Presentation at Channel Connect 2018 (October 3, 2018)
In the last three years, CPaaS has emerged as one of the fastest growing segments within business communications. Integrating real-time voice, video and messaging communications into web and mobile applications, CPaaS has proven to be disruptive across verticals like transportation and hospitality. Discover how leveraging CPaaS technology helps businesses reinvent customer engagement. In this panel, you'll learn how CPaaS redefines engagement with clients, sales partners and employees, improves customer experience, automates business processes - while creating stickier customer relationships.
:45
In this presentation we will share with you our thoughts on communications PaaS. We will present some of the research we have done and share with you:
How CPaaS is enabling digital native companies to disrupt entire industries
Why we believe CPaaS is emerging as a catalyst for digital transformation
Why this is relevant for the channel community
I represent 451 Research, an analyst firm based in NYC. We’re currently about 120 analysts.
I actually came in with the acquisition of the YG about 4-5 years ago. When we transitioned into 451 we became three new areas of research: customer experience, workforce productivity (formerly mobility) and IOT.
The reason I’m highlighting this is because our research on CPaaS is influenced by this background. IOW we believe we have a slightly different approach to other firms that also look at CPaaS say from the perspective of UC. While we do cover UC, CC, etc. you will notice in the presentation that our focus is very much influenced by our experience with mobility, customer experience and productivity.
0:40
I organized this presentation in three parts, basically answering three key questions:
What is happening: The role of CPaaS in digital transformation
Why is it happening? The platform model
Why does it matter? Use cases and market opportunity
An we will leave some time at the end for a quick summary, key takeaways and leave some time for Q&A
1:45
Industry changers like Airbnb, Hotel Tonight, Lyft, Uber and WhatsApp take advantage of underlying technologies such as mobile access, cloud computing scalability and internet-based social interaction.
These technologies have varying degrees of impact across the different industries they are disrupting but there is a common disruptive component across all of them: the end user experience
At first glance, they might seem like a more convenient or polished variation of existing services
A closer look reveals that the user experience is critical for how these companies deliver services to the end user. The user experience is critical for service adoption and effectively drives user behavior in a disruptive way.
As companies across all industries transition into digital businesses they will eventually experience a disruption of the user experience.
To place this into context let’s take a look at how CPaaS has evolved in the last 10-20 years.
2008 Twiliio
2009 Uber Nexmo WhatsApp
2014 FB acquires WhatsApp
2015 Cisco aquires Tropo
2016 Vonage acquires Nexmo
2017 Mitel acquires ShoreTel
2018
ALE acquires Sipwise
West acquires Flowroute
Vonage acquires ToxBox
So with this background information, where are we ten years later? This question brings us to the second topic in our intro, which is a baseline definition for CPaaS.
The definition for CPaaS that we use at 451 Research refers to vendors that provide technologies (APIs, SDKs, and libraries) that enable developers and enterprises to integrate real-time communications into their web and mobile applications.
Let’s start with a base definition for Communications PaaS (CPaaS) that will help us make a point about why it is important for the channel community.
Defining CPaaS presents a bit of a challenge because the term is used by vendors to identify a wide range of approaches for delivering voice, video, chat and messaging APIs.
At a basic level, this conveys the functionalities these vendors provide, but there are important differences in their value propositions that make it challenging to do a side-by-side comparison.
This is not a bad thing in itself; rather we believe it reflects the current state of the industry and its transition into the next phase.
Our definition of CPaaS refers to vendors that provide APIs, SDKs, and libraries intended to allow developers and enterprises to integrate real-time voice, video and messaging communications into their web and mobile applications.
Developers and enterprises will use these services to enable features such as push notifications, voice and video click-to-call capabilities, and two-factor secure authentication.
Let’s summarize some key points from this first section that will help us with the following sections in this presentation:
WHAT HAPPENED? CPaaS has been around for over a decade (20), but in the last three years it has emerged as one of the fastest-growing segments within business communications.
WHY DID IT HAPPEN? The landscape is defined by the different ways in which it enables peer-to-peer (P2P) and application-to-person (A2P) communications. These capabilities have proven disruptive across verticals like transportation and hospitality, thanks to companies such as Airbnb, Lyft, Uber and WhatsApp.
WHY DOES IT MATTER TO YOU? 451 Research projects that demand for CPaaS will continue to grow as it expands beyond its traditional market of developers and startups, and adoption in the enterprise segment takes off. This represents an important opportunity for the channel community. The opportunity will be defined by how organizations leverage embedded communications to redefine the ways in which they engage with their clients, partners and employees.
What is happening: The role of CPaaS in digital transformation
Why is it happening? The platform model
Why does it matter? Use cases and market opportunity
Key takeaways
Industry changers like Alibaba, Airbnb, eBay, Lyft, and Uber provide virtual platforms that enable groups of users to connect and engage with each other.
Engagement can take different forms: from peer-to-peer (P2P) messaging using mobile apps like Facebook Messenger and WhatsApp; to P2P lending with players such as Upstart, Prosper and Funding Circle; and to giving someone a ride or having a guest in your spare room in the case of ‘“sharing economy”’ apps like Uber and Airbnb.
These companies benefit from the emerging platform business model which provides suppliers with the means for efficient delivery of their products and services, and enables access for consumers to these products and services.
This can involve a number of interactions between suppliers and consumers to exchange information about the availability and demand of products and services, followed by the actual exchange or delivery of these products and services and the payment transaction. In the case of Uber and Lyft, this translates into identifying an available driver, coordinating pickup, delivering the service and completing the payment transaction.
For Airbnb and Hotel Tonight it translates into identifying available lodging, coordinating the stay and payment. Each of these steps entails curating a tight engaging user experience around different forms of secure A2P and P2P communications and a number of technologies that come into play.
Airbnb and Hotel Tonight it translates into identifying available lodging, coordinating the stay and payment.
Coordinating the stay. This step alone entails a number of interactions between guest and host that may include:
Booking inquiry
Booking request
Booking confirmation
Check-in information
Check-out message
Thank you and review reminder
What is happening: The role of CPaaS in digital transformation
Why is it happening? The platform model
Why does it matter? Use cases and market opportunity
Key takeaways
3:00
I’d like to share with you the preliminary results for a report that 451 Research will publish later this month.
Our Market Monitor report looks at the CPaaS segment to identify key players and provide a market forecast and analysis. As I mentioned these are preliminary results so keep in mind the final report will look slightly different to what I’m showing you today:
We have identified four major categories to define competitive landscape
We currently have identified 20+ vendors
The methodology for our MM report is a bottom up analysis which entails looking at key vendors, revenue, projected growth and aggregating all data into our forecast
Our projected CAGR is 31%. $1.6bn in 2017, growing to over $6bn by 2022.
This does not include aggregating which is largely commodified. Rather we are looking at services and interactions that are mission-critical and require enterprise-grade reliability.
2:12
A problem with this definition (and with CPaaS in general) is that this is a segment largely vendor-defined. By this we mean that it is widely used by vendors looking to articulate their value proposition. The term is used somewhat loosely to identify a wide range of approaches for delivering communication APIs.
This is not a bad thing in itself. This is a segment that is still emerging and rapidly evolving so it makes sense to articulate their value proposition in terms that will be more familiar to their audience.
The problem is when we try to compare these vendors side-by-side.
To address this problem we recently published where we map the competitive landscape for CPaaS. We identified a total of 18 vendors (and there are many more) and defined a framework that builds on four major criteria to identify how vendors define their product and go-to-market strategies. More importantly, it helps us understand who is going after this opportunity?
The four criteria are:
Connectivity: Does the vendor provides PSTN access, IP-based services, or both?
Geographic coverage: Basically segmenting into US and ROW
API offering: Does the vendor focus on specialized APIS (like video-only) or offer a wide range of communications APISs?
Go-to-market: Is the G2M strategy based on partnering with CSPs?
CPaaS enablement is an interesting development in this segment that we believe can be a game changer.
1:30
Consumer-driven mobility has been effective in terms of placing mobile devices in the hands of employees. Enterprise mobility, however, has not changed significantly from its early days.
Unified communications (UC) providers usually include mobility as a standard feature in their offerings. Their approach is typically based on a mobile app that loosely connects mobile devices to a company's UC network. While this setup provides some benefits to the end user, it also has fundamental limitations stemming from the lack of integration at the public switched telephone network (PSTN) level.
1:30
Consumer-driven mobility has been effective in terms of placing mobile devices in the hands of employees. Enterprise mobility, however, has not changed significantly from its early days.
Unified communications (UC) providers usually include mobility as a standard feature in their offerings. Their approach is typically based on a mobile app that loosely connects mobile devices to a company's UC network. While this setup provides some benefits to the end user, it also has fundamental limitations stemming from the lack of integration at the public switched telephone network (PSTN) level.
Take off empowered customers
Smartphone– adoption- in first column- 90%
Delete 40%
Technology is also becoming increasingly central to how individuals drive changes to experiences they demand.
It is shifting the center of gravity from businesses to individuals in an unprecedented way. Catering to users’ preferred ways of consuming information and engaging with brands is becoming an increasingly critical part of businesses’ strategic value propositions and competitive differentiation.
55% prefer self-service to avoid calling a customer service agent. Why – it’s painful to wait on hold only to get a person that has very little contextual information at point of interaction. It seems – even with the call center investments made across multiple industries we still struggle to ensure to not only ensure context is maintained but we can’t even intelligently route to the right person at the right time.
40% prefer to chat to a business through SMS or social media messenger – that means it’s not just about self-service – it means multimodal- with interactions that can float over time – demanding both synchronous and asynchronous modes of communication through their preferred channel- and that preferred channel is digital
With 76% of consumers preferring digital channels to communicate with a businesses. The world has shifted and now 42% state that the ability to resolve issues through digital channels is a prerequisite for future loyalty
What is happening: The role of CPaaS in digital transformation
Why is it happening? The platform model
Why does it matter? Use cases and market opportunity
Key takeaways
Key differences between early adopters (digital native companies, startups, developers) and enterprise:
Enterprise requirements differ (in terms of reliability, support, how they consume services, tend to be more high touch, etc.)
Will require involving several decision-makers (not just developers but also IT, dev ops, LOB)