• January 1, 2016
  • By Donna Fluss, president, DMG Consulting

Cloud-Based Contact Centers: The Sky's the Limit

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DMG estimates that more than 150 vendors are competing in this market worldwide. The large number of competitors cannot be supported by current market activity. Additionally, though the market is growing at a rapid rate, only about 2 million cloud-based contact center infrastructure seats were in production as of August 2015. Confusing the landscape further is the lack of a clear market leader. (Market share should not be the only factor identifying a market leader; reliability, retention, satisfaction, flexibility, innovation, and vision should also come into play.)

DMG expects the growth rate of new market entrants to slow down and market consolidation to begin. This will present a new challenge for this sector. When cloud-based vendors merge, it often forces users to undertake a platform transition. This opens the door to customer attrition as enterprise customers are forced to consider a new solution—which is something they want to avoid.

The good news for prospects is that there's no shortage of vendors and solutions, although the options for companies that need fewer than 25 seats are surprisingly small, which is another factor that drives them to carriers. And there remain substantial functional and service differences between the cloud-based solutions—even between a technology provider that sells its own solution and a carrier that offers that same solution. Prospects need to pay as close attention to service-level performance, system reliability, and professional services as they do to the functional capabilities and cost.


DMG expects to see the vendors raise the bar on system performance and reliability during the next two years. Having a system reliability of 99.999 percent is no longer acceptable, particularly when a vendor does not include planned downtime in these numbers. (End users expect better service from cloud providers than they are getting from internal support teams.) Increasingly, companies expect 99.999 percent reliability, which is forcing vendors to use an active/active mode of delivery from geographically paired but dispersed data centers. This requirement will help shrink the playing field, as not every competitor will be able to make the necessary investment in multiple data center sites. It will also drive more vendors to Amazon Web Services (AWS) and other similar data center infrastructure providers, which could increase the cost of delivering these services.


While some environments will have contact center systems that are either completely on-premises or entirely in the cloud, this will be increasingly rare. Companies want to buy what is convenient for them, which varies based on many factors, including their financial situation and time frame. DMG expects to see a growing number of hybrid environments where some systems are on-premises and others in the cloud.

As a result, cloud-based vendors must be willing and able to perform all types of integrations. While vendors benefit from offering functionally broad solutions, it's just as important for them to provide open application programming interfaces (APIs) and Web services to facilitate integrations, interoperability, and data sharing. It's also essential that vendors provide resources for performing necessary integrations.


The cloud-based contact center infrastructure market is still relatively new, but it is well established. While on-premises contact center solutions are not going away—there are good reasons why many organizations will opt for them—the outlook for cloud-based contact center solutions is outstanding. Companies of all sizes need to be able to respond rapidly to changing market conditions and customer demands, so as innovation arises in the cloud-based contact center market, enterprises will increasingly look to acquire solutions from the most nimble of vendors.

Donna Fluss (donnafluss@dmgconsult.com) is founder and principal of DMG Consulting, a provider of contact center and analytics research, marketing analysis, and consulting.

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