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The Other ‘CaaS’ Company Positioned for Success
I recently wrote a post in No Jitter about how the UCaaS “industry” appears to be maturing and there are a limited set of companies well positioned to be the large dominant players in the space. However, while UCaaS seems to be maturing, enabling business communications and collaboration toolsets outside the core UCaaS user base is a parallel market. While there are some organizations where having the same platform for UCaaS and non-employ communications are of value—for many, integrated non-employ communications, like sending an appointment notification SMS, can be on a completely separate platform. This extends to the plethora of companies with a frontline workforce that doesn’t interact with the company’s UCaaS knowledge workers, but uses a communication and collaboration capability within a defined business process. In this emerging market are different core technologies, products, skillsets, and integrations. It also includes large established adjacent business software competitors moving into a market solution set positioned to manage and enhance Customer Experience (CX) and employee roles in those interactions.
While most of the business communication industry was riding the UC wave, Twilio found another wave. From the start of unified communications, as far back as 2006, there was the concept of UC for knowledge workers and UC for the rest of the workforce, i.e., today’s frontline workforce.
Both Avaya and Nortel had products to enable integration of their platforms with client-server applications in 2008—Avaya with communication enabled business processes and Nortel with its Agile communication environment. While each failed, Twilio took that concept and delivered it with two dramatic improvements. First, it was in the cloud (and therefore independent of your PBX or other systems), so as cloud technologies advanced, it became easy to integrate a Twilio service into your application. Second, while messaging exploded, Twilio delivered a simple way to integrate an SMS notification into an application, to the delight of dentists everywhere. With a great service, Twilio focused not on selling to the corporate telecom staff but to the application developers. It developed a community of dedicated developers who helped foster viral adoption of the Twilio products as those developers migrated to different employers. This situation, combined with low to zero entry costs and pay-as-you-go cloud billing, created a CPaaS juggernaut.
But CPaaS, once understood, is a service that many companies can deliver. Numerous large global and regional service providers announced CPaaS offers, and all the leading UCaaS vendors have made some form of CPaaS available to their user base.
Rather than trying to leverage its CPaaS position into UCaaS and compete with this large number of global and regional service providers, Twilio focused on their customers and how they were using Twilio. Most of Twilio’s customers were using Twilio for some form of customer interaction, like notifying customers of appointments, running security checks, or triggering another automated process required for completing business. However, Twilio’s customers often had a percentage of its customers that needed human assistance; since Twilio’s customers either didn’t have or couldn’t access a current contact center, Twilio saw an opportunity. This opportunity led to Twilio using its CPaaS platform to build its own contact center, Twilio Flex. The integration with the CPaaS offer has given competitive advantage to Twilio in the emerging smaller contact center markets that the cloud is enabling.
This integration placed Twilio firmly into the contact center market—competing within its CPaaS accounts. Not only with other contact center vendors (Genesys, Five9, NICE) but with UCaaS vendors touting in-house call center solutions (like Cisco) or vendors with preferred call center partnerships, like RingCentral with NICE.
At its recent analyst event, Twilio focused on Segment, their platform to gather data about customer interactions across all channels, human, machine, digital, social, etc. The platform, which they refer to as a customer data platform (CDP), goes beyond the traditional customer relationship management (CRM) to keep a much more complete view of the customer. This is a fragmented space with purpose-focused companies and traditional CRM vendors enabling larger pools of customer data.
The result is that Twilio now has a potentially compelling story for several companies. For companies with strong contact centers or CRM vendor relationships, Twilio is the CPaaS service offer but is always available for consideration for new projects or markets. However, Twilio may have the most success in the emerging mid-market and smaller. These companies were unable to take advantage of most CX technology until the cloud. The movement to the cloud has driven NICE and Five9’s growth. Twilio has the advantage of bracketing the contact center decision with the implementation of CPaaS notifications and the need to manage all data its new systems and platforms are delivering. For mid-market and smaller customers, the Twilio integrated cloud solution may be a logical path to take. Based on their current market position and the growth options that come with their strategy to pursue customer interaction, Twilio appears to be well-positioned for long-range leadership (or a large acquisition).
The emergence and growth of Twilio, cloud contact centers, and other business communications vendors in what I call the ‘CaaS’ space (but not in the UCaaS space) is an indication that different customer needs exist for integrating the knowledge worker UC solution with the emerging CX and frontline solution set.
For some companies, having the CCaaS and CPaaS services as part of a complete UCaaS offer may be the most compelling solution. In these companies, there will often be more interactions between the frontline staff as part of the CCaaS solution, and the UCaaS supported employees, as well as a larger number of hybrid employees who are both operating as knowledge workers and occasionally on the frontline. Having a single common platform could be important in maintaining a concise flow between the employees and customers. Cisco is addressing this market, the same one Zoom saw in its attempt to acquire Five9. The Cisco “Find an Expert” functionality for contact centers builds on this need. While Microsoft doesn’t have an in-house contact center product at this time, its Teams for Frontline offering is a clear move to integrate the frontline workforce into the Teams/Office/Azure environment of the knowledge worker.
For companies with stronger delineations between their knowledge workers and frontline workers— having a common solution may be less important, and potentially even undesirable. For companies with large agent pools, field service, or retail workers, a dedicated optimized solution may be more effective. For companies with clear delineation in roles and little interaction overlap, choosing Twilio-based solutions for the range of frontline needs while using one of the large UCaaS vendors for the knowledge workers may be the best option, both in functionality and in cost. For example, this separation of employee needs has been the driver of success for Genesys for many years and most of the emerging CCaaS vendors.
While the UCaaS part of our industry is maturing, broad opportunities continue for innovation and growth as the convergence of information and customer interaction continues. For companies deciding their path in the new ‘CaaS’ world, it’s time to analyze your company business strategy for the role of customer interaction in the coming years.
A clear understanding of how customer interactions will be managed, and who in the organization will be involved, is a first step in deciding whether a separate UCaaS and CXaaS solution set is right for your company and business model. Perhaps a converged ‘UCXaaS’ platform will deliver better values for your organization. Understanding needs in this area will be critical to defining the cloud vendor field for consideration for any implementation.