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Building enterprise applications becomes simpler with the cloud, and one reason for this shift is the IT department's ability to move away from dabbling with networking infrastructure. Against this backdrop, the communications platform-as-a-service market is rapidly growing. But, to reap the potential financial rewards from the transition, channel partners need to shift from a networking to an application focus.
CPaaS market: New communications apps emerge
Traditional network devices, such as routers and switches, required significant manual input to get up and running. With cloud, software layers have been added, so tasks that required a turn of a wrench are now done with the click of a mouse. A reliance on APIs is another key difference between how legacy communications applications were built and how cloud services are delivered.
Market researcher IDC identified Avaya, Bandwidth, IMImobile, MessageBird, Nexmo, Plivo, Sinch and Twilio as key communications platform as a service (CPaaS) companies in a September 2019 vendor assessment. Such offerings facilitate real-time communications through text, email, voice and video content. CPaaS lets organizations embed those communications capabilities into enterprise applications through APIs.
These cloud-based communications products enable organizations to engage with customers in new and more effective ways, according to industry executives. The richness of the new experiences is one reason IDC expects the market to grow from $3.3 billion in 2018 to $17.2 billion by 2023, a compound annual growth rate of nearly 40%.
Barriers to entry
Channel partners must clear a few hurdles to take advantage of the high-growth forecast for the CPaaS market. Take Telecom Brokerage Inc. (TBI), a Chicago-based master agent, for example. The company works with more than 3,000 partners, including many managed service providers, to develop communication-centered services.
Courtney MunroeGroup vice president of worldwide telecommunications research, IDC
One CPaaS challenge TBI partners face is working with a new set of decision-makers.
"With cloud, partners engage not only with network managers, but also marketing, operations and finance executives," explained Dave Landsberger, senior director of training and events at TBI. "So, they need to understand the buyer's journey from many different perspectives."
Also, the market is dynamic. "Every day, it seems like a new CPaaS solution emerges," Landsberger noted. Consequently, partners need help understanding product capabilities, nuances and use cases.
In addition, deep technical expertise is often needed to pull all of the elements in a CPaaS into a cohesive whole. The emphasis on APIs requires partners to extend their skill sets. "To be successful, CPaaS partners need some background in coding," said Courtney Munroe, group vice president of worldwide telecommunications research at IDC.
Communications APIs are at the heart of the CPaaS market.
Variable financial forecast
CPaaS supports a wide range of applications, and their potential rewards vary. Landsberger said a unified communications application costs $15 to $25 per seat per month, while a contact center comes in at $75 to $250 per seat per month.
The CPaaS market is poised for significant growth in the coming years. Partners can benefit from that expansion, but they need to pivot their business, develop new skills and select niches that offer the potential for financial rewards.