As part of our coverage of the year that was, 2023 edition, we asked Brent Kelly of Omdia to provide his thoughts on a few trends that emerged through a year of weekly No Jitter Roll coverage. Some of these trends include the apparent confluence of unified communications as a service (UCaaS) and contact center as a service (CCaaS) as exemplified by news from Avaya, along with other announcements from providers like RingCentral, Zoom, Cisco Webex.
NJ also noticed an ongoing discussion around the transition from on-premises systems – e.g., private branch exchanges (PBXs) and call/contact centers – to UCaaS and CCaaS. NJ asked Kelly to provide some context around that trend, including the possibility that Microsoft, with all its generative AI and collaboration tool momentum (via Teams) might charge into the contact center space. Here’s how the conversation went.
Brent Kelly (BK): To understand UCaaS plus CCaaS, we need to look back at the buying patterns for PBX and contact center that existed before UCaaS and CCaaS. Before UCaaS/CCaaS existed, between 60% and 80% of contact center purchases were made from the same vendor that provided an organization's PBX. So, the precedent to buy a “PBX plus contact center” combination has existed for many years.
Let’s now look at the early days of UCaaS and CCaaS. When UCaaS first came out, none of the UCaaS providers had a contact center. Likewise, when CCaaS first became available, none of the CCaaS providers had telephony. As of now, many of the UCaaS providers have added both telephone and contact center to their offerings. These companies include 8x8, Vonage, Cisco Webex, RingCentral, Zoom, Dialpad, etc. The only major UCaaS provider with telephony but without a contact center is Microsoft.
The only CCaaS provider that I’m aware of to add telephony is TalkDesk. Genesys, Five9, and others do not provide telephony…yet.
In an Omdia end user survey run in October, we asked end users if they would prefer to buy UCaaS and CCaaS together (we call this MultiCaaS). Of those who have already purchased CCaaS, 64% indicated that they would prefer to buy CCaaS from their UCaaS provider. This is similar to pre-UCaaS/CCaaS days.
Why do they want MultiCaaS? Well, we asked that too, as illustrated in the following chart.
My interpretation of these results is that organizations expect UCaaS + CCaaS to allow them to have more efficient operations for both IT and for the end users. Having the same underlying platform for IT will simplify operations while having the same underlying platform will simplify interaction between the contact center and the rest of the company.
In the future, we may see some moves away from pure CCaaS-only providers as companies choose to buy MultiCaaS (UCaaS + CCaaS together). Similarly, Microsoft’s grip on the UCaaS market may soften as the MultiCaaS play gets fully rolling.
BK: There are several reasons why vendors are pushing customers to the cloud:
Speaking about bucking the trend, in our October 2023 survey, we asked end users if they had an on-premises PBX. Eighty percent of respondents do have a PBX, and they intend to keep an on-premises PBX for a while. They will migrate some users over to cloud services, but not all.
Furthermore, of those that do have an on-prem PBX, 80% of these plan to spend money upgrading their PBX within the next 5 years. Thus, the PBX is far from dead. In fact, we call this very slow decline in on-premises PBXs the “PBX long tail,” indicating that there is still a lot of life left in the on-prem PBX market.
NJ: What is the likelihood of Microsoft Teams emerging as a contact center platform? (For example, Microsoft Copilot for Service is a new product and throughout 2023 other “plug-ins” and/or CC-related integrations were announced.)
BK: Well, Microsoft could have either bought or developed a contact center a long time ago, and they still can. My sense is that if there is a sufficient market opportunity for a Microsoft-owned contact center, Microsoft will do something in this area. For instance, if the number of Microsoft Teams Phone users who can call out to the PSTN can get up to 30 to 50 million users, Microsoft will certainly come out with a contact center of its own – whether it buys or builds is yet to be determined.
BK: One key area is what I’ve already mentioned – the trend toward MultiCaaS. But clearly the biggest trend is all of the AI capability showing up in contact centers. In a sense, this is revolutionizing the contact center market and leveling the playing field. What will be interesting to see is some work done on how well the different contact centers perform certain AI-assisted functions like Agent Assist, Call Summaries, Speech-to-Text, etc. I really think it would be fascinating to develop some metrics or ways to gauge how well an AI-enabled contact center performs based on the different AI/LLMs it uses. I will be doing some of this myself in 2024.
Brent Kelly will be presenting on several of these topics in March 2024 at Enterprise Connect:
