UCaaS and CPaaS Merging
Once upon a time there were two totally separate industries: unified communications as a service (UCaaS), the application; and communications platform as a service (CPaaS), the platform. But the distinction between these services is getting fuzzy.
Both industries have experienced significant growth. 8x8, a public, pure-play UCaaS provider has a market capitalization over a billion. Twilio was founded in 2008 as a CPaaS pioneer. The company is still private, but was valued at $1 billion in April 2015. Today there are hundreds of UCaaS providers and possibly as many as 100 CPaaS providers.
The overlap is not new. Communications enabling business processes (CEBP) was one of the initial goals of UC. Back in 2011 Twilio launched OpenVBX which was designed to transform CPaaS services into UCaaS. Most UCaaS providers also offer integration tools such as APIs, SDKs, and packed integrations into services such as Salesforce, Zendesk, and Google for Work.
The overlaps are more apparent in contact centers because they inherently require custom integrations. Home Depot uses a custom created contact center based on Twilio technology. Recently BroadSoft acquired Transera, a contact center completely based on APIs. LiveOps teamed with Twilio and Google to create a contact center solution that uses Chromebooks for agents.
A clear pattern has emerged of UC or UCaaS companies launching or acquiring CPaaS companies. Most recently Vonage announced intent to acquire Nexmo. Last March Avaya launched Zang and Vidyo launched a video oriented platform as a service. Last year ShoreTel acquired Corvisa, Vonage acquired gUnify, and Cisco acquired Tropo. Two years ago Genband launched Kandy.
At the recent Genband Perspective conference, I saw two enterprise vendors demonstrate how they can improve their solutions with communications. IBM demonstrated UCaaS and SAP demonstrated CPaaS. Genband does not offer UCaaS as a retail service, but does extend its Nuvia service to partners as a wholesale UCaaS offer. Genband Kandy is a CPaaS service mostly sold through Genband partners.
IBM previewed an upcoming integration between IBM Connections Cloud and Genband Nuvia. IBM Connections Cloud is an enterprise-oriented service featuring IBM Verse email, cloud storage, web-based office productivity apps, IBM social networking, and SameTime for real-time communications.
IBM Connections Cloud customers obtaining all or part of their UCaaS needs from a Genband partner will benefit from a tight integration of these services. Customers can either use traditional Genband endpoints or configure the SIP client within IBM SameTime. This is a meet-in-the-channel approach requiring customers to work with partners of both IBM and Genband.
SAP is using Kandy for communications in its Hybris solutions. SAP Hybris is a digital transformation suite of products. This integration complements the B2C and B2B commerce component popular with SAP customers. The integration adds a “contact us” dialog on a customer’s website to provide chat, voice, or video interaction with an agent. The solution also allows agents to share their screen and see what is in the customer’s e-cart. The solution is available today, and is marketed and sold by SAP.
In both of these examples the vendors are communications enabling and enhancing their enterprise applications with cloud-delivered communications. Had IBM integrated with Kandy instead of Nuvia, the functional capabilities could be identical. The SAP experience could also have been recreated with the APIs that many UCaaS providers offer.
Sometimes API-to-API isn’t enough. Vonage offers a middleware approach to integration with its gUnify technology. For example, Vonage uses gUnify to integrate its UCaaS services into Clio, a practice management solution for legal offices. The result is a business workflow application with integrated communications capabilities.
To be clear, not all UCaaS companies, not even most, are embracing CPaaS. Craig Walker, CEO of Dialpad tweeted that CPaaS is “Fools Gold” and wishes it upon his UCaaS competitors. His conclusion is understandable as the UCaaS segment continues to experience double-digit growth, and there’s plenty of more logical ways to enhance and differentiate core services.
On the other hand, UCaaS and CPaaS both involve many of the same skills, partners, and resources. Vonage cited that among the benefits of its Nexmo acquisition is complementary expansion in Asia. Platform plays are often considered to be more strategic and sticky than application plays. Both are still emerging markets, and CPaaS has fewer competitors.
I was recently reminded that Google was the 21st vendor to enter the emerging search engine market in 1998. There is still plenty of time for both UCaaS and CPaaS to coalesce, and for leaders to emerge. There is no question that applications are going to become more communications savvy over time. Nor is there any debate about ongoing UCaaS growth. How these markets will overlap, converge, or compete with each other is yet to be seen.