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Industry experts discuss the key trends driving the growth of the CPaaS market, the challenges and security concerns of implementing CPaaS into existing infrastructure, and what advice they’d give to businesses seeking to leverage CPaaS for a competitive industry advantage
Last Edited: July 20, 2023
Kieran Devlin
Implementing an effective CPaaS solution into a business’s existing infrastructure could be a game-changer. It can potentially provide companies with a cost-effective pay-as-you-go model of communications infrastructure, a versatile omnichannel approach to customer and employee communication, improved customer engagement, and a breadth of scalability and flexibility to suit a business’s specific needs.
However, with such utility come challenges. Integration can be complex, requiring significant expertise, resources and effort to implement effectively. Reliance on a cloud-based comms system prompts doubts over reliability in the event of downtime, while cost-effectiveness and scalability, usually a positive tick in CPaaS’s favour, also need constant monitoring to ensure costs don’t spiral while scaling quickly. There are also myriad security and compliance problems to consider, as UC Today‘s experts explore.
With our latest Round Table subject, “CPaaS”, we spoke with experts and executives from Avaya, Horisen, Plivo, Cisco, Bandwidth, and AWS about the key trends driving the growth of the CPaaS market, the challenges of integrating CPaaS solutions into existing infrastructure, the security concerns behind implementing CPaaS solutions, and advice for organizations seeking to leverage CPaaS to gain a competitive advantage in their industries.
Ankush Gangwani, VP of Product, Enterprise Solutions at Bandwidth
Gangwani observed three key trends in CPaaS in 2023, the first being that global 2000 CIOs need to “incorporate new AI and ML capabilities while integrating communications across UCaaS and CCaaS”.
Secondly, “in the current macro environment, the need to reduce costs has created a greater urgency to move to the cloud”. Lastly, Gangwani highlighted the growing trend of cloud-to-cloud transitions as well as on-prem-to-cloud transitions.
Jay Patel, VP & GM Webex CPaaS Solutions at Cisco
Patel highlighted Gartner’s prediction that by 2025, 95 percent of global enterprises could adopt CPaaS solutions to strengthen their digital competitiveness, a rise of around 35 percent from current adoption. “During the current economic situation with high inflation and borrowing rates, the overarching trend driving the continued growth in CPaaS is business demand for greater efficiency and revenue,” Patel said.
“By automating customer interactions with CPaaS,” Patel expanded, “businesses can reduce their operational costs, allowing them to do more with less. In many cases, CPaaS also creates more engaging experiences that attract customers to smarter, richer digital channels than manually-intensive options like phone calls to a contact centre agent. Digital transformation drives much of the demand for CPaaS, which has only accelerated during the last few years.”
Patel highlighted that, while many businesses are on their digital transformation journey, that is still an ongoing process. “As AI continues to evolve,” he suggested, “the value-add for enterprises becomes even greater because businesses can automate time-intensive tasks, allowing them to optimize labour costs, realize a return on investment quicker and focus investments on two-way proactive communications services that distinguish their customer experience from their peers.”
Christopher Sampson, WWSO Leader for Communication Developer Services at AWS
Sampson frequently hears from customers about the need to build a modern architecture that unifies communication channels that can be directly integrated with planned AI and machine learning projects.
“It’s critical to connect communications channels with ML-based customer engagement because inbound channels, like email or push notifications, need to be used in the ML models for more effective real-time engagement,” Sampson said. “These CPaaS channels fuel ML models, like predictive capabilities, and provide the outbound path to engagement in real-time.”
Sampson suggested CPaaS’s popularity is growing partly because customers value real-time engagement over waiting for data to be analysed and segmented. “The unification does not mean an interest in a full-stack solution with private APIs or a UI,” he added.
“Instead, I’m hearing that customers prefer building blocks that allow them to build solutions tailored to their unique enterprise environment. By using building blocks, customers can preserve their investment in services they value and eliminate redundant services and ring-fence costs to a use case or a communication service like SMS.
“I frequently see customers start with SMS One-Time-Password (OTP) and then transition to SMS for promotions or email for transactional notifications,” Samson continued. “Growth in CPaaS is generally driven by the need for omnichannel adoption, but omnichannel adoption does not require all channels to be adopted at once.”
Venky Balasubramanian, CEO and Cofounder at Plivo
One key CPaaS trend that Balasubramanian has observed is that businesses are increasingly engaging with their customers programmatically via mobile and web apps, inferring that this is how people prefer to interact.
“We’re seeing more point solutions aiming at not only specific departments, such as customer service or sales or human resources, but also specific verticals, such as real estate, retail, and hospitality, and even businesses of different sizes,” Balasubramanian said. “For example, the features that suit a payroll system for a small business won’t be adequate for a large multinational company.”
Balasubramanian highlighted that reaching a global audience over mobile networks entails multiple components and protocols. “It’s too complex for most businesses to tackle on their own — and they shouldn’t have to since CPaaS platforms can do it for them,” he said.
Savio Tovar Dias, Vice President – Avaya Customer Experience Services at Avaya International
Dias pointed out that large digital transformations are not something that happens all at once and that gradual evolution requires a flexible solution such as CPaaS. “The innovation is a process, not a one-and-done,” Dias said. “Organisations which understand that customer experience is their most important differentiator need a platform that can evolve in step with them to meet their dynamic business needs.”
“Whether it’s on-prem, full cloud, or somewhere in between, digital channels, workflow automation or even AI can be added as required without having to rip out existing infrastructure,” Dias continued.
Dias cited an example of a company needing to expand personalisation, and so CPaaS makes it easy to integrate powerful AI capabilities and data-driven automation into its business workflows “to leverage text messages, calls, and chatbots to deliver in-the-moment, personalised experiences”.
“CPaaS, or as we call it, Avaya Communications APIs,” Dias added, “also makes it easy to extend a comprehensive set of communications capabilities to integrate into any kind of app.”
Fabrizio Salanitri, CEO at Horisen
Salanitri also recognised the collective digital transformations that businesses have undergone over the past decade but accelerated after 2020, including the implementation of omnichannel digital customer engagement. “As consumer expectations continue to rise, effective communication must encompass multiple channels, be interactive, and offer personalized, intelligent, and tailored experiences,” Salanitri said.
“Investment in cloud-based messaging platforms that enhance connectivity between brands, customers, and applications play a crucial role in driving growth within the messaging industry in the upcoming years,” Salanitri continued. “These investments are projected to remain resilient even during challenging economic circumstances, making them less susceptible to budget cuts.”
Savio Tovar Dias, Vice President – Avaya Customer Experience Services at Avaya International
Dias highlighted that one fundamental issue could be that not every business has an established team of developers to leverage their expertise in integrating CPaaS. However, “this challenge can be overcome by working with a technology partner that provides dev support,” Dias explained. “The right partner will have open and in-house development to meet ever-changing needs so is able to build the required customer solution.”
Dias emphasized that the most crucial challenges that organizations would face would be based on the depth of understanding of their customer experience journeys. Subsequently, they can build that “journey over disparate data, communications and business applications,” Dias said. “This needs strong customer experience knowledge and agile architectures that can help unify the flow of information and communications.”
Venky Balasubramanian, CEO and Cofounder at Plivo
Balasubramanian stressed that businesses have to consider the opportunity cost of the implementation cycle, which can be difficult to plan for. “As they architect their applications,” Balasubramanian, “they need to pay attention to factors such as compliance with telecom regulations, security and privacy, controls to limit the possibility of using the platform for fraud and architecting for low latency and high reliability.”
Balasubramanian highlighted that businesses that already use a CPaaS understand what benefits and challenges they’re in for, so “integrating a second provider or migrating to a new one isn’t as much of an effort as the task for new adopters”. To simplify the process of adding a provider requires finding a CPaaS whose APIs complement those they’re familiar with.
“For new adopters, there’s more of a learning curve, so it’s important to work with a CPaaS vendor that understands your use cases and can help you navigate not only technical but also regulatory issues,” Balasubramanian added.
Christopher Sampson, WWSO Leader for Communication Developer Services at AWS
Sampson highlighted that adopting and integrating CPaaS solutions can be plateaued because ownership for decisions, implementation and reporting can become fragmented. “When I speak to customers, it is not unusual to hear that traditional marketing teams are more biased toward solutions that offer an eloquent user interface and that marketing technologists prefer the freedom to build solutions that are tailored for use cases using APIs,” Sampson said.
“The customers who are focused on building the next generation customer engagement systems, where ML is likely to play a large role, will focus first on the use case and build-up from channels, followed by segmentation, analytics and then ML,” Sampson continued.
“By decomposing the architecture elements against the use case, you often find that new solutions can leverage legacy systems as a data repository while reimagining new types of engagement mixing in video, sms, email and social messaging.”
Ankush Gangwani, VP of Product, Enterprise Solutions at Bandwidth
Gangwani underlined the complexity and difficulty of transitioning to the cloud from existing on-premises infrastructure, especially when it comes with a lengthy timeline. “The options enterprises have are often limited to legacy SIP, which requires each enterprise to individually adopt and integrate communications tools, or a cloud contact centre solution, which locks enterprises into the roadmap of one provider,” Gangwani said.
“Enterprise CIOs trying to forge a third path to integrate best-in-class, real-time voice apps across their unified communications, cloud contact centre and AI platforms can take months or even years and a lot of investment to reach full interoperability,” Gangwani continued. “That’s why it’s crucial to partner with the right provider. Access to these innovative technologies can make or break your ability to future-proof for the years to come.”
Jay Patel, VP & GM Webex CPaaS Solutions at Cisco
Patel noted that many prominent consumer businesses struggle with an effective customer engagement strategy because of legacy investments in IT systems. “Over time, they’ve also accumulated a lot of vendors for communications as different teams, departments, and geographies implemented their own systems and processes, leading to a silo approach to communications enablement,” Patel explained.
“Not least, this means their customer data is decentralized,” Patel expanded, “preventing them from delivering a singular, unified customer experience. It’s not easy to consolidate, but a centralized communications platform is a prerequisite to improve agility and scalability and apply automation and AI to your workflows and customer journeys.”
Jay Patel, VP & GM Webex CPaaS Solutions at Cisco
Patel pointed out that consumers are increasingly exposed to security scams and are demanding more from vendors to protect and safeguard them. These include spear phishing attacks, which rose sevenfold since the pandemic.
“Businesses must safeguard against an increasingly complex security landscape, and cloud communications platforms (CPaaS) are firmly part of the battle for customer trust,” Patel said. “Organizations need to consider how to securely integrate CPaaS into their tech stack to assure customers that their data is safe and use the capabilities of the technology to combat fraud and strengthen customer trust.”
“Additionally, organizations must consider the security of a vendor’s overall platform,” Patel said. They also have to pursue vendors that offer baseline features and address emerging security technologies. This would enable them to have secure, in-built features like “channel verification processes, security solutions for business-to-customer interactions — such as two-factor verification and mobile identity — and security capabilities to manage consumer preferences to further protect data, like end-to-end encryption.”
Venky Balasubramanian, CEO and Cofounder at Plivo
Balasubramanian underlined several issues around privacy and security, including data protection and privacy. “Businesses have to protect sensitive data, such as personal user information,” Balasubramanian explained.
“The CPaaS should support message redaction in logs and number masking in applications. It should encrypt data both at rest and in transit, but the organization is ultimately responsible for using best practices to stay compliant with their company’s privacy policy, as well as with privacy laws such as GDPR and CCPA and industry privacy standards such as PCI DSS and HIPAA.”
Balasubramanian then pinpointed authentication and access control as security problems, as customers can’t protect data if they don’t have sophisticated authentication and access control mechanisms.
Lastly, Balasubramanian cited vulnerability management. “Organizations should follow the practices of CPaaS platforms and take a proactive approach to identifying and managing vulnerabilities,” he said. “This means monitoring and auditing security and access logs, performing regular security testing, and developing a process for responding to identified vulnerabilities. Independent security audits can provide additional reassurance.”
Ankush Gangwani, VP of Product, Enterprise Solutions at Bandwidth
Gangwani suggested that when selecting a CPaaS partner, it is important that the prospective vendor takes necessary security measures and implement the proper tools to provide a robust service level that protects the customer’s business and customer experience. “These include compliance with standards such as ISO 27001, the global “gold standard” for security and risk management,” Gangwani said.
“Security is an important consideration,” Gangwani continued, “but it’s critical that organizations also put resiliency at the forefront of their operations to prepare for unexpected scenarios. Solid network resiliency, call uptime, and disaster recovery plans can protect your customer experience. Make sure to bring this up with your CPaaS provider to see how they can support your security and resiliency goals.”
Christopher Sampson, WWSO Leader for Communication Developer Services at AWS
Sampson explained that most of his customer discussions around security centred on email and SMS. “In discussions around email security, I hear most often sender ID management and security,” Sampson said. “Domain Keys Identified Mail (DKIM), Sender Policy Framework (SPF), and Domain-based Message Authentication, Reporting and Conformance (DMARC).”
“When an internet service provider (ISP) receives an email, they check to see if it is authenticated before attempting to deliver it to the recipient. Authentication demonstrates to the ISP that you own the email address you are sending from – that’s critical for commerce and promotions using email.”
Sampson also highlighted that with the growth of DTC and public agencies using digital channels to manage public policy, he regularly hears the request to implement SMS to support One-Time Password (OTP).
“Customers can use OTP to generate new one-time passwords and have their applications then use that secure password,” he said. “Because SMS is generally available across the globe, it’s fast and does not require a learning curve, the cost-effective implementation of OTP is top of mind with any of our customers. Whether the security use case is email or sms, CPaaS or the channel building blocks, give customers the flexibility to implement and ring-fence costs associated with the use case.”
Fabrizio Salanitri, CEO at Horisen
For Salanitri, to fully harness the capabilities of CPaaS and gain a competitive edge in the market, businesses must “invest in scalable solutions”. However, Salanitri recognised that finding platforms with scalable architecture could be problematic because it is often the most complex aspect of development.
“But failing to achieve scalability can lead to a decline in customer experience,” Salanitri added, “an undesirable outcome for any business. So, given the continuous growth of the CPaaS market, businesses need to identify scalable tools that empower their businesses to address challenges and facilitate smooth growth.”
Christopher Sampson, WWSO Leader for Communication Developer Services at AWS
Sampson asserted that businesses should “start with defining the use case and then brainstorm with technologists and marketing leaders to identify if there are new service capabilities and approaches that can truly improve the speed of customer engagement, enhance the customer experience and ring-fence cost”.
They should value their marketing technologists or IT leaders, as they can be business-savvy individuals who can ideate around integrating new technology with legacy systems.
“Be certain to capture real-time data and use ML/AI models used for customer engagement and integrate new engagement channels to include IVR, conversational ChatBot, and OTP with channels like SMS and email,” Sampson expanded. “There are compelling use cases in travel and hospitality and healthcare concierge services when a wider range of channels are used beyond alerts and reminders.”
Savio Tovar Dias, Vice President – Avaya Customer Experience Services at Avaya International
Dias highlighted that contactless service and digital engagement have become mainstream, with customers comfortable using digital channels to acquire the products and services they need. This means if a business can’t create multi-experience models for customers and employees, it could miss out on the positive business outcomes produced through improving communications.
“With CPaaS, they can bring their digital apps and channels together to deliver a consistent, seamless, and immersive experience across devices and modalities — whether at work or mobile, via talk, chat, or video,” Dias explained. “They can also be agile and create the experiences they need in response to evolving customer and operational needs.”
When a contact centre leverages a CCaaS solution, CPaaS capabilities allow businesses to build any number of applications that can “drive personalised, contextual experiences across SMS, MMS, voice, messaging, and digital channels — and at a fraction of their typical cost and complexity,” Dias added.
“The main advice is that the benefits of CPaaS are not just for large enterprises. The flexibility of CPaaS reduces the need for “one-size-fits-all” applications. Customised applications that once required the efforts of specialised developers and engineers can now be created and deployed across organisations of any size in a matter of days and weeks instead of months or years — and without disruption to existing processes.”
Ankush Gangwani, VP of Product, Enterprise Solutions at Bandwidth
Gangwani noted the importance of selecting a provider that meets your specific needs: “Ask, ‘does the provider have the ability to provide reliable connectivity everywhere you want and aspire to be?’”
“Choose a provider that helps you stay on top of global regulations,” Gangwani expanded. “Does your provider have the global regulatory experience to help you stay ahead of compliance developments around the world, any one of which could halt services in one or more countries? This includes complying with requirements in such areas as 911 emergency services, and messaging campaign registration etc.”
Gangwani also underlined the importance of ecosystem integration and operability, both in the present and in the future. “Does the provider enable you to create full solutions by connecting best-in-class capabilities across all the cloud platforms in UCaaS, CCaaS, and AI?” he said. “Are you future-proofed for potential future needs? Are you able to seamlessly migrate from one cloud platform to another, not locked in?”
Jay Patel, VP & GM Webex CPaaS Solutions at Cisco
Patel’s sage advice was to avoid underestimating the importance of customers’ ease of service and how customer experience can be considered a differentiator.
“We know from research that over half (57 percent) of customers will move to another brand if they think another brand will offer a better customer experience,” Patel explained. “Organizations need to be continually upgrading their communication capabilities to keep pace with consumer expectations.”
“Gen Z consumers, the digital-native generation, have reached the age to purchase and therefore more greatly depend on evolving CPaaS capabilities,” Patel continued.
“Organizations should look to automate and provide self-serve options for as much as possible, especially for when customers commonly need answers to frequently asked questions. For instance, when customers are choosing the channel to engage on, they may choose a voice-first platform, but what was supposed to be a quick resolution results in long call and waiting times.”
Patel noted that with advanced CPaaS solutions, such as the automation and operation of omnichannel communications, customers don’t have to repeat information across channels or get stuck at a dead end with an agent. “By doing so, it allows companies to invest in higher value areas that are going to drive value for consumers, therefore achieving business objectives and increasing market shares,” Patel concluded.
Venky Balasubramanian, CEO and Cofounder at Plivo
Balasubramanian asserted the importance of customers outlining their CPaaS business goals before beginning on their product journey. “Are you looking to improve customer service? Enhance marketing? Drive more engagement? Keeping the goals in mind helps you choose a CPaaS that fits your needs,” Balasubramanian commented.
“Ask for recommendations from industry peers who’ve undertaken similar projects, or visit independent software review sites such as G2 and Capterra to see what professionals who’ve used each platform say. Look for a provider that offers high scalability, a documented record of reliability, and a presence in every market where you do business or plan to.”
Balasubramanian also suggested having an alternative provider as a contingency plan, either to offer 100 percent operational uptime, to reach a wider range of nations, or “because one provider is more reliable or more cost-effective in certain geographies than another”.
“Choose a provider that prioritizes guided onboarding and exceptional customer support, not just from the tech support team but from the ground up, including documentation and user guides,” he added.
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