• May 1, 2018
  • By Donna Fluss, president, DMG Consulting

Cloud Contact Center Solutions Continue Upward Trajectory

Article Featured Image

Last year could be seen as the breakthrough moment when cloud-based vendors began their takeover of the contact center infrastructure market. While most contact center infrastructure is still installed on-premises—market replacements generally occur every six to 10 years—cloud-based contact center infrastructure is where market momentum is happening, in the form of growing sales, technical innovation, and the creation of a large and lucrative ecosystem of partnerships.


With more than 150 competitors worldwide, the cloud-based contact center infrastructure market is primed for success. This sector includes vendors that build solutions and those that sell them, although there is overlap between these two groups. For most of the past 20 years, the primary go-to-market strategy for this sector was direct sales. As this market matures, a vast ecosystem of partners has emerged to participate in this large revenue opportunity. And with the entrance of each new vendor and partner, more salespeople enter the market to evangelize, promote, and sell cloud-based contact center infrastructure solutions.

A significant challenge for this market is that there are vendors from many categories vying for sales opportunities, including purpose-built solution providers; on-premises solution providers that sell cloud capabilities; hosted interactive voice response providers; carrier/network service providers; business process outsourcers; system integrators; cloud-based private branch exchange providers; contact center platform providers; and more. Enterprise business and IT leaders are struggling to find the right cloud-based solutions for their operations. While there are major differences in system functionality, reliability, and security, as well as in vendor vertical expertise and knowledge of contact center best practices, the messaging from most of these vendors sounds the same.

It’s great that prospects have many choices, particularly after years of limited on-premises infrastructure options, but the proliferation of cloud-based solutions is creating a great deal of market confusion. Selecting the right vendor partner is critical for the long-term success of the contact center because the client organization will need to work closely with this vendor to achieve mutual success.


As of the end of 2016, DMG estimates that the revenue size of the cloud-based contact center infrastructure market (excluding carrier revenue) was at least $2.8 billion. Given that this represents only 11.4 percent of total contact center seats, the revenue potential for the cloud-based contact center infrastructure market is in the tens of billions. As value-added partners join the cloud-based ecosystem, the costs for enterprise clients increase, as each vendor must get a piece of the action. It’s great to have a large group of vendors to choose from and lots of value-added options, but with each additional layer, the costs go up.

A cloud-based contact center infrastructure solution offers many benefits. The primary one for most companies is that it frees their IT departments from implementing and maintaining hardware and software with which they have little expertise, allowing them to dedicate time to addressing their specific business needs. There are many other benefits, including a geographically redundant environment without the need for buying and maintaining a second system; a simplified upgrade process and reduced risk; timely access to new features and capabilities; and the elimination of annual maintenance fees, which are often in the range of 18 percent to 24 percent, and climbing.

In many but not all cases, when a company buys a cloud-based solution, it ends up spending more after year four or five than if it had purchased it outright as a capital investment. As a result, the revenue potential of the fast-growing cloud-based contact center infrastructure segment and ecosystem is larger than the on-premises sector, which is another reason why so many vendors are entering the cloud-based market.

CRM Covers
for qualified subscribers
Subscribe Now Current Issue Past Issues