The future of contact center applications is in the cloud, as chief information officers (CIOs) and business leaders are in agreement and on board with the benefits of adopting this model for contact center infrastructure and other contact center systems. While on-premises applications are not going away, the benefits of the cloud-based delivery model are so compelling that a company needs a good reason to justify keeping its contact center solutions in-house.
2016: A BREAKTHROUGH YEAR FOR CLOUD-BASED SOLUTIONS
The number of cloud-based contact center infrastructure seats increased by 20.9 percent in 2016. This growth came from companies of all sizes, most of which replaced an existing premises-based contact center solution. Adoption of cloud-based contact center infrastructure has expanded beyond small and midsize organizations, although the market is not yet seeing wholesale replacements of on-premises solutions in very large environments. Instead, it is seeing strategic insertions at these sites, a trend that is expected to continue.
Financial services organizations, among the last holdouts, are joining many other industries in adopting cloud-based contact center infrastructure. The increased reliability, flexibility, and security of some of the offerings are convincing IT and business leaders in financial services to give them a try, particularly now that cloud-based vendors are driving market innovation. The adoption rate of cloud-based contact center infrastructure is still slow in the larger financial services organizations, but acceptance has begun.
Globalization and the need for worldwide contact center and carrier services are also important trends that are driving the adoption of cloud-based contact center infrastructure. The cloud-based vendors are adept at handling the complexities of multinational carrier services and routing, making these solutions an obvious choice for enterprises that conduct business in many countries.
REPLACEMENTS ARE GOING TO THE CLOUD
The vast majority of contact center infrastructure seats sold in the past two years have been replacements of premises-based solutions. The contact center infrastructure market is in the midst of a major technology refresh, as companies are being forced to replace their 18- to 20-year-old premises-based solutions, which are either obsolete or at the end of vendor support. Ten or more years ago, a large percentage of companies stayed with their incumbent solutions, but in this era of customer engagement, enterprises need solutions that give them an ongoing flow of new features and functionality. The cloud-based vendors are introducing innovation to the market much faster than their premises-based counterparts. Agile development methodologies enable the vendors to release new functionality daily or weekly, so it’s readily available when an enterprise client requires it.
Vendors are delivering enhancements to improve system usability, ease of integration, agent productivity, and the customer experience. In the past 12 to 18 months, a number of the cloud-based contact center infrastructure vendors have released new user interfaces and user experiences for their customers, and some are already planning further improvements. The readiness of these vendors to listen and respond to the needs of customers is a significant advantage; similarly, their willingness to customize solutions is helping to attract larger contact centers.
THE M&A STORY
In a market with more than 150 competitors, mergers and acquisitions are inevitable. It’s been a busy M&A season for the cloud-based contact center infrastructure market, and DMG expects to see more of this activity in the near future. Notable deals include NICE’s acquisition of inContact and Genesys’s purchase of Interactive Intelligence. NICE is a workforce optimization company that plans to operate inContact as a separate business unit. NICE works with many of the major banks worldwide, which have large and very large contact centers; these relationships will likely open up opportunities for inContact.