Telecom Services Need CPaaS Glue For Enterprise Stickiness
In conversations with our telco partners, we often hear that the wholesale voice and SMS traffic business has been great. However, they are increasingly under price pressure from competitors; and it’s hard to hold on to enterprise accounts without matching the ever lowering prices. The big question from our telco partners is how to achieve better telecom services to enterprise stickiness that protects existing revenues and allows for expansion. Telestax believes the answer is CPaaS enablement. Read further to find out why.
The Concept Of Glue
Glue is another word for middleware. Once considered a very unsexy workhorse, middleware has now been given the recognition it deserves. Its connective sticky threads hold today’s IT world together. Middleware is the best super adhesive to connect external surfaces with internal enterprise business processes and IT systems. And it has now entered into the telecommunications space to add its value there as well.
Middleware was introduced in the late 1990s and flourished with Java EE in the 2000s. We witnessed it first hand at JBoss. Every enterprise needed to build a web presence. JBoss has been the glue that connects internal, closed IT systems running on mainframes and minicomputers to the Web.
Nowadays middleware is often referred to as microservices. Microservices is a software development technique—a variant of the service-oriented architecture (SOA) architectural style that structures an application as a collection of loosely coupled services. In a microservices architecture, services are fine-grained and the protocols are light weight.
There are many great microservices frameworks that help expose internal IT systems to the Web and Smartphone Apps. Development of Web applications for desktop and mobile devices has become very efficient and common place. And there are millions of highly productive web and mobile app developers.
New Intelligent Communication Methods
However the new frontier for consumer experience is no longer the Web. Consumers are adopting intelligent natural language interactions that utilize voice, messaging and video. The shift to natural language interaction is happening much faster than the shift to the Web. Think Alexa, Siri, Watson, tens of thousands of chatbots that plug into messaging platforms like Facebook Messenger, WhatsApp, WeChat, iMessage, Android Messages / RCS.
It is impossible to keep consumers from using their communication method of choice. Add the ever increasing number of choices and IT becomes overloaded fast. How does an enterprise connect its existing business process workflows to the constantly growing multitude of contextual voice and messaging interactions?
Programmable APIs To The Rescue
The answer is programmable communication APIs. APIs that mainstream developers can use internally in a protected IT environment with higher level of trust between developers on staff and also APIs for external public communication channels, such as SMS and PSTN.
The market for programmable communication APIs doubled in 2017 to $1.6B, and according to analysts (Gartner, IDC, and Juniper Research) will keep growing at 50% until it reaches $7-$8B by 2020. Gartner projects that 30% of Enterprises will use programmable communication APIs by 2020 up from 5% in 2017.
The consensus name for modern programmable communications API technology is CPaaS (Communication Platform as a Service). The Q4 financial results of three public CPaaS companies support the trend. Twilio reported 40% YoY growth, Vonage/Nexmo 29%, Bandwidth 16%. The margins CPaaS companies report consistently are in the order of 40-50%. But the wholesale telco business has seen margins as little as 2%. Both are making money transporting the same thing – messaging and voice so how can this be?
But I Digress A Bit
To return to the main topic of this blog, wholesale services are losing their margin and are highly vulnerable to replacement. Wholesale services such as SIP Trunking have little attachment to an enterprise customer. Sip Trunking is simply the way to connect a company phone network to the outside world.
The only common connection between a SIP Trunking service and the business customer is the SIP Switch, which all other communication devices such as desk phones and UC clients within the enterprise connect to. Replacing a SIP Trunking vendor is a matter of reconfiguring the SIP switch to point to a different wholesale SIP vendor. For the most part, nobody in the enterprise will know or even notice when that switch happens – assuming the new vendor has same or better quality of service.
On the other hand, programmable communication APIs – when they sit on top of carrier-grade middleware (glue) can permeate into all corners of a company. Full stack communication APIs can be used by IT developers looking to optimize communications and internal workflows between employees, vendors and partners. And with external product developers looking to improve end user experience. When there is carrier grade middleware (glue) that takes care of moving the communication on behalf of the developer, these new business applications become more straightforward to design, develop and maintain.
Programmable communication APIs can help optimize internal business processes such as sales bookings approvals, travel approvals, order delivery confirmation and many more. And once a business process demonstrates value and is adopted by employees, partners and users, it becomes very hard to change. People tend to resist change in general, but even more so when it comes to new business processes that affect how they go about doing their job. Everyone is simply too busy to consider learning new processes unless it’s highly necessary.
The reason people are quickly adopting natural language interactions is because this is the type of change that does not require them to acquire new skills. They become more productive using skills that have been polished for thousands of years. Enterprises are rushing to offer products and services via natural language interface to their end users. Web pages may go the way of Yellow pages and nobody wants to bet against this shift.
Programmable communication APIs make this transition move faster for enterprises. And they are stickier. The fastest way to offer this capability to your enterprise customers is through a CPaaS. But building a CPaaS offering is a herculean task. You not only have to build the programmable communication API layer, you have to build the carrier grade middleware to transport the communication. This is at least a 2-year investment – probably longer. And service providers do not have 2 years to waste. Commercial CPaaS providers are currently going after your enterprise customer base. If and when this happens, they take traffic off of your network.
Once an enterprise selects a CPaaS vendor, it’s highly unlikely to replace in the near term. That would require approval from all internal IT and product teams who are actively using the CPaaS for their projects. The friction associated with selecting a new CPaaS provider is far greater than simply replacing a SIP trunk. It is far better for service providers to get out ahead of these commercial CPaaS providers. You own the enterprise customers currently – keep them. Service providers must give their enterprise customers what they want and need now or risk losing them to a commercial CPaaS provider. Commercial CPaaS providers will bring in service providers with whom they have existing relationships, leaving you behind.
If you are a service provider executive without a rock solid CPaaS strategy under way, you may be on the verge of losing real and present opportunities. Telestax’s mission is to CPaaS enable every service provider in the world. That is right – we want you to become the CPaaS provider to your enterprise customers. And we can do it in 8 weeks or less with our RestcommONE CPaaS enablement cloud solution. We are the only brand that provides full stack CPaaS that wants to empower you – not take business away from you.
Takin’ out the demons in your range,
Livin’ in a world that’s oh so fast
Gotta make your money last
Learn from the past, oh
Time’s a wastin’
Don’t you take your time young man
– June Carter Cash and Carl Smith
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