Over the last four years, the Cloud Comms Summit has been bringing experts into the cloud communications space together in a vendor-neutral environment perfect for service providers. The conference provides an opportunity for leaders to discuss industry trends and share strategic insights.
Cloud Comms Summit, USA was hosted in Washington this year, by the Cavell Group and the Cloud Communications Alliance. The day began with an opening session with Matt Townend of the Cavell group, who began by welcoming everyone to the event and thanking the sponsors for their input. He introduced what was going to happen through the day, discussing the growth track, innovation track, and best practice tracks for the afternoon, before moving onto a discussion of how he, and Cavell see the future of the cloud comms market.
The Three Waves of the Cloud Comms Market
As part of the Cavell Group – a knowledge company that’s been in the industry for about 12 years now, helping service providers across Europe and the US, Matt knows a thing or two about communications. He’s worked alongside people from all over the world, and the research that the Cavell Group does gives them a deep insight into what’s going on in the global market.
As part of his opening speech, Matt said that Cavell see the market in three waves:
“The first wave was just about PBX replacement. After that, we got excited about collaboration, and now, we’re moving into an era of customer analysis and intelligence.”
According to Townend, we’re going through waves of challenge in the industry, which are changing how we adapt to take advantage of new customer opportunities. The cloud is still growing, with some markets moving faster than others.
The Market for Cloud is Maturing
Matt noted that the most developed market they’re working with right now is the Dutch sector, with cloud communications penetration well over 20%. However, they’ve also done some research in the U.S. too. Cavell conducted a study of 100 service providers and looked at public pricing, and they found that the market is quickly growing more mature. “Certain parts are more mature than others. The small and mid-markets are the most penetrated right now, while the bigger markets still have a lot of opportunities to offer.”
Townend commented that the accelerating move to the cloud is starting to hurt the slow-movers more and more. For instance, one of their Dutch customers, KPN, lost 18% of their fixed business revenue during 2017, and Cavell is seeing the same figures around the world, in markets like the UK and the US too.
“This change is both a good and bad thing. It’s pushing people to move faster to the cloud. In the UK, there’s a company called Gamma who came from nowhere and is now clearly leading the market. The people who are winning the cloud battle are the new providers.”
“People think that they’ll never fully move to SIP trunking, but 51% of the ISDN market in the UK has now moved to SIP. It’s happening there, and it’s going to happen here in the USA.”
The Drive for Differentiation
For Matt, the most important focus for many organisations in the marketplace today is figuring out where they can differentiate.
“People are passionately looking to differentiate themselves – and that’s a big challenge we’re all facing right now.”
As part of the drive to be different, companies are consolidating, buying other businesses, and looking for ways they can segment the market by vertical. As Townend said in his speech, some people believe that the best way to compete in this market is to get really close to a particular segment, and a specific area of the market.
“As the market matures, we’re seeing that one size doesn’t necessarily fit all. You’re going to notice a theme through today, which highlights how people can begin to differentiate in this maturing market, in a range of different ways.”
The Options for Differentiation
Townend drew attention to a few specific options that service providers are using to differentiate themselves in the modern world. The first point he discussed involved people producing new products around specific sectors or “segments.” They’re looking for a niche that they can fully understand and cater to.
On the other hand, there has been a lot of merger and acquisition activity recently.
“Soon, you’ll be competing with a lot of people you don’t really know.”
Matt acknowledged that the industry is seeing more consolidation than ever before, both on the vendor side and the enterprise side. “We’re seeing people from adjacent markets come together to offer more distinct value propositions.”
Another place where vendors are seeing value in differentiation is at a relationship level. “In the new world, before I buy anything, I pre-qualify myself, find the right person to talk to and read reviews. You’ve got to think about those interactions, whether it’s in the contact center, or de-packaging some of those contact centre offerings into things like analytics and reporting suites.”
The Potential of SD-WAN
Matt also pulled focus to the concept of SD-WAN for the service provider as part of his opening speech. He noted that SD-WAN is a huge opportunity for cloud communications providers. “There are two markets to SD-WAN right now. You can either take the top-end replacement story with NPS, or you can explore the bottom-end cloud enablement story.”
Townend commented that while the NPS (net promoter score) story is very popular, he believes some service providers may be missing the point with SD-WAN.
“You might think of it in terms of NPS and cost reductions, but if you own the SD-WAN relationship, you also own the insight into that customer’s cloud usage. This will enable you to offer new and more advanced services.”
Matt encouraged attendees at the Cloud Comms Summit to go after the SD-WAN opportunity and own their voice relationships.
Matt finished off the keynote speech by acknowledging that today’s service providers have a lot to think about if they want to stand out in a competitive marketplace. They need to figure out how to compete from a collaboration perspective with solutions like Slack, evolve into an international space, and improve the conversation with end users.
Townend closed his session by reminding service providers that it’s not just up to vendors to innovate.
“You need to look at innovation yourself, think about where you can integrate, where you should develop, and how you can drive differentiation with SD-WAN, internal migrations, analytics, and interactions.”