Contact Center as a Service (CCaaS) is one of the fastest growing cloud technologies in the market today. It’s expected to see a compound annual growth rate of 15.7% from 2021 to 20281. Because the market opportunity is so huge and the growth potential is so attractive, the landscape of providers has exploded in recent years. Predictably, this growth is starting to drive M&A activity in this space. In fact, just this month Zoom announced that it was acquiring Five9, a leading CCaaS platform, which is what triggered me to write this post. But, more on that in a minute. Let’s start with a little background…
Contact Center (formerly—and sometimes still—known as Call Center) technology, like traditional PBX phone systems, were once premise-based technologies that sat in your wire closet. With the growing ubiquity of cloud technology, the features, functionality, and intelligence of the contact center software have grown and become more robust, as well as more cost effective. Once primarily used by only larger enterprises or companies, this technology has trickled down and become available to smaller businesses.
This change has happened rapidly. It has both fueled, and been fueled by, a growing trend among businesses of all kinds to focus on creating a great customer experience (CX). You may remember how the difficult-to-navigate automated attendants and IVRs (interactive virtual response) systems in the ’90s and early ’00s were common fodder for late-night talk show hosts and comedians. Well, there was a lot of truth to the frustrations behind this cumbersome technology.
Companies learned that those experiences were damaging to their brands. And with social media exploding over the last decade, these frustrations were a risk to their brand reputation and brand equity, because it was now very simple for customers and users to share their terrible experiences with masses of people. The better brands also learned that great customer service and a great customer experience could drive brand equity and brand loyalty.
This confluence of factors—growing awareness of the pain points caused by bad CX, easy dissemination of bad customer reviews, and the cost-effective availability of incredibly sophisticated solutions—has driven the demand for CCaaS.
Fast forward to today, and the CCaaS market has grown and matured into one of the cornerstone technologies that enterprise IT departments invest in. This increasing rate of change in the technology and the providers that offer such technology results in an opportunity for enterprises and even SMBs. But it can be a strain on the IT resources responsible for the decision-making, solution design, and procurement.
With mega-mergers like Zoom acquiring Five9 starting to unfold, it’s a fulltime job to evaluate the market and provider landscape, understand the technical solution design, and benchmark the going rates to create a TCO model (total cost of ownership) in order to understand the potential costs and ROI (return on investment) of the technology.
Next month, I’ll write a post that gives you tips for navigating the CCaaS market and decision-making process. Until then, remember that Premier Team is your single source, and completely vendor agnostic advisor, for getting cloud, connectivity, IT, and telecom projects done successfully. With CCaaS, we have especially extensive experience and institutional knowledge that you can put to work for you. And, as always, engaging with Premier to assist with your CCaaS project doesn’t cost you anything.
If you want to short-cut the time it takes to evaluate, buy, and implement CCaaS while reducing your risks, talk to Premier Team today!
In the meantime, here’s my unbiased analysis of the acquisition of Five9 by Zoom:
- The deal was announced July 18, 2021
- It’s an all-stock transaction valued at $14.7 billion
- It’s Zoom’s largest transaction to date
- Opportunities
- Zoom’s UCaaS (Unified Communications as a Service) platform is complementary to Five9’s CCaaS platform.
- Integrating the platforms will give customers a powerful single platform built from two market-leading platforms. (However, see below for the potential downside)
- Users of the respective platforms individually will now have access to the powerful functionality of the other platform.
- Threats
- Will the cultures meld?
- How will the integration of the platforms go? Since Zoom is buying their way into the CCaaS market, there are some inherent downsides to the “bolt-on” approach that may ultimately drive some customers to platforms where the CCaaS and UCaaS technology were developed organically together.
- This may drive other M&A activity that could be equally or more powerful. Could purchasing now on a 2-3 year term create a missed opportunity?
- Will they stay focused on product development with the same intensity and focus as when they were individual niche players? Or will the expanded focus dilute their efforts?
- Less competition sometimes works against the consumer, in terms of buying leverage and customer service and support. Could that happen here?
It’s a lot to make sense of. Remember, as your unbiased and objective advisor, we can help you weight the potential pros with the potential cons. Just contact Premier Team, and we’ll help you navigate this changing CCaaS landscape.
