CPaaS industry growth driven by pandemic communications
The CPaaS industry is accelerating as the pandemic drives new use cases for communications APIs, from virtual patient visits in healthcare to contactless pickup in retail.
Communications platform as a service, or CPaaS, has become a mainstream technology as the COVID-19 pandemic forced organizations to replace face-to-face and in-person communications. This growth in CPaaS is driving new use cases as organizations expand embedded communications beyond the usual voice and messaging services, such as anonymous calling and appointment reminders.
In the last six months, virtual conversations built on CPaaS APIs for voice and text have picked up the slack of reduced in-person communications due to social distancing and quarantines, IDC analyst Mark Winther said.
CPaaS APIs enable organizations to embed communications capabilities into business processes without needing to change or modify the back-end infrastructure.
Winther and other industry experts spoke about the rise of the CPaaS industry at Enterprise Connect 2020.
Spending on CPaaS services -- including voice, video and text messaging -- is expected to grow exponentially over the next four years. In 2019, global CPaaS market revenue reached $4.26 billion and is estimated to reach $17.71 billion by 2024, according to IDC data.
Expect to see more CPaaS products
CPaaS growth is also driven by tools that simplify development, like low-code/no-code tools, which make it easier for developers and nondevelopers to create applications, adapt applications and build marketing campaigns, Winther said.
The key question is: Are these stopgap measures set up to handle this particular macroenvironment, or do they become long-term solutions that are sustained in business processes?
Mark WintherIDC
Larger, more established enterprises are also pivoting to the cloud and adopting more communications APIs, he said. While cloud-native companies were the first to embrace APIs and CPaaS, legacy companies are looking to APIs to take advantage of market acceleration.
For larger enterprises with considerable back-office operations, CPaaS could integrate communications capabilities into those complex systems, said Jim Burton, founder of consulting firm CT Link.
Over the next few months, major unified communications vendors will begin to introduce new CPaaS offerings, he said.
"CPaaS growth is going to wind up being one of the big highs of the COVID transition," ZK Research analyst Zeus Kerravala said.
New communication needs drive CPaaS industry growth
The opportunity for CPaaS now is to fix the problems of brick-and-mortar industries built around face-to-face interactions, Winther said. New CPaaS use cases have emerged around telehealth, retail and e-commerce, and programmable video.
While telehealth has been around for years, it's largely been restrained by regulations like HIPAA, Winther said. But many of those regulations were relaxed in response to COVID-19 to reduce the number of people leaving their homes to visit doctor offices and clinics.
In this 2017 video, IDC analyst Mark Winther discusses the emergence of CPaaS.
"The key question is: Are these stopgap measures set up to handle this particular macroenvironment, or do they become long-term solutions that are sustained in business processes?" he said. An IDC survey suggested these new use cases have longevity as 84% of first-time users of virtual care during the pandemic were satisfied with the experience, he said.
In addition to virtual patient visits, CPaaS can also enable virtual waiting rooms and remote patient monitoring, as well as keep health organizations in touch with their staff.
Embedded e-commerce and exercise
Contactless retail and e-commerce are also driving new communications requirements that CPaaS can address. Contactless pickup has become a popular option for businesses that had to eliminate or limit in-store shopping. Retail organizations needed a way to communicate quickly with customers and employees about in-store customer limits, shopping hours, scheduling and health protection requirements.
Another area of growth for CPaaS is programmable video, which includes a wide range of use cases, including video banking, video-assisted sales, field services, customer support and education.
Peloton Interactive Inc., the exercise equipment and media company, uses Vonage's CPaaS APIs to embed video, voice and chat into its UI. The integration, for example, enables Peloton's instructors to see a user in real time during an exercise session and provide feedback.
"You couldn't do a Peloton using Zoom and its interface and expect users to flip back and forth," Kerravala said. "The ability to embed video, chat and voice greatly improved productivity."
The next generation of CPaaS emerges
The CPaaS industry is now starting to move into the next generation of the technology, which involves making interactions more conversational and intelligent through AI and machine learning. Communications becomes more real time, personalized and contextual, Winther said.
But, for next-generation CPaaS to become a reality, Winther outlined several challenges that need to be addressed:
Scale. CPaaS must be scalable and support high-volume use cases where an organization, like a large bank or government agency, may need to send over 1 million messages a day.
Analytics. Platforms need to provide insights into call quality or message receipt reliability. Organizations want more than an overall picture of performance, so analytics that can drill down into the specifics are important.
Reliability. CPaaS is a cloud-driven technology, but cloud infrastructures like AWS, Google and Microsoft Azure aren't built for real-time applications, he said. CPaaS apps are sensitive to latency, and cloud infrastructure must accommodate real-time traffic needs.
Outages. Most organizations use one CPaaS vendor, unless they operate in different geographies. But vendors must monitor performance issues and liability concerns that fall under outages.
Trust. Organizations need to ensure their CPaaS platform has the tools to maintain compliance with government and industry regulations.
Liability. Organizations and vendors must establish who is liable if performance fails on the back end.
