News & Analysis

Communications Platform as a Service Grows in Stature

In an age where every brand and business are talking about the power of social media, videos and chat apps to generate consumer interaction, the challenge that enterprises face relate to speed and agility and an ability to address issues within the fraction of a second. CIOs too are realizing that today’s communication strategies are all about customer experience (CX) or they risk losing their business.

They are struggling to integrate more communications functions into one tool, while keeping an eye on the cost factor. It is here that Communications Platform as a Service (CPaaS) – a cloud-based platform that integrates real-time communications into business applications through APIs (application programming interfaces), enables enterprises to customize the way they want to interact with their customers.

While premise-based communication platforms continue to exist, these are cumbersome and expensive processes and were only limited to very large enterprises. That’s because racks of infrastructure need to be procured, installed and maintained to deliver the required functionality and it was a costly affair. It is now easy to see why the demand for the CPaaS is marketplace is growing at a rapid pace.

Customer Engagement

The rise of the CPaaS market enables developers to access collaboration functions such as SMS, speech recognition, telephony, video and other functions from the cloud. Analysts believe that CPaaS solutions are designed to allow businesses to embed communications into workflows without the need for intensive coding. In addition, businesses do not need to develop any backend infrastructure. They can deploy and scale their solutions almost instantly and only pay for what they use.

Data and analytics firm, GlobalData sees a huge growth in the CPaaS market in next 2-3 years. Siow Meng Soh, Technology Analyst at GlobalData, believes that SMS was at the core of early CPaaS platforms and it remains pervasive and an effective channel for businesses to engage their customers. These solutions have been expanded to include various channels including chat apps, video and email; as well as to support a wider range of use cases.

“Today, CPaaS enables many vertical use cases. For example, providing real-time information for dispatch drivers and passengers for the transportation sector; fostering customer loyalty through social media; and sending check-in reminders, gate changes and flight status to airline passengers,” he added.

Other researchers have also highlighted the urgency of deploying a CPaaS solution for superior customer experience. According to a recent research by global cloud communication software company, IMImobile,  there is a gap between the experience customers now expect, and what businesses are currently able to provide, primarily owing to the inability to innovate and improve customer communications. For example, CIOs cited legacy IT systems (51%), data being spread across multiple systems (51%), and budget constraints (42%), as the top three challenge in delivering superior customer experience. (Read the full research report here)

Calling this a worrying sign that can make or break a business, Aseem Sadana, EVP at IMImobile noted in the research, “CIOs must consider a centralized platform approach to orchestrate and automate communications across existing business systems and communications channels.” And he believes that the answer lies in zeroing on CPaaS.

Strong Business Growth

According to industry analyst IDC, the CPaaS market is forecast to grow from $2 billion in 2017 to $10.9 billion in 2022. Initially, this market was driven by startups such as Twilio, Nexmo, Plivo and Tropo (acquired by Cisco) and other pure-play vendors that have seen strong business growth by winning many cloud-native customers. These vendors generally focus on innovation and growing their developer community and ISV partner ecosystem. Traditional unified communications (UC) and contact center vendors such as Alcatel-Lucent, Avaya, Cisco and Mitel have also developed CPaaS capabilities.

CPaaS vendors have different go-to-market strategy. US-based Ribbon Communications, for example, offers its Kandy CPaaS solution mainly through communications service providers (CSPs) and other partners.

Many UC and contact center (CC) service providers are also keen to develop their own CPaaS capabilities to support their enterprise clients; particularly CSPs. As an example, Orange Business Services has developed its own CPaaS solution as well as a solution-based on Nexmo.

However, with a range of vendors in the market, CIOs need to decide which vendor best meet their requirements. As Soh mentioned, “They need to decide whether they want full flexibility by develop solutions in-house using APIs or source for a turnkey solution. Businesses should also consider the features and functionality of the solution; the ability for the vendor to provide service assurance and meet security and compliance requirements; the extent of the partner ecosystem; and the support provided.”

“Going forward, CPaaS vendors will add AI/chatbot capabilities and also extend from application-to-person use cases to Internet of Things as well as machine-to-machine use cases,” he added.

As the growth of CPaaS continues, we anticipate many different use cases as more businesses engage with their customers in real time.

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