The Future of Contact Center Infrastructure is in the Cloud
The Future of Contact Center Infrastructure is in the Cloud 1/2/2015
By Donna Fluss
The past 12 months have been outstanding for the cloud-based contact center infrastructure market (automatic call distributors (ACDs) and dialers), the best year in the history of this sector. Competition is fierce and new vendors continue to emerge. Carriers are active in the sector. Premise-based solution providers are increasingly getting into the cloud to protect their customer base, either by acquisition or partnerships, and established cloud-based providers are upping their game in an attempt to differentiate themselves, attract larger customers and gain market share.
The Cloud-Based Contact Center Infrastructure Market is Unique
DMG Consulting estimates that there are over 150 competitors in the cloud-based contact center infrastructure market on a worldwide basis, and more are entering from all over the world, including Africa and China. These vendors are currently chasing a relatively small number of seats, but the long-term growth potential is substantial. As of August 2014, DMG Consulting estimates that there were 1,302,788 cloud-based contact center infrastructure seats. On a conservative basis, DMG expects this sector to grow by 20%, 20%, 18% and 18% each year, respectively, from 2014 to 2017, although there are a number of dynamics that could greatly increase these numbers. One of the largest impediments to adoption is the traditionally long replacement cycle for contact center systems, on average 8 – 12 years; over the next decade, many seats are expected to slowly move to the cloud. The market is already seeing this transition, along with adoption by organizations that are purchasing their first contact center solution. Another issue is the inability of the cloud-based contact center infrastructure solutions to interoperate with existing on-premise ACDs and dialers. Companies are also showing a growing desire to purchase both contact center and PBX in the cloud from the same vendor. Improvements in any of these dynamics will result in much faster adoption.
No Market Leaders
Despite the large number of competitors, this sector still does not have any clear-cut leaders. Some vendors are claiming leadership, but their performance does not justify the title. The immaturity of the cloud-based vendors continues to prevent any of them from achieving dominance. Market leadership has more to do with completeness of vision and ability to execute cleanly and dependably than the number of customers or seats. DMG expects to see a few leaders emerge in the next 2 – 3 years, and it is likely that these leaders will start to buy some of their competitors. Prospects need to be aware of this, as it is likely that many of today’s competitors will be gone in the next 5 – 8 years.
Who Will Survive the Market Shakeout?
The large number of competitors in this sector is not sustainable, and there will eventually be a shakeout. The purpose-built cloud-based contact center infrastructure vendors are currently the dominant players and are likely to remain so. Carriers will be one group of survivors in this market, as selling cloud-based contact center seats is a logical extension of their positioning as the primary telecommunications provider for most enterprises. Many organizations will reach out to their carrier to ask for help in this area. Unfortunately, most carriers are dysfunctional and ineffective at selling and implementing contact center capabilities, even when the business is handed to them. Traditional premise-based contact center infrastructure vendors who want to succeed in the cloud will need to change their business models, particularly as larger enterprises adopt cloud-based solutions. DMG also expects to see business process outsourcers (BPOs) and contact center system integrators successfully adapt to the new way of doing business.
It’s a Buyer’s Market
The proliferation of vendors, options and pricing structures is making cloud-based infrastructure solutions highly attractive and viable for contact centers of nearly every type, size and budget. End users and prospects are increasingly comfortable with the idea of solutions in the cloud; it is becoming the preferred acquisition model for new applications and/or replacements of outdated technology. Aside from the real and quantifiable financial benefits, end users are reaping the rewards from the opportunity to acquire new, robust and flexible technology, regular upgrades and ongoing innovation without being hampered by insufficient IT resources or geographical restrictions. Relieved of the burden of managing the hardware and software, end-user organizations are free to focus on utilizing the solutions to deliver an outstanding customer experience. Given the large number of competitors, the challenge is to identify the ideal cloud-based contact center infrastructure vendor partner and solution to meet end users technology, applications and security requirements, as well as to support their servicing philosophy.
It has taken close to 15 years, a severe technology recession in 2010, and a major shake-up in the premise-based contact center infrastructure market for cloud-based contact center solutions to be accepted by enterprise managers. The cloud-based contact center infrastructure market is just getting started. More contact center applications are migrating to the cloud with enterprises pressuring vendors to make it easier for them to do business. Larger contact centers in financial services, insurance, telecom and even the large BPOs will start to quietly adopt these solutions as these solutions continue to mature, the platforms become more dependable and the benefits outweigh the risks. During the next 5 years, more hybrid environments will emerge to support the needs of large and complex organizations that want to move to the cloud while keeping some of their systems on-premise. The cloud-based contact center infrastructure vendors who can support this level of complexity while making the transition easy for their customers are likely to emerge as market leaders.