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The AI revolution is driving demand for massive computing power and creating a data center shortage, with data center operators planning to build more facilities. But it’s time for data centers and other organizations with large compute needs to consider hardware replacement as another option, some experts say.

Data centers are running at near capacity in many areas of the world, according to the Global Data Center Trends 2024 report from CBRE, a real estate services firm. Singapore’s data centers have a 1% vacancy rate, and data center availability in the huge northern Virgina data center hub stands at 0.9%, despite an 18% increase in capacity between early 2023 and early 2024, according to the report.

The 2023 CBRE report found that 83% of the data center capacity under construction at the time was presold.

While there’s more than 10% of capacity available in Europe, Latin America, and the greater Asia Pacific region in 2024, the growth of AI, cloud computing providers, and other power-hungry applications requires a new approach to data center operations, the report says. “High-performance computing will require rapid innovation in data center design and technology to manage rising power density needs,” it adds.

A current data center building boom isn’t likely to stop soon, with credit rating firm Moody’s, in a July 15 report, projecting that global capacity will double in the next five years. But with finding space for new data centers becoming increasingly difficult, some experts say it’s a good time for data center operators, cloud computing providers, and companies running AI and other major workloads in house to think about replacing old hardware instead.

Efficiency is money

Modern CPUs not only offer more computing power, but they also are more power efficient than older models and generally take up much less data center space, some advocates say. Using new CPUs, data centers can consolidate servers running tens of thousands of cores into less than 50 cores, says Robert Hormuth, corporate vice president of architecture and strategy in the Data Center Solutions Group at AMD.

An estimated 100 million 5-year-old servers are still in operation, partly because the COVID-19 pandemic stalled some planned upgrades, Hormuth says. About 21 million new servers could replace those old machines, leaving data centers and in-house server rooms more space to add computing power.

With power efficiency gains and other savings, a large-scale hardware replacement could give data center operators and other hardware-dependent organizations a return on investment in as little as two months, Hormuth claims. Meanwhile, building a new data center can cost hundreds of millions of dollars.

Power efficiency gains of new hardware can also give data centers and other organizations a power surplus to run AI workloads, Hormuth argues.

“That’s the race that seems to be going on in enterprises: ‘How do I go make room and power to do AI?’” he adds. “That pressure is just really driving the enterprise customers, whether it be in a co-lo or create their own, to get those capabilities.”

Big upgrades ahead

While AMD has a dog in this hardware-replacement fight, several other IT experts also say it’s a good time to replace servers and other hardware. Many data center operators appear to be thinking the same way, with Gartner projecting a 24.1% data center spending increase, covering servers, external storage, and network equipment, in 2024. Data center spending, which doesn’t include new buildings in Gartner’s calculations, saw just 4% growth in 2023, Gartner says.

Jim Warman, vice president of infrastructure architects and engineers at Myriad360, a data center and cybersecurity consulting firm, sees the same trend. Many hardware users are prioritizing replacement.

“Businesses are recognizing the advantages of modernizing their infrastructure to support new applications and services, reduce costs, and maintain competitiveness,” he adds. “The emphasis is on utilizing the latest technology to drive business growth and operational efficiency.”

With data centers near capacity in the US, there’s a critical need for organizations to consider hardware upgrades, he adds. The shortage is exacerbated because AI and machine learning workloads will require modern hardware.

“Modern hardware provides enhanced performance, reliability, and security features, crucial for maintaining a competitive edge and ensuring data integrity,” Warman says. “High-performance hardware can support more workloads in less space, addressing the capacity constraints faced by many data centers.”

The demands of AI make for a compelling reason to consider hardware upgrades, adds Rob Clark, president and CTO at AI tool provider Seekr. Organizations considering new hardware should pull the trigger based on factors beyond space considerations, such as price and performance, new features, and the age of existing hardware, he says.

Older GPUs are a prime target for replacement in the AI era, as memory per card and performance per chip increases, Clark adds. “It is more efficient to have fewer, larger cards processing AI workloads,” he says.

While AI is driving the demand for data center expansion and hardware upgrades, it can also be part of the solution, says Timothy Bates, a professor in the University of Michigan College of Innovation and Technology. Data center operators can use AI to monitor efficiency, he says.

“By using AI tools to predict and manage hardware degradation — such as PCIe cards, SSDs, and memory components — businesses can replace individual components rather than entire systems, optimizing costs and extending the lifespan of existing infrastructure,” Bates says. “This approach, combined with strategic hardware upgrades, can maximize the efficiency and performance of data centers.”

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One of four government data centers in the Netherlands, Overheidsdatacenter Noord (ODC-Noord), the northernmost facility of its kind in The Netherlands, is located in the picturesque city of Groningen. With nearly 140 employees, the high-performance data center provides government agencies with mission-critical compute, storage, and networking solutions needed to provide important services to citizens.

Offering Housing-as-a-Service, Platform-as-a-Service, and Infrastructure-as-a-Service featuring ODC-Noord currently serves around 40 customers. These include numerous government ministries and agencies that serve citizens of the Netherlands. One of the provided services is the high availability and performance of the VMware based vCloud platform.

“We provide scalable ICT services in accordance with the National Institute of Standards and Technology (NIST) cloud computing reference architecture for business applications,” says Jaap Jansma, manager at ODC-Noord. “This includes not only HaaS, PaaS, and IaaS, but also the supporting facilities for development of custom software, as well as solutions for DevOps teams—among them Kubernetes test and production environments and applications for specific use cases, including data science and deep analytics.”

ODC-Noord’s agile teams are comprised of skilled personnel. These experts not only develop, but also manage and maintain all of the organization’s services.

“Our teams are driven, enterprising and a bit headstrong,” adds Jansma. “These are qualities that serve us well in our dedicated work to provide high-quality and innovative services to our customers.”

Those services also reflect ODC-Noord’s commitment to reduce its carbon emissions to net zero by 2030 and to serve as a partner who can help government agencies further their own sustainability goals. Jansma notes that’s why the decision to embrace the VMware Zero Carbon Committed initiative was a natural one.

“As a public-sector organization, we are included in the Dutch government’s diligent efforts to create a carbon-free energy system, but at ODC-Noord, we also feel strongly that it is our responsibility as a service provider to do everything we can to reduce the impact of ICT on the environment,” says Jansma. “The migration to software-defined data centers was an important step in the right direction, but it’s just the beginning. The VMware Zero Carbon Committed initiative builds on that momentum and is a natural next step.”

Notably, ODC-Noord already runs on 100% renewable energy sources, among them hydro, wind and solar power. Servers are also controlled with advanced power management solutions to maximize their efficiency. There are also plans to use residual heat to heat 10,000 homes and buildings in Groningen.

Outside air is also used to cool the data center—radically reducing the need for traditional air conditioning systems. Even the basic design of the facility uses natural airflows in which colder air sinks and warmer air rises to minimize the use of heating and cooling systems. In 2022, the average Energy Usage Effectiveness, or EUE, of ODC-Noord was an impressive 1.25.

Other steps, including ODC-Noord’s goal to transition to hydrogen are far reaching and ambitious, but Jansma notes that every step, large and small, is important.

“We’ve already stitched to a hydrogen-powered backup utility offered by one of our suppliers, NorthC, which is big step forward, and our innovations in power management enabled us to reduce the power usage of 40% of our assets, including servers, by 90%,” he says. “We’re also working with our suppliers to institute sustainability rating certifications and to reduce the amount of packaging—for example we recently eliminated the packaging of individual items with one of our cable vendors—and we are recycling hardware in-house to ensure it’s done right. And of course, there are myriad small steps we take each day, from recycling in our offices to promoting public transportation. It’s all important.”

Jansma believes the VMware Zero Carbon Committed initiative is a powerful way not only to support these efforts, but to make them part of the conversation with customers. It’s a conversation he believes must occur.

“We are living in a world where it seems that the sky is the limit, but we are realizing that we have to be careful with everything our planet gives us,” he says. “For a sustainable future, and for the future of our children, it is our duty to invest in a zero carbon footprint.”

Learn more about ODC-Noord and its partnership with VMware here.

Cloud Computing, Green IT

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The room was abuzz. People were standing, talking intensely, mingling, and meeting new people. This was our first in-person conference in 2023, and it was going exactly as planned: Participants were engaged and networking. In all of our surveys, networking is always one of the top two reasons attendees come to our events (the other is the content), but often we don’t see them doing it. So we’d put a structured networking exercise on the agenda, introduced the session, and presented some sample questions they could use as conversation starters. Voila – off they went. Later, our survey results indicated it was a highlight of the event.

Welcome to FutureIT, our new event brand debuting in five cities in 2023. We’ve focused on leveraging what’s special and important about meeting in person again, with keen attention paid to creating the best – and a memorable — attendee experience. A fresh take on content, networking and experiences means it’s not your father’s IT event – as one attendee enthusiastically told us.

That’s right. Our focus covers three areas: leadership, technology and personal development. The program starts with a workshop to heed the call of deeper learning, networking and personal growth;  features an inspirational, non-endemic keynote, followed by interviews with and panels of exceptional CIOs; and includes not just the aforementioned structured networking but active discussion groups led by our sponsors.

The program also features content aimed at attendees’ careers, by looking at the latest job requirements for senior IT and security executives. This session includes information that will help managers recruit for open positions – a big pain point across so many and IT security teams – as well.

As such, the agenda checks all the boxes regarding what recruiters and our research indicate are the most crucial skills for success in today’s volatile business environment. Sound exciting? We have programs coming up in Washington, D.C.; Toronto; Chicago; New York; and Southern California. Join us.    

Digital Transformation, Events, IT Leadership

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By Hock Tan, Broadcom President and CEO

During the 17 years I have led Broadcom, solving problems for customers and giving them the tools they need to succeed have been the most rewarding parts of my job. It’s important to me that whether we’re inventing the future through innovative R&D or co-creating new solutions with partners and users, Broadcom’s focus is customer centricity.

Broadcom has long prided itself in offering world-class enterprise technology solutions, spanning semiconductors to infrastructure software that the world’s largest companies need and want. Once we acquire VMware, we expect to deepen our commitment to customer success by building a more dynamic IT value proposition. Together, we will add the software tools customers need to better manage and get the most out of their data across all possible environments, whether they choose private cloud or public cloud approaches.

We’ll also gain valuable partnerships – an ecosystem that has been and will remain essential to Broadcom’s broader commitment to maintain, nurture, and serve VMware’s existing and future customers, regardless of organizational size. VMware’s partners today serve as both innovation collaborators and connectors to a wider range of customers, including small- and medium-sized businesses. Once the acquisition is completed, we will sustain and further develop VMware’s robust partner ecosystem, especially as we work together to expand VMware’s solutions. Partners will be able to grow their businesses as the combined company accelerates execution and smart portfolio growth. Together, we’ll be better positioned to help customers speed app modernization, move to the cloud faster and support a more secure and hybrid workforce.

We will also help expand an extremely innovative, world-wide user community. As I mentioned in my open letter to the VMware User Group (VMUG), it’s all about the product – and we’re going to focus on making VMware’s products even better for customers, including making them easier for customers and partners to access and use. As part of this, we will support and invest greater resources in VMware’s training programs, which we recognize are incredibly valuable offerings to the user community, and use our longstanding experience in utilizing partner and user ecosystems to support customers’ technology and multi-cloud priorities.

However, for Broadcom and VMware to remain central to customer success, we also must remain at the forefront of product innovation and help customers keep up with technology advancements. VMware will complement Broadcom’s more than 60-year focus on innovation, intellectual property, and R&D know-how. Our combined track record of developing and distributing ground-breaking technologies will accelerate customer value, and industry and ecosystem growth. Each company’s products are leaders in their respective markets and categories, powering the most complex IT environments in the world.

Ultimately, through this combination of partners, users, and products, we will take our commitment to customer success to a new level. In this multi-cloud era, Broadcom and VMware will empower customers by providing them the tools that give them the choice, freedom, and flexibility to innovate and better manage their IT environments. Customers cannot compete or operate effectively if their IT environments lag the industry, and that’s particularly true for those managing highly sensitive data and need to protect and control their data across environments – whether on-premises or in private or public clouds.

Take Europe, for example, where governments and critical industries are looking to sovereign clouds. A multi-cloud approach that includes sovereign clouds allows organizations to ensure their data is being safely stored and managed in compliance with relevant regional and national laws and regulations. It is critical for enterprises, especially governments, to maintain flexibility to move data between deployment environments, while running workloads across these multiple environments. Governments moving to multi-cloud will need the tools to effectively manage their data and run applications in different cloud environments to meet different regulatory and other requirements.

At Broadcom, we all see an incredibly exciting future for VMware’s customers. Together, we will continue investing in and further developing VMware’s innovative product portfolio, leveraging our shared R&D commitment and expertise. And we will leverage our collective experience with VMware’s partners and users to unlock new value and growth. This combination will serve our customers more impactfully and comprehensively than ever before and propel their businesses forward over the long term.

Learn more from Broadcom

Cautionary statement regarding forward-looking statements

This communication relates to a proposed business combination transaction between Broadcom Inc. (“Broadcom”) and VMware, Inc. (“VMware”).  This communication includes forward-looking statements within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and Section 27A of the U.S. Securities Act of 1933, as amended.  These forward-looking statements include but are not limited to statements that relate to the expected future business and financial performance, the anticipated benefits of the proposed transaction, the anticipated impact of the proposed transaction on the combined business, the expected amount and timing of the synergies from the proposed transaction, and the anticipated closing date of the proposed transaction.  These forward-looking statements are identified by words such as “will,” “expect,” “believe,” “anticipate,” “estimate,” “should,” “intend,” “plan,” “potential,” “predict,” “project,” “aim,” and similar words or phrases.  These forward-looking statements are based on current expectations and beliefs of Broadcom management and current market trends and conditions. 

These forward-looking statements involve risks and uncertainties that are outside Broadcom’s control and may cause actual results to differ materially from those contained in forward-looking statements, including but not limited to: the effect of the proposed transaction on our ability to maintain relationships with customers, suppliers and other business partners or operating results and business; the ability to implement plans, achieve forecasts and meet other expectations with respect to the business after the completion of the proposed transaction and realize expected synergies; business disruption following the proposed transaction; difficulties in retaining and hiring key personnel and employees due to the proposed transaction and business combination; the diversion of management time on transaction-related issues; the satisfaction of the conditions precedent to completion of the proposed transaction, including the ability to secure regulatory approvals on the terms expected, at all or in a timely manner; significant indebtedness, including indebtedness incurred in connection with the proposed transaction, and the need to generate sufficient cash flows to service and repay such debt; the disruption of current plans and operations; the outcome of legal proceedings related to the transaction; the ability to complete the proposed transaction on a timely basis or at all; the ability to successfully integrate VMware’s operations; cyber-attacks, information security and data privacy; global political and economic conditions, including cyclicality in the semiconductor industry and in Broadcom’s other target markets, rising interest rates, the impact of inflation and challenges in manufacturing and the global supply chain; the impact of public health crises, such as pandemics (including COVID-19) and epidemics and any related company or government policies and actions to protect the health and safety of individuals or government policies or actions to maintain the functioning of national or global economies and markets; and events and trends on a national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature.

These risks, as well as other risks related to the proposed transaction, are included in the registration statement on Form S-4 and proxy statement/prospectus that has been filed with the Securities and Exchange Commission (“SEC”) in connection with the proposed transaction.  While the list of factors presented here is, and the list of factors presented in the registration statement on Form S-4 are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties.  For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to Broadcom’s and VMware’s respective periodic reports and other filings with the SEC, including the risk factors identified in Broadcom’s and VMware’s most recent Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.  The forward-looking statements included in this communication are made only as of the date hereof.  Neither Broadcom nor VMware undertakes any obligation to update any forward-looking statements to reflect subsequent events or circumstances, except as required by law.

No offer or solicitation

This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.  

Additional information about the transaction and where to find it

In connection with the proposed transaction, Broadcom has filed with the SEC a registration statement on Form S-4 that includes a proxy statement of VMware and that also constitutes a prospectus of Broadcom.  Each of Broadcom and VMware may also file other relevant documents with the SEC regarding the proposed transaction.  The registration statement was declared effective by the SEC on October 3, 2022 and the definitive proxy statement/prospectus has been mailed to VMware shareholders. This document is not a substitute for the proxy statement/prospectus or registration statement or any other document that Broadcom or VMware may file with the SEC.   INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.  Investors and security holders may obtain free copies of the registration statement and proxy statement/prospectus and other documents containing important information about Broadcom, VMware and the proposed transaction once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov.  Copies of the documents filed with the SEC by Broadcom may be obtained free of charge on Broadcom’s website at https://investors.broadcom.com.  Copies of the documents filed with the SEC by VMware may be obtained free of charge on VMware’s website at ir.vmware.com.

About Hock Tan:

Broadcom Software

Hock Tan is Broadcom President, Chief Executive Officer and Director. He has held this position since March 2006. From September 2005 to January 2008, he served as chairman of the board of Integrated Device Technology. Prior to becoming chairman of IDT, Mr. Tan was the President and Chief Executive Officer of Integrated Circuit Systems from June 1999 to September 2005. Prior to ICS, Mr. Tan was Vice President of Finance with Commodore International from 1992 to 1994, and previously held senior management positions with PepsiCo and General Motors. Mr. Tan served as managing director of Pacven Investment, a venture capital fund in Singapore from 1988 to 1992, and served as managing director for Hume Industries in Malaysia from 1983 to 1988.

IT Leadership

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Even as cloud spend is set to grow at a CAGR of 16.9% and surpass $1.3 trillion by 2025, the transformation journey is riddled with challenges, such as security, governance, compliance, economics, and resourcing. A cloud center of excellence (CoE) in an enterprise can make a big difference in the return on cloud investments.

Cloud CoE adoption has increased from 69% in 2017 to 82% in 2021, demonstrating its role in value creation. To work effectively, CoE transformation must rest on four key pillars — innovation, advocacy, scale, and governance — that can accelerate cloud adoption throughout an enterprise.

But that’s just the tip of the iceberg. Besides technology expertise and contextual knowledge, every successful cloud CoE revolves around these five tenets:

Being relevant: A cloud CoE must stay relevant by bringing a convergence between the long-term objectives (top-down) and immediate priorities (bottom-up), leading to a strong foundation that supports future strategy and mitigates risk and rework.

Staying connected: A cloud CoE must seek representation and involvement from across the business to improve buy-in and compliance.

Building a strong team: Various skills, ranging from cloud experts to business specialists, are required for the effective functioning of cloud CoE.

Innovating continuously: A cloud CoE must invest time and resources to identify digital capabilities to innovate and build ecosystems of the future.

Transforming culture: A cloud CoE must engage the security and risk groups within an organization to understand the hybrid landscape and ensure the identification and mitigation of risks.

Learn more about cloud-driven business agility on Microsoft Cloud with this case study from TCS.

Cloud Computing

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As applications and IT services advance, scaling and modernizing data centers and meeting increased performance and security requirements grows more and more challenging. While networking technology has evolved over the past decade to provide higher-performing leaf-spine topologies, the unfortunate reality is that associated security and services architectures have not kept pace.

To compensate, many organizations use a stateless data center fabric, bolting on network services and applying complex service chaining — an inefficient solution that delivers sub-par results.

Enterprise organizations that want to compete on the same level as the hyperscalers must shift away from legacy architectures and embrace the next-generation data center fabric. This stateful architecture provides integrated infrastructure services required to secure and scale applications while improving performance and manageability.

Aruba and Pensando Systems have come together to innovate a new category of switches that enables organizations to create hyperscale-like environments in their existing data centers. The Aruba Distributed Services Switch is the game-changing, next-generation data center fabric organizations need to overcome legacy limitations and resolve security and performance issues.

East-West traffic has outgrown current-generation switching technologies

As technologies like edge computing advance, the volume of data requiring processing has surged, prompting enterprise data centers to repurpose traditional firewalls to segment the network. This leads to a number of issues. For example, when a host system in one cabinet needs to interface with another, traffic must be routed to the services host. Unfortunately, this service-chaining approach creates a hair-pinning or trombone effect, resulting in choke points that bog down the network, operations, and performance.

To accommodate traffic and capacity increases, more firewalls must be added, making scaling complex and expensive. The reality is that traditional firewalls designed for North-South traffic fall short when it comes to enforcing East-West traffic policies. Furthermore, traffic from microservices-based applications may never leave a physical host, leading to security blind spots that leave an organization vulnerable to threats.

The next-generation data center fabric: Aruba CX 10000 Series Switch

As East-West traffic continues to expand, organizations must rethink how traffic gets handled in the data center. And that’s what the folks at Aruba and Pensando have done. The Aruba CX 10000 Series Switch combines Aruba data center L2/3 switching technology with the Pensando Elba DPU.

Putting the Pensando Elba DPU on the switch itself addresses the shortcomings of the traditional data center by eliminating the need for manual service chaining. As the industry’s only programmable DPU, the Pensando Elba creates a centralized policy enforcement point and delivers a distributed stateful firewall for East-West traffic. The result is the industry’s only solution of its kind, completely revolutionizing data center fabric and delivering the improved security, performance, and scalability of hyperscalers at a fraction of the cost.

Benefits of the Aruba CX 10000 include:

Zero-trust segmentationMicro- and macro-segmentationPervasive telemetryTraffic flow optimizationIncreased bandwidth and performanceImproved operational efficiency and scalabilityAccelerated provisioningSubstantially reduced capex and opex costs

Streamline and secure your data center with Aruba CX 10000

What’s great about the Aruba CX 10000 is that it allows organizations to use their existing data center architecture. It provides a single pane of glass to manage everything in one place, simplifying administration, security, provisioning, and scaling. Plus, this cost-effective solution costs half to a third of traditional data center switching while delivering far superior performance and ROI.

To learn more about transforming your data center architecture with next-generation data center fabric, contact the experts at GDT.

Data Center

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‘Cloud’ is a buzzword that has run its course in a lot of industries, but there is a resurgence of cloud talk in the contact center arena these days.

Contact Center as a Service (CCaaS) is a high-priority digital transformation project for many businesses around the world, and some of the biggest players in tech are jumping in with both feet. Zoom, Microsoft, Amazon Web Services, Google, and Salesforce are all touting new ideas to leverage voice, digital and technological advances like artificial intelligence (AI), natural language processing (NLP), and machine learning (ML) in the contact center. At the same time, legacy on-premises players like Genesys1, Cisco, and Avaya are making big bets on the cloud.

While midsized companies have generally found it easier to move their contact centers to the cloud (many were urged on by the push to have contact center agents working from home during the pandemic), many bigger enterprises have yet to take the plunge. The global market for CCaaS offerings is expected to grow by 26.1% annually2 from 2022 to 2027, expanding from $17.1 billion to $54.6 billion. With all the buzz about CCaaS in the industry and amid looming economic uncertainty, it is realistic to expect that this shift will happen even faster.

The real difference between cloud and on-premises

Traditional contact center technology is built purposefully. It is intended to be used as a telephony-based call center solution, and it has worked really well for a long time, which is partly why larger organizations haven’t been as quick to jump to the cloud.

The cloud is a different kettle of fish. Many CCaaS offerings include an assortment of technologies, apps, and integrations with an ecosystem of partner apps assembled to form a contact center. In addition to core contact center functionality, cloud solutions have added perks, like built-in productivity tools and AI integration, which traditional telephony solutions just can’t match.

Adding AI to your contact center is a game-changer, and moving to the cloud gives you access to the best the industry has to offer. AI comes baked into many CCaaS solutions, which opens fresh opportunities for companies to leverage natural language engines like voice bots, chatbots, or conversational IVRs to enable more self-service options for customers while freeing up human agents and driving the cost of service down.

How to get started: Lift and Shift vs Lift and Shine

Sometimes, it makes perfect sense to take what you have in your on-premises solution and just move it to the cloud. Other times, a cloud migration is a great opportunity to reassess priorities and examine how your customers are interacting with your business. Identify your customers’ true intents: What does a successful interaction with your business look like to them? How can you deliver personalization and opportunities for self-service? Then, bring that vision to life by shifting the way you think about your contact center and throwing the rule book out the window.

If a move to the cloud coincides with a foray into AI, maybe your IVR becomes conversational. Should you revamp call flows or elements of your customer journey to make them more user-friendly? How can you incorporate chatbots, voice bots, or other digital channels or real-time communication? Whatever you decide, you need to have a meticulous plan to ensure a smooth transition.

If you fail to plan, plan to fail

All too often, as a cloud migration gets rolling, the contingencies, nuances, and complexities overwhelm even the best migration teams.

When Electrolux3 set out to consolidate their European on-premises contact centers into one cloud-based solution, the team soon realized that bringing together the staff, processes, and legal requirements from different countries and languages would create a new set of challenges. With its existing fully manual testing process, there was no way for Electrolux to run tests at the new scale demanded by the cloud. Manual testing proved too slow to keep pace. They also struggled to consistently measure cloud environment stability and quickly identify issues that needed to be addressed from the customer’s perspective. Electrolux turned to Cyara for help monitoring voice quality and digital channels, improving end-to-end call routing, and accelerating their regression testing from 14-day cycles to overnight to get their migration back on track.

Assure your cloud migration with the right testing and processes

A rigorous testing regimen will make sure that you know how the system performed before, during, and after key steps in migration. Unfortunately, no team of manual testers can do this astutely without help from automation.

Even in the cloud, the technology required to run a contact center involves integrating disparate systems — such as a CRM or ERP — not delivered by the CCaaS platform. Cloud providers will test their solutions with their own technology, but they won’t test your cloud instance with your data and your integrations, which is necessary to assure performance.

This is an immense, complex task that will require many rounds of coding and testing. You need to successfully get through the entire migration process to day 0 and flip the switch with confidence and assurance. Ensuring this goes smoothly requires comprehensive testing.

The sooner you can fully migrate to the cloud, the sooner you can recognize the benefits and economies that come along with that move. Companies that use Cyara to assure their migration move to the cloud 2x faster than those that don’t. Learn more about how Cyara helps at every stage of the cloud migration journey by reading our eBook.

1: No Jitter. “Genesys Cloud: And Then There Was One.” October 2022.

2. Research And Markets. “Cloud-Based Contact Center Market by Component, Deployment mode, Organization Size, Industry and Region.” June 2022.

3. Electrolux Case Study by Cyara

Cloud Computing

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In some form or another, a recession is looking increasingly likely in 2023. The Conference Board, a global nonprofit think tank, called for a 96% probability of recession in the U.S. within 12 months from October 2022. That’s a steep increase from the 0% likelihood in early 2020 through early 2022.[1]

We can be confident that regardless of the severity of the looming downturn, it’s likely to affect businesses across all sectors of the economy.

In an environment like this, tightening is inevitable. Yet, contact centers that spend strategically will be best positioned to weather the storm. The best way to get through a recession is to balance cost cuts with a strategic investment in customer experience (CX) to ensure you hold on tight to your customers.

How bad will it be?

While it would certainly be helpful if contact center leaders could see exactly what the downturn will look like, economists aren’t clear about how bad it could be. Even though they can’t agree on the severity, they generally concur that recession is imminent.

The Conference Board expects that factors such as lingering inflation, continuing Fed rate hikes, and geopolitical turmoil will combine to make a recession highly likely in 2023. The group expects that U.S. gross domestic product (GDP) will turn negative in late 2022 or early 2023.[1] Although it doesn’t expect negative economic growth to linger for long, the Board does anticipate a slower pace of GDP growth for the next decade, beginning in 2024.[2]

Other predictions span the spectrum from pessimistic to promising. BlackRock analysts were bullish about 2023, despite some hopeful upticks in markets after the midterm elections.[3] JPMorgan CEO Jamie Dimon, meanwhile, predicted a mild recession that would pale in comparison to 2008, even predicting 1% GDP growth in 2023.[4] Goldman Sachs is a clear outlier, calling for a “soft landing” that may even see the U.S. skirt a recession entirely.[5]

What will a recession mean for contact centers?

Every recession is unique, but each brings some predictable results. That means contact center leaders can learn from the past and proactively prepare for what’s coming.

Consumer spending is expected to slow, of course. During the last recession, 20% of consumers shifted their spending toward lower-priced goods. Likewise, overall consumer trust in brands dropped by 20%during the 2008 recession as buyers projected their pessimism about the economy onto the companies that drive it.[6]

Every customer dollar is valuable, but it becomes more so if there are fewer dollars to go around. In the face of a recession, contact centers need to position themselves to retain customers and grow revenue in any way possible.

How to weather the storm: invest in CX

These aren’t the only lessons that previous recessions have to teach contact centers, however. Not all companies cut costs indiscriminately in a recession, and those that made strategic investments in CX in 2008 fared far better than those that didn’t.

Data from a recent Watermark Consulting study illustrates just how much of a difference CX made during the Great Recession. Companies that were deemed CX Laggards from 2007–2009 saw their stock drop by an average of 57% during that stretch. In contrast, CX Leaders actually saw their stock increase by 6.1% on average, despite the S&P 500 dropping 15%.[7] Paradoxically, those companies that spent more on customer experience came out of the recession stronger.

This shouldn’t come as a surprise, though. Investing in CX is a critical way to bolster customer loyalty, something that’s especially critical during a downturn. Maintaining an existing customer is much less expensive than securing a new one, after all. What’s unique today is that customer expectations for CX are rapidly evolving. Investing in self-service, IVRs, and chatbots can help handle calls more cost-effectively.

“As customer expectations for outstanding service and experience continue to rise, businesses can no longer rely on improvements in usability, functionality, and dependability of a product or service to ensure customer loyalty,” says Alok Kulkarni, co-founder and CEO of Cyara. “Customers are essential for the business, and if they aren’t getting the experience they want, they’ll have no problem taking their business elsewhere. In 2023, providing exceptional CX will be critical for maintaining and retaining customers, and it will directly impact the company’s ability to weather the economic uncertainty.”

A complete testing solution

What does it look like to invest in CX in a way that will recession-proof your contact center in 2023, then?  As we’ve discussed before, technology investments like migrating your contact center to the cloud and adding conversational AI are critical for contact center success, regardless of what happens in the next 12 months. Both set the stage for the digital-first, self-service CX that customers expect today.

A complete investment in CX, however, involves much more. The cloud and conversational AI make so much possible, but they can also magnify defects in your IVR or chatbot solutions and can enhance problems with customer experience. To truly ensure a strong customer experience, contact centers must deploy end-to-end testing solutions that allow them to continuously monitor every stage of the customer journey.

Cyara offers the complete solution for recession-proofing your contact center. With automated testing and monitoring solutions, you can test more, assuring great quality CX, without spending more on labor. Not only that, but you can also ensure your employees spend their time on the most valuable thing — critical and complex customer service tasks — rather than on testing or trying to alleviate customer frustrations.

Just as in the last recession, the businesses that invest in these CX-supporting solutions will be the ones that come out strong on the other side. Read more about the true cost of manual testing or reach out today to learn more about how Cyara can help you get ready for the rough waters ahead.

[1] The Conference Board. “Probability of US Recession Spikes to 96%.”

[2] The Conference Board. “Global Economic Outlook 2023: US Edition.”

[3] Jonathan Ponciano, Forbes, “Dow Rallies 800 Points As Apple Stock Surges—But ‘Looming Recession’ Could Still Tank Markets, BlackRock Warns.” Oct. 28, 2022

[4] Siladitya Ray, Forbes, “JPMorgan Forecasts ‘Mild Recession’ In 2023— Here’s What Major Financial Institutions Predicted This Week.”, Nov. 17, 2022

[5] Goldman Sachs. “Why the US is Expected to Escape Recession in 2023.”

[6] AMC Technology. “How would a recession impact your call center?”

[7] Jon Picoult, Forbes, “The Best Business Strategy For Surviving A Recession? Not What You’d Think.” Jan. 7, 2020

Artificial Intelligence, Machine Learning

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Journey Beyond, a part of Hornblower Group, is Australia’s leading experiential tourism group. Headquartered in Adelaide, it operates 13 brands and experiences spanning the country. The company’s overall strategy is to “have a customer experience that’s second-to-none — from the moment they first engage with the company to plan their experience, to when they return home at the end of their travels — regardless of what Journey Beyond adventure you are booking.”

However, the company’s disparate technology systems were proving to be a hinderance in its commitment to consistently deliver unmatched services and experiences to customers. As its business diversified, including its own acquisition by Hornblower Group in early 2022, Journey Beyond inherited a range of disparate technology systems, including six different phone systems and an outdated contact center that was only servicing Journey Beyond’s rail journeys. The remaining brands in the company’s portfolio were using basic phone functionality for customer enquiries and reservations.

Madhumita Mazumdar, GM of information and communications technology at Journey Beyond

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“The different communication solutions were unable to provide an integrated 360-degree customer view, which made it difficult to ensure a consistent, unrivalled customer experience across all 13 tourism ventures, and any other brands Journey Beyond may add to its portfolio in the future. The absence of advanced contact center features and analytics further prevented us from driving exceptional customer experience. Besides, we couldn’t enable work-from-anywhere, on any device capability, for employees,” says Madhumita Mazumdar, GM of information and communications technology at Journey Beyond.  

These challenges forced the company to transition to a modern cloud-based communication platform.

Multiple communication solutions cause multiple challenges

Because Beyond Journey operates in the experiential tourism market, providing a personalized, seamless customer experience is essential — something its previous communications systems lacked, Mazumdar says.

“For instance, our train journeys get sold out a year prior to their launch. Therefore, when we launch a new season, there is a huge volume of calls from our customers and agents. The existing system lacked callback mechanism, leading to callers waiting in queue for as long as 40 minutes, which adversely impacted their experience,” she says, adding that there was also no way to prioritize certain calls over others.

The existing system also lacked analytical capability to provide any customer insights and it wasn’t integrated with Beyond Journey’s CRM. As a result, representatives interacting with a customer didn’t know whether the customer had traveled with the company before. “The communication between us and the customer was transactional instead of being personalized,” Mazumdar says.

Since the existing systems were very old, they couldn’t be managed remotely. In case of an outage, the company had to send a local person to rectify the on-site phone system, which could take a couple of hours. During this time, customers were unable to call Journey Beyond.

“The IVR was also not standardized across the company. As the IVRs were recorded in voices of employees from different business units, a caller had no idea they were part of the same business,” says Mazumdar.

Incoming calls to Beyond Journey’s toll-free numbers were also adding to the operational cost. “We paid per-minute on the calls received to our toll-free numbers. The high call volumes meant huge costs for us. Even if the call was hanging in the queue, it was costing us every minute,” she says.

Implementing a consolidated communications platform

To overcome the bottlenecks and drive customer engagement to the next level, Journey Beyond launched a contact center transformation, the first step of which was to establish a common unified communications (UC) platform across the business and integrate it with a new contact center (CC) solution. After evaluating several UC and CC solutions, Journey Beyond chose RingCentral’s integrated UCaaS and CCaaS platforms — RingCentral MVP and Contact Center.

“We started evaluating multiple vendors in the first quarter of 2021. The software evaluation process took three to five months after which the implementation started in August 2021. We went live in October 2021,” Mazumdar says. The entire SaaS solution was hosted on AWS.

The company took this opportunity to shift to soft phones and headsets by getting rid of all physical phones. “We purchased good quality noise-cancelling headsets, which was the only hardware we invested in significantly,” says Mazumdar. “Although we had premium support from RingCentral, we decided to learn everything about the solution and take full control over it. So, while the integration and prebuild was completely done by RingCentral, over time we trained multiple people in the team on the solution. In hindsight, this was the best thing we did,” says Mazumdar, who brought in two dedicated IT resources with phone system background for the new solution.

“Different business units within the company work differently. For instance, the peak hours for one business could be different from those of another business, which impacts how you set up the call flows. It’s not one basic standard rule that could be set up for all businesses across the company. With in-house understanding of the solution, we had full control over the solution and were able to make changes, refinements, and complex prioritization rules to it ourselves without depending on the solution provider,” she says.

Cloud-based solution delivers customer visibility and value

Connecting multiple businesses with a common communications platform to deliver consistent customer service across the group has yielded compelling business benefits to Journey Beyond.

A key advantage of the tight integration between UC and CC is the customer service operation’s accessibility for the entire Journey Beyond team.

“At a national integrated level, we now have subject matter experts in each of our experiences available to deliver unrivalled customer experience, with economies of scale. So, if one team is under duress in terms of call volumes, the call can be overflowed and picked up quickly by a consultant with secondary expertise in that brand,” says Mazumdar.

Journey Beyond is supporting its customer experience drive by integrating the CC solution with its CRM to develop omni-channel CX capabilities and build towards a 360-degree view of the customer.

“We are building up our ‘Know You Customer’ strategy, which starts with our customer service agents knowing who you are when you call any of our Journey Beyond brands,” says Mazumdar. “Callers who have travelled with us before, have their phone number in our CRM. When they call, their records pop up. The executive can look at the customer’s history with the company and the communication between them becomes a lot more personalized. The integrated view of the customer also helps to cross sell. For instance, if a person is booking a train journey from Adelaide but our executive knows that he is coming from Sydney, he can sell him another trip in Sydney.”

The other major advantage is the scalability and remote capabilities of the cloud-based platform. The solution allows Journey Beyond to run operations 24×7 with centralized administration and distributed users, working from anywhere, on any device. This has also given Journey Beyond the opportunity to recruit for talent in other locations outside the market around its Adelaide office.

Journey Beyond has also rolled out the solution’s workforce management functionality to better align agent availability with customer demand. The advanced feedback capabilities allow Journey Beyond to measure customer net promoter scores (NPS) right down to the consultant level. That NPS functionality will then be integrated into Salesforce, enhancing the 360-degree view of the customer experience.

The solution’s quality management functionality is providing Journey Beyond with a level of automation to ensure the contact basics are being completed, allowing leaders to focus on scoring the more complex or intangible components of customer engagements — delivering a recording of both the call and what is happening on screen at the same time. “Quality analytics completes the picture in terms of everything we need to see from a skills gap perspective,” says Mazumdar. Journey Beyond has deployed the UC solution to all businesses nationally. The CC solution has been rolled out at the company’ rail division and Rottnest Express while onboarding for the other businesses is in progress.

Unified Communications

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The modern hybrid workforce is composed of employees working in a variety of settings, from home, on the road, in the office, and just about everywhere in between. The help desk teams who support these dispersed employees are often in mixed working environments themselves and require enhanced contact center software with robust features to adequately serve their customers’ needs. Many companies are now exploring omnichannel solutions that combine contact center platforms, IT support systems, and video communications to address these new working environments.

With 83% of workers preferring a hybrid work model, and 63% of high-growth companies adopting a “productivity anywhere” workforce model, employees need to be as productive as possible no matter their location. IT professionals tasked with supporting these employees must be confident they can get all employees up and running as quickly as possible to avoid long stretches of downtime.

Getting assistance from IT help desks can include submitting tickets via email, online portals, calling them on the phone or using an on-site kiosk. While many enterprises have geographically dispersed IT help desk teams to support a global workforce, it’s now more likely these staffers are working from home or have their own hybrid schedule – which can make it difficult to deliver a more personalized help-desk experience.

Now, with an omnichannel, video-optimized contact center, companies can equip their IT Help Desk teams to deliver the same empathetic and supportive experience internally that is offered to external customers. IT help desk functions are just as important as external customer support, because an employee’s productivity and uptime depend on reliable technology that works. Adding visual engagements to your contact center allows for face-to-face communication that enhances support between an employee and the IT help desk team member.

Having relied heavily on tools such as Zoom for the past few years, many employees are quite comfortable with being on camera, which provides a human element that makes IT support more effective. For example, a video call allows help desk staff to provide a more personalized and caring experience for a frustrated employee who can’t get their work done. Screen and file sharing during the interaction lets IT staff solve problems faster and more efficiently. Video also can be used to quickly verify an employee’s identity, which can add another level of security with employees working from home or remote locations.

Many interactions require expertise beyond the contact center, so it’s important that IT staff have easy, real-time access to back-office experts while helping an employee. A modern platform that combines the contact center and unified communications creates a more seamless experience for help desk staff to interact with fellow employees and reduces costs while improving operational efficiency for IT staff. This also reduces research time, helps in locating answers to solve a given problem, and leads to higher employee satisfaction. What’s more, the department now has one less product to install, train on, administer, and maintain. Additionally, companies save money by eliminating the need to work with multiple vendors for various tasks.

An open platform that can integrate with the critical business applications that IT help desk staff use, such as Zendesk and ServiceNow, is essential to improving efficiency and streamlining the interactions with employees. Through integration, help desk staffers no longer need to switch between their contact center app and service ticket application, and instead, work directly within one application. This enables more automation capabilities and saves time from manually entering in the ticket and employee information.

Learn more about how Zoom Contact Center can assist IT help desk professionals with faster and more personalized support for a hybrid workforce.

Data Center Management