CPaaS brings together many of the messaging and engagement technologies that telemedia has been selling for years. But it also brings a new business model, new opportunities – and some challenges. Paul Skeldon reports.
For many the CPaaS model is nothing new. In the telemedia sector, many players have been offering the kind of communications tech that makes up a CPaaS offering for many years. What has changed is where it is hosted and who is using it.
According to John Wood, CEO at C3, “we’ve been selling CPaaS and other SaaS offerings for years. It started as on-premises equipment that we installed, then it moved to being hosted on private cloud. Today – and what makes CPaaS different – is that it is a public clouded hosted technology.”
And this has had a fundamental impact on the business model for CPaaS – in several ways.
According to Wood, it offers the ability to test and trial and then to scale and allows the companies that want to use it to pick and choose what they run. Voice, SMS, video services and more can all be turned on and off as they are needed.
It also allows companies such as C3 to add payments and other apps into the mix to make the offering even richer to end-user clients greatly reducing scope of regulatory compliance.
This has meant that many of the ‘old skool’ telemedia players that have long offered these sorts of technologies can open up what they do to a wider range of companies.
For many, it has seen them start to be able to target larger organisations, which have been caught on the hop with needing to add WhatsApp and other OTT messaging channels to their customer engagement portfolios. For others, however, it has seen many more, smaller companies come along looking for better and more cost-effective ways to offer a wider range of contact channels to their customers.
“This is something new that CPaaS has ushered in,” says Wood. “When we would have looked at building a bespoke solution on premises or even on a private cloud, it wasn’t cost effective to do it for small companies. However, the CPaaS model allows us to build once and offer it to many, so that we get a massive economy of scale. This makes it much more viable to supply these services to more companies.”
CAPITAL IDEA
While this is all very positive, the shift towards CPaaS for these comms platform suppliers has had a different kind of impact on business, changing how comms service suppliers get paid.
“We have moved from doing a big install and being paid in 60 days to having to have a large capital outlay and recouping that over time from what is essentially rent,” says Wood. “For C3 this isn’t a problem as we have 30 years of legacy business, so we are covered with regular payments and have already made most of the capital outlay. But for anyone looking to enter this market, they overlook that they are going to have to spend a lot and then nothing will make any money until it all breaks even.”
What is likely to happen down the road is that many of these smaller players and start-ups that look to make an entrance in the CPaaS market are likely to be bought out by other more established players or will go under.
OUT OF THE CLOUDS
Another strategy that for CPaaS providers is that they can look to allow their clients to be more Flexible with how they use their CPaaS services. For starters, it is possible for companies to have access to the platform to build their own apps or for the CPaaS host to individually tailor and tweak what is available to meet their specific needs.
“This is something C3 offers, allowing clients to take what are general solutions and adapt them to what they specifically want to do,” says Wood. “This creates more value and can distinguish one CPaaS provider from another.”
A different tack is to essentially take things back off the public cloud. “As CPaaS users get bigger and more sophisticated with their use – and as their core businesses grow – they may also want to look at how to essentially buy the technology and put it on their own private cloud,” says Wood.
This may seem counterintuitive, but it can be cheaper. The public cloud means using server farms run by AWS or Microsoft Azure and, while this can be great from a price point of view when you start, they can raise their prices as the client business gets bigger.
“This can suddenly make what was a cost-effective CPaaS model less compelling,” says Wood. “It may actually be cheaper, easier and more flexible to run it yourself. We allow our customers to do that, and I think this may become how this model works longer term.”
The ROI of CPaaS
A study, commissioned by imimobile, to evaluate the ROI on CPaaS systems installed in enterprises finds that there is a 330% return, even with costs, saving a business as much as $1.2m.
The research, conducted by Forrester, which is based on the economics of using imimobile’s CPaaS platform conducted interviews with two organisations that invested in imiconnect as a key part of their IT infrastructure, which formed the basis of its Total Economic Impact framework. This framework was then used to identify the cost, benefit, flexibility, and risk factors that affect the investment decision in order to evaluate the overall impact that the imiconnect platform can have on an organisation.
In addition, the study highlighted three business critical advantages. First, time to create and manage customer communication journeys reduced from days to minutes. Previous communications management platforms required one week’s Time to compose and manage customer journeys. The scale and low-code tools identify the cost, benefit, that imiconnect provides reduced this effort to a couple of hours of FTE time, resulting in more than 50% increase in productivity efficiency.
Secondly, scalable SMS and mobile communications improved onboarding processes. With imiconnect, customers interviewed were able to automate the onboarding process and know your customer (KYC) information Flows through SMS communications. The platform improved onboarding processes for 3.5m new customers per year, which in turn represented a $1.2 million saving in both productivity and costs.
Finally, improved self-service capabilities increased efficiencies in customer support functions. SMS and WhatsApp capabilities provided end customers with easy and pervasive access to fulfil simple services in a self-service manner, and choice of communication channel dependent on the service request – reducing customer inquiries to the contact centre.
