The state of the CPaaS market and
digital transformation
Presented by Raul Castanon

110+ Analysts
85,000+ IT
Decision Makers
1,000+ Client
Organizations
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451 Research Today

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A combination of research & data is delivered across fifteen
channels aligned to the prevailing topics and technologies of digital
infrastructure… from the datacenter core to the mobile edge.

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The State of the CPaaS Market

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CPaaS has emerged
as a dark horse for
disruption and digital
transformation.
Though still evolving it became mainstream in
the last two years. Key events include the
acquisition of Tropo by Cisco, the acquisition of
Nexmo by Vonage and Twilio's IPO.

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The UX is critical for
driving user
behavior in a
disruptive way.
Industry-changers like Airbnb, Lyft and Uber
seem like more convenient variations of
existing services. A closer look however
reveals that the UX is critical for their value
proposition.

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What are enterprises are looking for?

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Digital transformation is the result of IT innovation
that is driven by a well-planned business
strategy with the goal of transforming how
organizations serve customers, employees
and partners; support continuous improvement
in business operations; disrupt existing businesses
and markets; and invent new businesses and
business models.
Digital Transformation and Disruption of the End-User Experience (October 2016)
“

17%
20%
33%
29%
1%
We currently have no digital transformation strategy
We are considering it, but have no formal plans
We are in the planning stage - researching to form our
digital transformation strategy
We have a formal strategy and are actively digitizing
our business processes and technologies
Don't Know
Which of the following best describes your organization’s
status with regards to a *Digital Transformation effort?
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Nearly 2/3 have or are planning a digital
transformation strategy
Source: Voice of the Connected Users Landscape, 2H16

11Source: 451/Microsoft Cloud and Hosting Study 2016. n=1734, 11 countries
Priorities are shifting toward agility and risk

IT spending
priorities over the
next 12 months
Key drivers include
transforming business
processes to improve
operational efficiencies and
security Initiatives
Source: Voice of the Connected Users Landscape, 2H16

IT and Business Application investments over
the next twelve months
Retail
Customer Responsiveness
Healthcare
Transforming business processes, Security Initiatives
Financial Services
Innovation, Security Initiatives
Source: Voice of the Connected Users Landscape, 2H16

15%
17%
20%
24%
25%
25%
27%
30%
31%
31%
32%
32%
0% 5% 10% 15% 20% 25% 30% 35%
Energy conservation initiatives
Enabling extended enterprise roles (contractors, etc.)
Legal, regulatory and compliance requirements
Increasing competitive differentiation
Internal employee collaboration
Cutting costs
Enabling more mobile/remote working
Transforming business processes to improve operational…
Customer responsiveness
Enhancing our ability to innovate and develop new products…
Security Initiatives
Creating new revenue streams
Respondents Included = SMB LOB only
Source: Voice of the Connected Users Landscape, 2H16
IT and Business Application investments over
the next twelve months

43%
23%
33%
21%
31%
28%
34%
39%
40%
42%
33%
30%
31%
33%
38%
28%
20%
35%
34%
46%
28%
29%
37%
45%
35%
34%
36%
18%
40%
35%
CONSUMER RETAIL
PRODUCTS & SERVICES
FINANCIAL SERVICES HEALTHCARE MANUFACTURING
EQUIPMENT & SERVICES
TELECOMMUNICATIONS
- CARRIER/ISP
%VALIDCASES Customer responsiveness
Security Initiatives
Creating new revenue streams
Enabling more mobile/remote working
Transforming business processes to improve operational efficiencies
Enhancing our ability to innovate and develop new products and services
Source: Voice of the Connected Users Landscape, 2H16

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• The shift to the cloud is gaining momentum and reaching a
tipping point.
• Non-traditional competitors like Slack, Nexmo and Twilio are
increasingly influencing the market.
• Business communications are transitioning into a cloud-
based open ecosystem.
▪ They will provides the SW building blocks for easy and agile
customization of the digital experience.
▪ The transition into a SW-defined ecosystem entails a profound
transformation.
▪ Skillset requirements will shift from network engineers and telecom
managers to developers.

Thank you
Raul Castanon
@rcastanonm
Raul.Castanon@451Research.com

Organizations
face a
fragmented
landscape
Enterprise Communications are
headed into collision with each other.
Consumer messaging apps, enterprise
apps, UC and A2P are increasingly
overlapping with each other.

Slack user growth
Source: Slack Technologies

Products  Services
20
Sell Tractors
Revenue at sale
Product-centric
Deliver Services
Ongoing revenue
Service-centric
Predictive
Maintenance
Soil
Analysis
Weather
Yield
Forecast
Machine
Data

Cloud Service
Usage
Q: Which of the following types
of cloud computing options, if
any, does your organization
currently use?
Please select all that apply.
Source: 451 Research, Voice of
the Enterprise: Cloud
Transformation, Vendor
Evaluations 2016
21
63.3%
43.1%
34.2%
32.9%
10.1%
57.8%
33.7%
41.1%
31.8%
12.8%
Software-as-a-Service (SaaS)
Infrastructure-as-a-Service
(IaaS)/Public Cloud
On-premises Private Cloud
Hosted Private Cloud
None of the Above (Do Not
Currently Use Cloud…
Percent of Sample
Cloud Non-Users: Shrinking Proportion of the IT
Landscape
Q3 2016 (n=922) Q3 2015 (n=1212)