The Cloud Contact Center Land Grab Is on
THE contact-center-as-a-service (CCaaS) vendors have hit their stride by giving enterprises what they want—the ability to meet the dynamic omnichannel needs of their customers on an inbound and outbound basis. The vendors are investing in and competing to come up with the most successful approaches, be they out-of-the-box solutions, programmable platforms, or combinations of the best of both.
One thing is clear: In the battle to stand out among vendors of cloud-based contact center infrastructure (CBCCI), the real winners will be their enterprise clients, as these vendors are making multimillion-dollar research and development investments to enable enterprises to deliver outstanding and differentiated customer experiences, cost-effectively.
THE FUTURE OF CONTACT CENTER TECHNOLOGY IS IN THE CLOUD
The future of contact center technology, systems, and applications is in the cloud, even though the adoption rate of CBCCI seats was only 17 percent as of the end of calendar year 2020 (based on DMG Consulting’s “2020 Worldwide Cloud-Based Contact Center Infrastructure Market Share Report”). While the vast majority of contact center seats are still on-premises and will continue to be for the foreseeable future, market innovation is focused on cloud-based solutions.
Vendors that offer both on-premises and cloud-based solutions are delivering first to the cloud and, in some cases, begrudgingly retrofitting enhancements to their increasingly technologically outdated premises-based models. In other situations, contact center infrastructure vendors have committed to supporting their premises-based solutions for the life of the asset, while making it clear to clients that such solutions will not maintain functional parity with their cloud products.
Despite the market migration to the cloud, many enterprises are still making major investments in premises-based contact center solutions. The low penetration numbers make it clear that there are still major impediments to the adoption of CCaaS solutions in many enterprises, including in some of the largest contact centers in the world. Vendors are working to remove these roadblocks, which include concerns about security, loss of control, and reliability, as they quietly chip away at any remaining issues. However, these are clearly serious and deeply entrenched concerns that CCaaS vendors need to address aggressively.
WHAT IS REQUIRED IN A CCAAS SOLUTION?
A CCaaS solution can come with various types of applications and modules but must include these two core capabilities: an omnichannel routing engine and dialing. This means that all other functionality is optional, and many of the features are differentiators for CCaaS vendors and the market.
For example, if a CCaaS solution comes with native workforce optimization (WFO)/workforce engagement management (WEM) capabilities, this is a plus, as it’s something that many enterprise clients expect. If the CCaaS solution has its own unified-communication-as-a-service (UCaaS) and video capabilities, it is even more compelling, as it is likely to address enterprises’ expanding needs for a communications platform. But this is just the beginning, as DMG Consulting expects contact center functionality to become a standard productivity tool, akin to Microsoft Word, Excel and PowerPoint, for a growing percentage of enterprise workers in the next 10 years. When this happens, contact center functionality will be employed by a majority of knowledge workers in organizations, greatly expanding the total addressable market for contact center functionality.
UNDER THE HOOD
There are substantial and growing differences in the technology and architecture of CCaaS solutions that were built (or rebuilt) from the ground up in the past three to four years, compared to the majority of offerings that came to market five to 15 years ago. The newer solutions leverage technology and design principles that likely include microservices, Solr (and other highly scalable databases built for the cloud), containers, orchestration, and mobility, and they can run in private and public cloud facilities and move easily from one to another. They can also be deployed on premises or in a hybrid mode, which is important, as it allows vendors to invest their R&D dollars in one platform.
Although many of the mature CCaaS solutions have been retrofitted to operate in public clouds, the older architectures are generally slower and clunkier than current-generation cloud-based solutions. In some cases, the differences are transparent to users, but when it comes to adding new functionality or changing the user interface of a CCaaS solution built on an older technology stack, these differences become impactful, as development and processing can take longer. As time passes, the disparity between early-generation CCaaS solutions and current offerings will become more apparent and will drive vendors either to make the necessary investments or sell their companies to third parties with deeper pockets.
BEST-OF-BREED SOLUTIONS VS. CUSTOMIZABLE PLATFORMS
This is one of the great debates in the CCaaS market today, even though it’s really another take on the classic build-vs.-buy discussion. Enterprises want the agility to adapt their customer-facing solutions quickly and easily and without waiting for their company’s IT department to make the modifications for them. For this reason, many enterprises want an all-in-one CCaaS solution that comes with the WFO/WEM modules they need (advanced recording, quality management, workforce management, interaction analytics, surveying, etc.) out of the box and provides a low-code/no-code development environment so system changes and modifications can be made by a business analyst or operations manager who works in the contact center.
But there are also many enterprises that want to build their own cloud-based contact center environments. These companies are investing in solutions that offer platforms and programmable application programming interfaces (APIs) that enable users to build their own cloud-based contact centers. This is why a growing number of the established all-in-one CCaaS providers are striving to open up their platforms to allow for customization.
ACQUISITIONS REFLECT MARKET TRENDS AND OPPORTUNITIES
The strengthening demand for CCaaS solutions during the past 24 months has fueled a highly competitive sales environment. The market is undergoing a land grab as vendors strive to quickly bring on new customers and seats. Adding to this push is the understanding that contact center infrastructure solutions are “sticky”—companies tend to hold on to them. This is driving software vendors, including some of the largest in the world, that are not traditional contact center providers to enter the CCaaS market, a trend DMG expects to continue. The shift in the competitive landscape is encouraging established CCaaS vendors to acquire complementary applications, such as WFO/WEM capabilities, instead of spending the many years it would take to build this functionality themselves.
In the next couple of years, DMG expects to see more like-to-like acquisitions of CCaaS vendors, as this may be the best way for some of the vendors to upgrade their platforms and rapidly grow their customer base, at least in the short term. We also expect more enterprise software vendors to go shopping for a CCaaS solution. And we expect leading CCaaS vendors to buy differentiating capabilities.
CBCCI HAS A VERY BRIGHT FUTURE
The dynamics of the contact center infrastructure market have been altered by CCaaS vendors. DMG predicts that within nine years there will be intelligent, modularized cloud platforms that provide contact center infrastructure (automatic call distributor, dialers, etc.), analytics, WFO/WEM, and CRM functionality, a prediction that is already well on its way to becoming a reality. DMG expects the CCaaS market to continue to pick up momentum during the next five to 10 years, as there are many premises-based seats to replace and more opportunities opening up. (New and fast-growing organizations will tend to adopt digital-first, cloud-based customer service models for their efficiency and flexibility.) It’s not a question of whether the CCaaS market grows rapidly, only what the growth rate will be, as this is a highly opportunistic segment with a massive addressable market.
Donna Fluss, president of DMG Consulting, is highly regarded as one of the foremost experts on contact centers and the back office and specializes in digital transformation, artificial intelligence, and automation. With 30 years of experience helping organizations build highly effective operating environments and assisting vendors to deliver competitive solutions, Fluss created DMG Consulting to deliver unparalleled and unbiased research, analysis, and consulting services. Fluss is a renowned speaker, author, and source for industry and business publications. She can be reached at Donna.Fluss@dmgconsult.com.