual Maintenance Over Analysis Period 150,554$ PV of IT Personnel Over Analysis Period 391,398$ Total Cost of Ownership Over Analysis Period 1,027,802$

Next Generation Contact Center On-DemandPD Provisioning Fee (per seat) 200$ PD Monthly Fee (per seat) 200$ PV of Provisioning & Monthly Fees Over Analysis Period 316,075$ Total Cost of Ownership Over Analysis Period 316,075$

Savings from Contact Center On-Demand 711,727$ Savings as % from CCOD 69%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

E-mail Management5. E-mail Management (including ACD integration with unified queue)Maximum E-mail Mgmt Seats Required 45 Average of Peak Concurrent E-mail Mgmt Seats per Month 30

Standalone Premise-Based SystemStandalone E-mail Mgmt System Base Price 25,000$ Standalone E-mail Mgmt System Per Seat Price 1,000$ Installation Days Required 11CTI Package for ACD Integration w/ Unified Queue 13,500$ Professional Services for Integration 70,000$ IT Personnel Required 1Hardware and Software 70,000$ Installation Fee 19,800$ Integration to ACD w/ Unified Queue 83,500$ PV of Annual Maintenance Over Analysis Period 41,558$ PV of IT Personnel Over Analysis Period 195,699$ Total Cost of Ownership Over Analysis Period 410,557$

Next Generation Contact Center On-DemandE-mail Mgmt Setup Fee (per seat) 200$ E-mail Mgmt Monthly Fee (per seat) 100$ PV of Setup & Monthly Fees Over Analysis Period 99,323$ Total Cost of Ownership Over Analysis Period 99,323$

Savings from Contact Center On-Demand 311,234$ Savings as % from CCOD 76%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Live Internet6. Live Internet (incl. chat, voice, video, co-browse w/ ACD integ. & unified Q)Maximum Live Internet Seats Required 15 Average of Peak Concurrent Live Internet Seats per Month 10

Standalone Premise-Based SystemStandalone Live Internet System Base Price 25,000$ Standalone Live Internet System Per Seat Price 500$ Installation Days Required 11CTI Package for ACD Integration w/ Unified Queue 4,500$ Professional Services for Integration 62,500$ IT Personnel Required 1Hardware and Software 125,000$ Installation Fee 19,800$ Integration to ACD w/ Unified Queue 67,000$ PV of Annual Maintenance Over Analysis Period 64,452$ PV of IT Personnel Over Analysis Period 195,699$ Total Cost of Ownership Over Analysis Period 471,951$

Next Generation Contact Center On-DemandLive Internet Setup Fee (per seat) 200$ Live Internet Monthly Fee (per seat) 100$ PV of Setup & Monthly Fees Over Analysis Period 33,108$ Total Cost of Ownership Over Analysis Period 33,108$

Savings from Contact Center On-Demand 438,843$ Savings as % from CCOD 93%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

TCO Summary – Basic + Advanced

Totals Premises CCODACD Inbound (single site) 1,398,721$ 933,225$ CRM Integration 826,191$ 412,325$ IVR 384,310$ 78,269$ Outbound Predictive 1,027,802$ 316,075$ E-mail Management 410,557$ 99,323$ Live Internet 471,951$ 33,108$

4,519,532$ 1,872,324$

Savings from Contact Center On-Demand 2,647,208$ Savings as % from CCOD 59%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Sensitivity Analysis• What Happens If The Analysis Period Is Longer?

– 5 Years TCO– 10 Years TCO

• What If It’s Shorter?– 2 Years TCO

• What Happens If IT People Are Paid Less?– $30,000– $10,000

• Paid More?– $90,000

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Sensitivity – 5 Year TCO• Baseline – 3 Year

• 5 Year

Totals Premises CCODACD Inbound (single site) 1,398,721$ 933,225$ CRM Integration 826,191$ 412,325$ IVR 384,310$ 78,269$ Outbound Predictive 1,027,802$ 316,075$ E-mail Management 410,557$ 99,323$ Live Internet 471,951$ 33,108$

4,519,532$ 1,872,324$

Savings from Contact Center On-Demand 2,647,208$ Savings as % from CCOD 59%

Totals Premises CCODACD Inbound (single site) 1,878,303$ 1,378,651$ CRM Integration 1,041,364$ 560,800$ IVR 501,005$ 115,388$ Outbound Predictive 1,295,287$ 464,550$ E-mail Management 527,621$ 143,865$ Live Internet 600,339$ 47,955$

5,843,920$ 2,711,210$

Savings from Contact Center On-Demand 3,132,711$ Savings as % from CCOD 54%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Sensitivity – 10 Year TCO• Baseline – 3 Year

• 10 Year

Totals Premises CCODACD Inbound (single site) 1,398,721$ 933,225$ CRM Integration 826,191$ 412,325$ IVR 384,310$ 78,269$ Outbound Predictive 1,027,802$ 316,075$ E-mail Management 410,557$ 99,323$ Live Internet 471,951$ 33,108$

4,519,532$ 1,872,324$

Savings from Contact Center On-Demand 2,647,208$ Savings as % from CCOD 59%

Totals Premises CCODACD Inbound (single site) 2,678,194$ 2,121,016$ CRM Integration 1,400,123$ 808,255$ IVR 695,624$ 177,251$ Outbound Predictive 1,741,568$ 712,005$ E-mail Management 722,858$ 218,102$ Live Internet 814,522$ 72,701$

8,052,888$ 4,109,329$

Savings from Contact Center On-Demand 3,943,559$ Savings as % from CCOD 49%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Sensitivity – 2 Year TCO• Baseline – 3 Year

• 2 Year

Totals Premises CCODACD Inbound (single site) 1,398,721$ 933,225$ CRM Integration 826,191$ 412,325$ IVR 384,310$ 78,269$ Outbound Predictive 1,027,802$ 316,075$ E-mail Management 410,557$ 99,323$ Live Internet 471,951$ 33,108$

4,519,532$ 1,872,324$

Savings from Contact Center On-Demand 2,647,208$ Savings as % from CCOD 59%

Totals Premises CCODACD Inbound (single site) 1,112,502$ 667,302$ CRM Integration 697,753$ 323,684$ IVR 314,663$ 56,108$ Outbound Predictive 868,187$ 227,434$ E-mail Management 340,689$ 72,730$ Live Internet 395,335$ 24,243$

3,729,128$ 1,371,501$

Savings from Contact Center On-Demand 2,357,627$ Savings as % from CCOD 63%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Sensitivity – $30K IT• Baseline – $60K

• $30K

Totals Premises CCODACD Inbound (single site) 1,398,721$ 933,225$ CRM Integration 826,191$ 412,325$ IVR 384,310$ 78,269$ Outbound Predictive 1,027,802$ 316,075$ E-mail Management 410,557$ 99,323$ Live Internet 471,951$ 33,108$

4,519,532$ 1,872,324$

Savings from Contact Center On-Demand 2,647,208$ Savings as % from CCOD 59%

Totals Premises CCODACD Inbound (single site) 1,007,324$ 933,225$ CRM Integration 630,492$ 412,325$ IVR 286,461$ 78,269$ Outbound Predictive 832,103$ 316,075$ E-mail Management 312,707$ 99,323$ Live Internet 374,102$ 33,108$

3,443,188$ 1,872,324$

Savings from Contact Center On-Demand 1,570,864$ Savings as % from CCOD 46%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Sensitivity – $10K IT• Baseline – $60K

• $10K

Totals Premises CCODACD Inbound (single site) 1,398,721$ 933,225$ CRM Integration 826,191$ 412,325$ IVR 384,310$ 78,269$ Outbound Predictive 1,027,802$ 316,075$ E-mail Management 410,557$ 99,323$ Live Internet 471,951$ 33,108$

4,519,532$ 1,872,324$

Savings from Contact Center On-Demand 2,647,208$ Savings as % from CCOD 59%

Totals Premises CCODACD Inbound (single site) 746,392$ 933,225$ CRM Integration 500,026$ 412,325$ IVR 221,228$ 78,269$ Outbound Predictive 701,637$ 316,075$ E-mail Management 247,474$ 99,323$ Live Internet 308,869$ 33,108$

2,725,626$ 1,872,324$

Savings from Contact Center On-Demand 853,302$ Savings as % from CCOD 31%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Sensitivity – $90K IT• Baseline – $60K

• $90K

Totals Premises CCODACD Inbound (single site) 1,398,721$ 933,225$ CRM Integration 826,191$ 412,325$ IVR 384,310$ 78,269$ Outbound Predictive 1,027,802$ 316,075$ E-mail Management 410,557$ 99,323$ Live Internet 471,951$ 33,108$

4,519,532$ 1,872,324$

Savings from Contact Center On-Demand 2,647,208$ Savings as % from CCOD 59%

Totals Premises CCODACD Inbound (single site) 1,790,119$ 933,225$ CRM Integration 1,021,889$ 412,325$ IVR 482,160$ 78,269$ Outbound Predictive 1,223,501$ 316,075$ E-mail Management 508,406$ 99,323$ Live Internet 569,800$ 33,108$

5,595,875$ 1,872,324$

Savings from Contact Center On-Demand 3,723,551$ Savings as % from CCOD 67%

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Why Are Telcos Offering It?

• Telcos Must Transform Core Business– From Providers of Commodity Transport– To Providers of Sophisticated Telecom Services

• Telcos Already Generate Significant Revenue from Contact Centers– Mostly Basic Transport – Vulnerable to Price Competition– Advanced Capabilities Left to Providers of Premises

Equipment

• Migrates Advanced Capabilities Back to Network• More Network Usage

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

Telco Bottom Line

• Results of Operations (Direct only)– Breakeven EBITDA Early in Year 2– $89M EBITDA Year 5– NPV of $170M– ROI of 200%

• Indirect Revenue– $1M in Year 1 grows to $52M in Year 5– $1 of Indirect Revenue for Every $2.5 - $3 Direct

Revenue

October 4-7, 2004 • Los Angeles, CA • www.itexpo.com

The Bright Future of a New Service Delivery Model

The Future Starts Now!