How CPaaS is Emerging as a Catalyst for Digital Transformation
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Presentation at Channel Connect 2018 (October 3, 2018) In the last three years, CPaaS has emerged as one of the fastest growing segments within business communications. Integrating real-time voice, video and messaging communications into web and mobile applications, CPaaS has proven to be disruptive across verticals like transportation and hospitality. Discover how leveraging CPaaS technology helps businesses reinvent customer engagement. In this panel, you'll learn how CPaaS redefines engagement with clients, sales partners and employees, improves customer experience, automates business processes - while creating stickier customer relationships.
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How CPaaS is Emerging as a Catalyst for Digital Transformation
- 1. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. How CPaaS is Emerging as a Catalyst for Digital Transformation Raúl Castañón Senior Analyst,Workforce Productivity & Collaboration
- 2. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. 451 Research is a leading IT research & advisory company Founded in 2000 250+ employees, including over 120 analysts 1,000+ clients: Technology & Service providers, corporate advisory, finance, professional services, and IT decision makers 85,000+ IT professionals, business users and consumers in our research community 2,000+ technology & service providers under coverage 451 Research and its sister company, Uptime Institute, are the two divisions of The 451 Group Headquartered in New York City, with offices in London, Boston, San Francisco, Washington DC, Austin, Mexico, Costa Rica, Brazil, Spain, UAE, Russia, Taiwan, Singapore and Malaysia
- 3. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. The role of CPaaS in digital transformation The platform model Use cases and market opportunity Key takeaways
- 4. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. 4 Industry changers like Airbnb, Lyft and Uber share a common disruptive element: the user experience. This is a critical component for how they create and deliver value. As companies transition into digital businesses they will also experience a disruption of the user experience. “
- 5. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. CPaaS Evolution 1998 Parlay consortium 2007 iPhone 1st generation 2008 Communications API for developers and digital native companies 2016 Communications API for the enterprise CPaaS 1.0 CPaaS 2.0
- 6. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. Year Transaction Company 2007 Launch iPhone 1st generation 2008 Founded Twilio, Airbnb 2009 Founded Uber, Nexmo,WhatsApp 2014 Acquisition Facebook WhatsApp 2015 Acquisition CiscoTropo 2016 Acquisition Vonage Nexmo; Google API.AI 2017 Acquisition Mitel ShoreTel; Cisco MindMeld, BroadSoft; 8x8 Sameroom 2018 Acquisition ALE Sipwise; West Flowroute;VonageToxBox Slack AstroTechnology, Atlassian IP, Missions; Facebook Redkix CPaaS Evolution
- 7. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. The term CPaaS is used to identify a wide range of approaches for delivering voice, video, chat and messaging APIs
- 8. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. CPaaS Evolution CPaaS has been around for over ten years. In the last three years it emerged as one of the fastest-growing segments within business communications. The landscape is defined by the different ways in which it enables P2P and A2P communications. 451 Research projects CPaaS will continue to grow as adoption in the enterprise takes off.
- 9. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. The role of CPaaS in digital transformation The platform model Use cases and market opportunity Key takeaways
- 10. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. Platform business model Industry-changers such as Airbnb, Uber and Lyft provide virtual platforms that enable users to engage with each other. This emerging business model provides suppliers with the means for efficient delivery of their products and services and enables access for consumers to products and services. This can involve several interactions to exchange information about availability and demand of products and services, followed by the actual exchange or delivery of these products and services, and the payment transaction.
- 11. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. For Airbnb, it translates into: ► Identifying available lodging ► Coordinating the stay ► Payment
- 12. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. For companies like Uber and Lyft the user experience entails: ► Identifying an available driver ► Coordinating pickup ► Delivering the service ► Completing the payment transaction
- 13. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. Uber Daily Rides 0 1 2 6 15 - 5 10 15 20 25 30 35 40 45 50 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 MILLIONS Uber daily rides In-app messaging
- 14. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. Date Feature Description Aug ’17 In-app messaging Chat with driver by clicking on “contact” and “chat” tabs Driver receives message, app reads content Driver can acknowledge with “thumbs up” emoji Apr ’18 Emergency button New “safety center” accessible from home screen Gives riders quick way to contact first responders Sep ’18 Audio commands Anonymization Drivers can contact riders without taking eyes off the road Riders can hide private information and contact drivers by in-app messaging or anonymous phone number Uber new features
- 15. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. The role of CPaaS in digital transformation The platform model Use cases and market opportunity Key takeaways
- 16. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. Competitive landscape 16 4 Major categories in CPaaS competitive landscape Source: CPaaS Market Monitor, 451 Research (2018) 22+ Vendors tracked in 451 Research’s CPaaS market monitor 31% Projected CAGR for CPaaS for the next five years
- 17. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. Market segmentation Connectivity PSTN access IP-based services Source: 451 Research, “Four categories defining the competitive landscape for communications PaaS,” 2018 Geographic coverage US only Global players API offering Horizontal focus Specialized CPaaS Go to market Standalone CPaaS CPaaS enablement
- 18. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. CPaaS Enterprise Opportunity 18 $1,637.9 $2,215.3 $2,949.5 $3,867.2 $4,949.8 $6,165.6 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 2017 2018 2019 2020 2021 2022
- 19. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. Market Opportunity CPaaS is emerging as one of the fastest growing categories in business communications. CPaaS plays a critical role when it comes to digital transformation, redefining how organizations create and deliver value. It provides the underlying infrastructure for emerging technologies driving business communications: mobile-native communications, digital assistants, voice commerce.
- 20. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. Twilio Strong focus on engineering and development of new products, features and functionality and enhancements Turning the traditional SaaS model upside down: ► R&D team is nearly 50% of company’s headcount of ~1,000 employees ► R&D expenses for 2017 were $120.7m or 30% of revenue ► Sales and marketing organization has 358 employees
- 21. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. 21
- 22. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. Competitive landscape Customers face a fragmented landscape There is a clear trend towards programmatic communications Vendors must support a range options: from ‘discrete applications’ to ‘building blocks’.
- 23. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. The role of CPaaS in digital transformation The platform model Use cases and market opportunity Key takeaways
- 24. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. 24 Adoption of connected smart home products continues to grow Speech recognition and NLU will change how we interact with computers, devices and appliances. This opens many opportunities for innovation in human-computer interaction (HCI).
- 25. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. Voice-enabled commands and applications Frontline workers, remote workers, mobile workers Task automation Trends to watch
- 26. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. Real-time communications are emerging as a critical component for digital transformation. The enterprise segment presents different challenges to the traditional CPaaS market of developers and startups. The channel community is uniquely positioned to benefit from this opportunity. Key takeaways
- 27. 451RESEARCH.COM ©2018 451 Research. All Rights Reserved. 451research.com US +1 212.505.3030 EUROPE +44 (0) 203 929 5700 Thank you @451Research New York London Boston Washington, D.C. San Francisco @rcastanonm
Notes de l'éditeur
- :45 In this presentation we will share with you our thoughts on communications PaaS. We will present some of the research we have done and share with you: How CPaaS is enabling digital native companies to disrupt entire industries Why we believe CPaaS is emerging as a catalyst for digital transformation Why this is relevant for the channel community
- I represent 451 Research, an analyst firm based in NYC. We’re currently about 120 analysts. I actually came in with the acquisition of the YG about 4-5 years ago. When we transitioned into 451 we became three new areas of research: customer experience, workforce productivity (formerly mobility) and IOT. The reason I’m highlighting this is because our research on CPaaS is influenced by this background. IOW we believe we have a slightly different approach to other firms that also look at CPaaS say from the perspective of UC. While we do cover UC, CC, etc. you will notice in the presentation that our focus is very much influenced by our experience with mobility, customer experience and productivity.
- 0:40 I organized this presentation in three parts, basically answering three key questions: What is happening: The role of CPaaS in digital transformation Why is it happening? The platform model Why does it matter? Use cases and market opportunity An we will leave some time at the end for a quick summary, key takeaways and leave some time for Q&A
- 1:45 Industry changers like Airbnb, Hotel Tonight, Lyft, Uber and WhatsApp take advantage of underlying technologies such as mobile access, cloud computing scalability and internet-based social interaction. These technologies have varying degrees of impact across the different industries they are disrupting but there is a common disruptive component across all of them: the end user experience At first glance, they might seem like a more convenient or polished variation of existing services A closer look reveals that the user experience is critical for how these companies deliver services to the end user. The user experience is critical for service adoption and effectively drives user behavior in a disruptive way. As companies across all industries transition into digital businesses they will eventually experience a disruption of the user experience.
- To place this into context let’s take a look at how CPaaS has evolved in the last 10-20 years. 2008 Twiliio 2009 Uber Nexmo WhatsApp 2014 FB acquires WhatsApp 2015 Cisco aquires Tropo 2016 Vonage acquires Nexmo 2017 Mitel acquires ShoreTel 2018 ALE acquires Sipwise West acquires Flowroute Vonage acquires ToxBox
- So with this background information, where are we ten years later? This question brings us to the second topic in our intro, which is a baseline definition for CPaaS. The definition for CPaaS that we use at 451 Research refers to vendors that provide technologies (APIs, SDKs, and libraries) that enable developers and enterprises to integrate real-time communications into their web and mobile applications. Let’s start with a base definition for Communications PaaS (CPaaS) that will help us make a point about why it is important for the channel community. Defining CPaaS presents a bit of a challenge because the term is used by vendors to identify a wide range of approaches for delivering voice, video, chat and messaging APIs. At a basic level, this conveys the functionalities these vendors provide, but there are important differences in their value propositions that make it challenging to do a side-by-side comparison. This is not a bad thing in itself; rather we believe it reflects the current state of the industry and its transition into the next phase. Our definition of CPaaS refers to vendors that provide APIs, SDKs, and libraries intended to allow developers and enterprises to integrate real-time voice, video and messaging communications into their web and mobile applications. Developers and enterprises will use these services to enable features such as push notifications, voice and video click-to-call capabilities, and two-factor secure authentication.
- Let’s summarize some key points from this first section that will help us with the following sections in this presentation: WHAT HAPPENED? CPaaS has been around for over a decade (20), but in the last three years it has emerged as one of the fastest-growing segments within business communications. WHY DID IT HAPPEN? The landscape is defined by the different ways in which it enables peer-to-peer (P2P) and application-to-person (A2P) communications. These capabilities have proven disruptive across verticals like transportation and hospitality, thanks to companies such as Airbnb, Lyft, Uber and WhatsApp. WHY DOES IT MATTER TO YOU? 451 Research projects that demand for CPaaS will continue to grow as it expands beyond its traditional market of developers and startups, and adoption in the enterprise segment takes off. This represents an important opportunity for the channel community. The opportunity will be defined by how organizations leverage embedded communications to redefine the ways in which they engage with their clients, partners and employees.
- What is happening: The role of CPaaS in digital transformation Why is it happening? The platform model Why does it matter? Use cases and market opportunity Key takeaways
- Industry changers like Alibaba, Airbnb, eBay, Lyft, and Uber provide virtual platforms that enable groups of users to connect and engage with each other. Engagement can take different forms: from peer-to-peer (P2P) messaging using mobile apps like Facebook Messenger and WhatsApp; to P2P lending with players such as Upstart, Prosper and Funding Circle; and to giving someone a ride or having a guest in your spare room in the case of ‘“sharing economy”’ apps like Uber and Airbnb. These companies benefit from the emerging platform business model which provides suppliers with the means for efficient delivery of their products and services, and enables access for consumers to these products and services. This can involve a number of interactions between suppliers and consumers to exchange information about the availability and demand of products and services, followed by the actual exchange or delivery of these products and services and the payment transaction. In the case of Uber and Lyft, this translates into identifying an available driver, coordinating pickup, delivering the service and completing the payment transaction. For Airbnb and Hotel Tonight it translates into identifying available lodging, coordinating the stay and payment. Each of these steps entails curating a tight engaging user experience around different forms of secure A2P and P2P communications and a number of technologies that come into play.
- Airbnb and Hotel Tonight it translates into identifying available lodging, coordinating the stay and payment. Coordinating the stay. This step alone entails a number of interactions between guest and host that may include: Booking inquiry Booking request Booking confirmation Check-in information Check-out message Thank you and review reminder
- What is happening: The role of CPaaS in digital transformation Why is it happening? The platform model Why does it matter? Use cases and market opportunity Key takeaways
- 3:00 I’d like to share with you the preliminary results for a report that 451 Research will publish later this month. Our Market Monitor report looks at the CPaaS segment to identify key players and provide a market forecast and analysis. As I mentioned these are preliminary results so keep in mind the final report will look slightly different to what I’m showing you today: We have identified four major categories to define competitive landscape We currently have identified 20+ vendors The methodology for our MM report is a bottom up analysis which entails looking at key vendors, revenue, projected growth and aggregating all data into our forecast Our projected CAGR is 31%. $1.6bn in 2017, growing to over $6bn by 2022. This does not include aggregating which is largely commodified. Rather we are looking at services and interactions that are mission-critical and require enterprise-grade reliability.
- 2:12 A problem with this definition (and with CPaaS in general) is that this is a segment largely vendor-defined. By this we mean that it is widely used by vendors looking to articulate their value proposition. The term is used somewhat loosely to identify a wide range of approaches for delivering communication APIs. This is not a bad thing in itself. This is a segment that is still emerging and rapidly evolving so it makes sense to articulate their value proposition in terms that will be more familiar to their audience. The problem is when we try to compare these vendors side-by-side. To address this problem we recently published where we map the competitive landscape for CPaaS. We identified a total of 18 vendors (and there are many more) and defined a framework that builds on four major criteria to identify how vendors define their product and go-to-market strategies. More importantly, it helps us understand who is going after this opportunity? The four criteria are: Connectivity: Does the vendor provides PSTN access, IP-based services, or both? Geographic coverage: Basically segmenting into US and ROW API offering: Does the vendor focus on specialized APIS (like video-only) or offer a wide range of communications APISs? Go-to-market: Is the G2M strategy based on partnering with CSPs? CPaaS enablement is an interesting development in this segment that we believe can be a game changer.
- 1:30 Consumer-driven mobility has been effective in terms of placing mobile devices in the hands of employees. Enterprise mobility, however, has not changed significantly from its early days. Unified communications (UC) providers usually include mobility as a standard feature in their offerings. Their approach is typically based on a mobile app that loosely connects mobile devices to a company's UC network. While this setup provides some benefits to the end user, it also has fundamental limitations stemming from the lack of integration at the public switched telephone network (PSTN) level.
- 1:30 Consumer-driven mobility has been effective in terms of placing mobile devices in the hands of employees. Enterprise mobility, however, has not changed significantly from its early days. Unified communications (UC) providers usually include mobility as a standard feature in their offerings. Their approach is typically based on a mobile app that loosely connects mobile devices to a company's UC network. While this setup provides some benefits to the end user, it also has fundamental limitations stemming from the lack of integration at the public switched telephone network (PSTN) level.
- Take off empowered customers Smartphone– adoption- in first column- 90% Delete 40% Technology is also becoming increasingly central to how individuals drive changes to experiences they demand. It is shifting the center of gravity from businesses to individuals in an unprecedented way. Catering to users’ preferred ways of consuming information and engaging with brands is becoming an increasingly critical part of businesses’ strategic value propositions and competitive differentiation. 55% prefer self-service to avoid calling a customer service agent. Why – it’s painful to wait on hold only to get a person that has very little contextual information at point of interaction. It seems – even with the call center investments made across multiple industries we still struggle to ensure to not only ensure context is maintained but we can’t even intelligently route to the right person at the right time. 40% prefer to chat to a business through SMS or social media messenger – that means it’s not just about self-service – it means multimodal- with interactions that can float over time – demanding both synchronous and asynchronous modes of communication through their preferred channel- and that preferred channel is digital With 76% of consumers preferring digital channels to communicate with a businesses. The world has shifted and now 42% state that the ability to resolve issues through digital channels is a prerequisite for future loyalty
- What is happening: The role of CPaaS in digital transformation Why is it happening? The platform model Why does it matter? Use cases and market opportunity Key takeaways
- Key differences between early adopters (digital native companies, startups, developers) and enterprise: Enterprise requirements differ (in terms of reliability, support, how they consume services, tend to be more high touch, etc.) Will require involving several decision-makers (not just developers but also IT, dev ops, LOB)