Pondering 2018: Transitions in the Customer Interaction Management Space Part 1
At this time of the year, I should be making predictions for 2019. Instead, I would like to ponder the many transitions that took place last year in the customer interaction management space.
Cloud Adoption Hit an Inflection Point
Both Unified Communication as a Service (UCaaS) and Contact Center as a Service (CCaaS) penetrated gradually the market from the low end. Every year, the cloud would start penetrating the next segment upmarket. However, vendors had to spend a great deal of effort to convince customers that cloud solutions were mature enough for each new segment. In 2018 the market flipped; most customers across all size bands became convinced that cloud is the way to go. The question for enterprises is no longer if they should move to the cloud, but how.
How to transition to the cloud has remained a challenge for the upper part of the market. So far, the prevailing cloud adoption model has been a small proof of concept followed by a flash cut migration. This approach doesn’t scale. Larger enterprises have existing assets to accommodate and many integrations they want to preserve. They require a phased transition to the cloud. Vendors need to evolve their offering and these new requirements have exposed some aging architectures.
2018 also saw all traditional vendors buying their way into the cloud. After Genesys’ acquisition of Interactive Intelligence late 2016 and Mitel’s purchase of ShoreTel late 2017, Avaya bought Spoken and Cisco made Broadsoft its go-forward technology for both UCaaS and CCaaS. Today all communications providers offer cloud solutions.
The Enterprise Contact Center Market Got Reshaped
Early 2016, the enterprise contact center segment was a slow-moving four-horse race between Avaya, Cisco, Genesys and Interactive Intelligence. By the end of the year, things had changed. Genesys bought Interactive Intelligence and both Avaya and Cisco got distracted by internal issues. In 2017, Avaya had to seek bankruptcy protection and Cisco reassessed its communications strategy and ended up acquiring Broadsoft. This situation propelled Genesys to a dominant position in the high-end of the market with little competition.
Fast forward to today, the landscape is completely different. Avaya came out of chapter 11. Cisco completed its Broadsoft acquisition and two formidable new competitors, Amazon and Twilio, entered the market. In addition, Five9 and Nice InContact kept on moving upmarket, joining the fray in the battle royale for the enterprise contact center market segment.
CCaaS and UCaaS Convergence
The communications and contact center convergence is an old story. The past decades saw the pendulum swinging back and forth between integration and best-of-breed approaches. The UCaaS movement triggered a new development. In 2011, 8x8 acquired Contactual to offer a complete UCaaS and CCaaS portfolio. Besides Evolve IP, it remained an exception, with other providers relying on partnerships for contact centers. In 2018, the market flipped with Vonage purchasing NewVoiceMedia and RingCentral acquiring Dimelo and, this month, Connect First.
Today, all the large pure-play UCaaS providers with the exception of Fuze have become active participants in the contact center market. The difference this time is that these steps go beyond adding call center capabilities. 8x8 reformatted its portfolio with the X-series to provide a single integrated suite with different levels of customer interaction capabilities. Vonage is pushing the envelope by also providing Communication Platform as a Service (CPaaS), thanks to its Nexmo and TokBox acquisitions. With Dimelo, RingCentral bought a digital customer care vendor. Dialpad, that has been developing organically its call center software, snapped up TalkIQ, a speech analytics specialist. These moves show that UCaaS players are going much deeper into the customer interaction market.
New Players Flood the Business Communication Market
2018 also witnessed the entry of several new players coming from different horizons. LogMeIn bought Jive Communications. It now offers a broad portfolio including meetings with GoToMeeting, communications with the addition of Jive Communications and GrassHopper, and customer engagement and support with the combination of Bold360, Nanorep, and its Rescue products. Zoom, so far a video conferencing company, introduced a communications product, Zoom Voice. Wix, known for its web development platform, introduced Answers, a customer support software that comes with a built-in call center. They are joining the new entrants from the CRM space such as Freshworks, Zendesk, or Zoho.
These transitions led us with my fellow BCStrategies consultants to declare the dawn of the Business Communications market. In the second part of this article, I will discuss the transitions that took place in the broader customer service and experience space. Stay tuned!