Why Are the Big UCaaS Vendors Leading with CCaaS?

UCaaS commoditization and CCaaS AI innovation are changing enterprise communications

Why Are the Big UCaaS Vendors Leading with CCaaS?
Contact CentreNews Analysis

Published: April 13, 2023

Charlie Mitchell

Enterprise Connect is an annual event where communications vendors traditionally showcase their latest UC innovations.

Yet, when the event returned to Florida last month, the focus shifted.

Instead of new meeting features and collaboration tools, CCaaS was very much front and center.

Noting this trend, Zeus Kerravala, Founder and Principal Analyst at ZK Research, told UC Today:

8×8 has said their XCaaS model will be contact-center-first, Webex spent more time in their keynote talking CCaaS than maybe ever… and the same can be said for Zoom.

Kerravala suggests there are a few critical drivers for this change. The first is that the UC space – while it’s not entirely commoditized – is becoming that way.

“Vendors keep adding features to their product, but they’re not charging more,” he said.

Moreover, now “COVID-contracts” – deals struck at the start of the pandemic – are coming up for renewal, and vendors are offering discounts to stave off all the competition.

As such, the economic value of UCaaS has become somewhat limited.

Where is the value in enterprise communications? The contact center.

For many organizations, the contact center is mission-critical. They invest a lot of money with vendors to build heavily customized solutions.

As a result, it is tricky for businesses to switch providers, and the chances of retention at an equitable price point are much higher.

In addition, AI is only beginning to touch the surface of its potential to transform contact center operations. As its presence in the space grows, RFPs may too.

Finally, Kerravala notes the footprint of the contact center is growing.

It’s not just agents anymore. Anyone who is customer facing [be it marketing teams, field service personnel, or store associates] can benefit from CCaaS tooling.

For these reasons, Kerravala believes that many enterprise communications vendors will pivot further, leading with the contact center and pulling UC through.

A Shake-Up Is Afoot

Across enterprise communications, there appears to be more supply than demand – according to Kerravala.

“If you look at the capital markets and the evaluation of public trading companies like RingCentral, Zoom, and Five9, they’re all worth less today than they were pre-pandemic,” he said.

These results reflect how investors see little room for growth within the space. As such, it seems likely that more consolidation is necessary – especially in the UC market.

After all, Microsoft Teams has become the de facto standard for many businesses, leaving a limited market share for its competitors.

Now, some vendors are suggesting that businesses can use two UCaaS systems. Cisco banged this drum when it announced a partnership with Microsoft last year.

Nevertheless, for most, UC remains a zero-sum game. A business picks one solution, and that becomes the business standard. As a result, the need for consolidation heightens.

Alongside this, engagement with legacy businesses – which have still not moved to the cloud – seems critical. As Kerravala stated:

There’s a massive legacy base, and – when I talk to them – they aren’t convinced they need to move to the cloud, so there’s some rationalization that has to happen there.

In CCaaS, there are many reasons for brands to hesitate. A lack of available resource, tricky migration loads, and regulatory considerations often throw a spanner in the works.

Yet, vendors are attempting to force change, slowing their on-premise development, and funneling all their innovation efforts into the cloud. This will likely accelerate some business transformations but may not be enough on its own.

“I do think over the next year, we will likely see some shake-ups, but that is good. It helps to create a healthier environment for everybody,” concluded Kerravala.



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