Lift Off for Microsoft In the Contact Center? 2024 Could Be the Year

Tom Arbuthnot shares his views on how Microsoft will evolve its CCaaS approach

Lift Off for Microsoft In the Contact Center? 2024 Could Be the Year
Contact CentreInsights

Published: January 2, 2024

Charlie Mitchell

Following the launch of Dynamics 365 in 2016, Microsoft has steadily dipped its toe deeper into the contact center space.

Indeed, the tech giant has since launched a Digital Contact Center Platform, kickstarted a certification platform for Microsoft Teams contact center integrations, and acquired Nuance.

However, Microsoft is still only calf-deep, sat on the edge of the CCaaS pool, yet to go all in and build a pioneering platform it can put up in lights.

Tom Arbuthnot, Co-Founder of Empowering.Cloud, believes this is only a matter of time.

“They’re definitely looking at the CCaaS market,” he told CX Today. “It’s a huge market, a huge opportunity, and they’re already doing so well in UCaaS. It makes sense.

Couple in their massive investment in AI and consider how big that’s going to be in the service space. They’ve got everything they need; they just haven’t got it together yet.

Nevetheless, bringing these pieces together is not an enviable task, as Microsoft has amassed many CCaaS nuts and bolts over the past several years. In doing so, it has quite the mish-mash of solutions.

Inside Microsoft’s Contact Center Portfolio

Microsoft has not one, not two, but three contact center propositions.

1. Microsoft Dynamics 365 Customer Service

Dynamics 365 Customer Service is Microsoft’s hallmark CCaaS platform, which it’s slowly but surely bulking out with new features here and there.

Some of these are exciting, including Copilot for Service and Microsoft Teams swarming. The latter allows service agents to share customer cases via the dominant UCaaS platform.

However, Microsoft’s rate of CCaaS innovation is much slower than its cloud adversary, AWS. It also lags many other market rivals – as evident in the recent Contact Center Suites Buyers Guide 2023 by Ventana Research.

The analyst ranked the Dynamics 365 Customer Service offering dead last after evaluating 23 contact center suites.

2. The Microsoft Digital Contact Center Platform

Microsoft’s second contact center proposition – the Microsoft Digital Contact Center Platform – has enjoyed little airtime since its grand release in August 2022.

Instead of providing a new-fangled CCaaS platform – like many first anticipated – it offers more of a framework for integrating other contact center suites with its various cloud capabilities.

Perhaps this is part of a longer-term plan to help on-premise operations leverage elements of the cloud for a more cautious CCaaS migration. However, it’s not easy to glean Microsoft’s strategy.

3. Microsoft Teams Contact Center Integrations

Finally, Microsoft has a certification program for other CCaaS vendors to build contact center solutions for Teams.

The tech juggernaut has had more success here, with participating vendors including industry stalwarts such as Five9, Genesys, and NICE. Altogether, there are 23 trusted partners – with 12 more in the certification process.

Yet, there is once again a twist in the tail. Each certified integration uses an old Connect and Extend model. Microsoft has stalled the release of its newest Power model – which has many significant advantages – for years.

Those advantages include Azure Communications Services (ACS) – Microsoft’s CPaaS platform – on the back end, native Teams connectivity, and a dedicated agent interface for formal agents alongside the Teams UI for informal agents.

Will 2024 Be Lift Off for Microsoft In the Contact Center?

“To win, they must have one core proposition,” states Arbuthnot. Yet, he believes that Microsoft is unlikely to make that critical step in 2024.

“Whatever Microsoft’s next big move in the contact center is, it’ll be AI-led,” he continued. “They’re obsessed with AI at the moment.

“Its focus will be more on “our AI for the contact center” than “our contact center offer as a whole”.”

As such, expect Microsoft’s headline contact center announcements this year to once again center on Copilot for Service.

However, Arbuthnot believes there is a longer-term strategy too. He said:

At some point, I think the contact center proposition will be decoupled from Dynamics. That’s when it’ll become more applicable.

Perhaps the Microsoft Digital Contact Center Platform is already a first step in this direction.

Meanwhile, it is unlikely that Microsoft will breathe new life into its three-level certification program for contact center integrations with Teams. As Arbuthnot stated:

I wouldn’t be surprised if that Power category drops because they don’t seem to be that invested in making it a key part of its certification program… it has been around for so long.

That program has proven beneficial, bringing businesses onto ACS, so they leverage the Microsoft Cloud and its APIs.

Yet, in bringing it off the boil, Microsoft could withhold a significant differentiator for when it eventually goes all-in on CCaaS.

Although that seems unlikely for 2024, slow and steady Microsoft may eventually take the plunge.

The Opportunity Knocks

Microsoft’s slow and steady approach continues despite CEO Sadya Nadella – in 2022 – promising to “aggressively” innovate contact center space.

Zeus Kerravala, Founder of ZK Research, predicted this 12 months ago, suggesting that the Microsoft Contact Center would struggle to gain momentum and “flop” in 2023.

He argued that its strategy of building lots of solutions, throwing them at the wall, seeing what sticks, and refining them would not work as well in CCaaS as it did in UCaaS.

Going further, Kerravala said:

It’s a good enough product, but I don’t believe the strategy will fly in the contact center, as it’s the lifeblood of most organizations.

His concerns largely came to fruition, as Microsoft had many distractions in 2023. After all, GenAI rose to the fore, and Copilots presented a once-in-a-blue-moon cross-platform growth lever.

However, in the meantime, the tech giant did make some subtle moves to bolster its position within the contact center market.

For instance, it released a report highlighting how its agents leverage Dynamics 365 Customer Service. In doing so, Microsoft showcased that even the biggest businesses can use its platform at the core of its contact center operations.

Moreover, it still has a host of industry experts at its disposal from the Nuance roll-up – alongside deep pockets for CCaaS investment. That opens the door to further acquisitions, with many potential options, given the shaky financials of some stalwart contact center vendors.

Finally, with UCaaS-CCaaS integrations in vogue, Teams presents a massive differentiator it can build upon as enterprises strive to streamline their customer experience tech stack.

As such, the opportunity is there for Microsoft to grab in the coming years – especially with over two-thirds of contact centers yet to migrate, according to Gartner.

Eager to dive deeper into Microsoft’s AI for contact centers? If so, check out our article: Copilot Cuts Average Handling Time By 12 Percent, Claims Microsoft



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