CPaaS Segmentation

cakeIn response to many questions over the past year on how different CPaaS (Communication Platform as a Service) providers compare, the general confusion given the rapid increase in the number of providers claiming to be CPaaS, and the likely continuation of that confusion given the evolution of the CPaaS market. I thought it would make sense to provide a CPaaS segmentation I use when evaluating providers.

Bear in mind CPaaS is part of the broader CXTech landscape which includes telecom APIs, CPaaS enabled services, unified communications as a service (UCaaS), call center as a service (CCaaS), instant authentication and trust ratings, conversational CRM (Customer Relationship Management) and BOTs (roBOTs, automated agents), machine-to-machine (M2M) and Internet of Things (IoT), WebRTC, application-to-person (A2P) comms, open source telecom software, and much much more.

We use the term CXTech (like FinTech) to capture this diversity, where the C stands for Connectivity, Communications, Collaboration, Conversation, Customer; X for Experience because that’s what matters; and Tech because the focus is enablers.

This segmentation is focused on the providers using the CPaaS label, and the diagram below shows the technologies and functions making up most of the CPaaS providers out there. Please bear in mind the categories in the segments are not clear cut, its a spectrum. I’m not delving into the CPaaS enablers (technology providers) and the services they offer, e.g. Telestax Restcomm and FreeSWITCH.

ProgrammableTelecomsArchitecure
Segmenting by Market Focus

Wholesale Legacy B2B

These are the classic PSTN aggregators, generally focused on PSTN voice and SMS using legacy telecom protocols. For example, BICS, Level3, Voyant, iBasis, Tata, Infobip, Syniverse, SAP, carriers’ wholesale divisions, etc. It’s a complex market as there are global and regional aggregators, focused on voice or SMS or both and in some cases DIDs (phone numbers), and on different customer segments, e.g. other telcos, marketing aggregators, multinational enterprise, CPaaS, UCaaS, and CCaaS providers. Its a well-established market where relationships and volume are key, and feels quite “telco”. They label themselves as CPaaS, in part due to the migration of this legacy business toward the next category.

API B2B

This isn’t self-service APIs, its B2B API deals, there’s operational and commercial hurdles to get into this category. Telesign supports a range of web-companies through its APIs, supporting SMS, 2FA, voice, and trust ratings. Sinch supports a range of CPaaS providers given its global SMS deals. The aggregation services provided are broader than PSTN services, include IP messaging like WhatsApp and smartphone push messaging, and other value added services.

Because of the large volumes, the pricing and functionality is not necessarily available through the self-service portal. Also the wholesale legacy B2B providers are moving into this space, adding in WhatApp messaging or SIM provisioning for IoT. There’s usually a management console, so changes / additions can happen on demand for B2B customers. But as mentioned, there’s operational and commercial hurdles to get into this category.

Also some of the UCaaS, CCaaS, and collaboration providers offer CPaaS with their platform, generally that only makes sense if you’re a customer of their UC/CC/Collab service first and CPaaS gets bundled. We’ll discuss this more in later segmentation.

Mass-market self-service

The classic example is the self-service portal of Twilio. Sign up, provide credit card, and start using their APIs; generally targeting developers. Note, some of those developers work in existing B2B customers, it’s just faster to test out new ideas without having to talk to the operational people in their business.

This category goes beyond API access to include simple web forms and wizards like we see in IdeaMart in Sri Lanka. VoIP Innovations and their Showroom is an example of a CPaaS provider offering API-enabled services under a self-service framework. Later segmentation will look at this trend of moving beyond transport-centric APIs.

Segmenting by Exclusivity

Private CPaaS

This category gets many confused. How can RingCentral, a UCaaS provider, also be a CPaaS provider? The critical point is they are not separate offers. The pricing on the RingCentral CPaaS page is that for the UCaaS offer. It’s really a set of APIs you can use with your UCaaS service to integrate with existing business processes. We had some nice RingCentral hacks at TADHack-mini Orlando back in 2017. It’s about extending the value of their UCaaS offer, its a private CPaaS, not a public one.

ALU has its Rainbow CPaaS. Rainbow is its UCaaS. And the Rainbow CPaaS as a way to integrate business applications with its UCaaS. As UCaaS is built on a Telecom App Server, and they or their customer have the PSTN interconnect deals, it’s a no-brainer to make this available to their UCaaS customers. BUT they’re UCaaS customers first.

Some public CPaaS providers consider the use of the term CPaaS by UCaaS providers as incorrect. Simply appending public and private to CPaaS solves the issue. For a business that has RingCentral as its UCaaS provider, and uses their fax API for a warehouse notification service they’ve been using for the past 20 years. It’s all just enterprise communications that they once bought from AT&T, and now buy from RingCentral. And yes, the same its true for collaboration services, call center services, really any enterprise communications service that offers an API, can make the claim of being a private CPaaS for that customer.

Additionally, as the CPaaS market evolves, we’re also seeing the emergence of eCPaaS (enterprise CPaaS). That is, an enterprise can buy a CPaaS (on premise or in the cloud) and run all the communication enabled business applications themselves. It’s a private CPaaS, without having to buy a UCaaS or CCaaS as well. We’ll discuss this more at TADSummit Asia at the end of the month, we’ll be hacking on eCPaaS at TADHack Global from hSenid Mobile in Chicago, and we’ll see those hacks and discuss eCPaaS impact at TADSummit Americas. As well as at TADSummit EMEA later in the year.

Public CPaaS

This is what most people think of CPaaS, a public cloud service that you can sign-up over the web and start using immediately, or through B2B deals.

Note, a point of confusion comes with VoIP providers like Vonage and VoIP Innovations that have expanded their business to offer CPaaS. Here their offers are public CPaaS, you do not need to be a Vonage or VoIP Innovation VoIP customer to use their CPaaS. But clearly there are benefits to being both in adding API-enabled service to you existing numbers. So treat this private / public CPaaS segmentation with a little flexibility. It’s all just software, and if the deal is big enough, they’ll do what’s necessary to win that business.

Segmenting by Breadth of Transport Offer

Focused

Thinq is an example of CPaaS that focuses on Least Cost Routing as a Service (LCRaaS). It has other services, but LCRaaS is what I consider to be its most popular service.

Broad

Twilio is a classic example, offering voice (PSTN and IP), messaging (PSTN and IP), fax, phone numbers, SIP trucking, 2FA, SIMs, etc. If its telecoms related, they’ll have an API for that 😉 Sinch, Nexmo, Telesign, etc. also take this broad approach with their own differentiation, e.g. trust ratings with Telesign.

Segmenting by Depth of Solutions

Transport focused

Infobip is an example that focuses on getting the message delivered over SMS, IP messaging, and even Voice.

VAS / Templates / Services

IdeaMart is a great example of packaging up simple services into templates / wizards so SMB owners can implement simple messaging related services like alerting, contact, and voting. VoIP Innovations with its Showroom also takes this approach into services like 2FA, modern voicemail, fax control.

Solutions focused

Twilio and Sinch are examples that deliver solutions around marketing, operations, and customer service thanks to their acquisitions (e.g. SendGrid, Mblox) and internal development (e.g. Flex)

Summary

So UCaaS / CCaaS providers’ CPaaS offers fit in this segmentation: it’s a private CPaaS. And we’ll see eCPaaS emerge as a category though 2019 / 2020. Which is a dedicated private CPaaS, not a bundled private CPaaS. Likely in Asia we’ll see this being adopted given the struggles UCaaS will see in some Asian countries.

Is this confusing for enterprise buyers? It sure is. That’s why you see a focus on channel.

Does this mean UCaaS and CCaaS will subsume CPaaS? No. But many analysts (most of them are US based) disagree with this view, seeing RingCentral, Cisco and Microsoft’s UCaaS as a winner takes all in the enterprise communications space. Only time will tell, but here are a few of my considerations.

SMB are unlikley to have CCaaS, and UCaaS is complex for many SMB. Rather a vanilla VoIP service is good enough, augment with a few CPaaS enabled services, its cheaper and much easier to use.

For large enterprise, it’s a portfolio approach, a dedicated CPaaS provider can solve trust ratings where UCaaS will struggle, it’s the classic span of control issue. Some enterprises may adopt their own private CPaaS with pre-packaged enterprise apps.

In Asia UCaaS struggles, in China WeChat and your mobile phone are good enough for many businesses (large and small). In emerging markets with high WhatsApp penetration, that’s good enough to restrict the addressable market for UC/UCaaS adoption. While a CPaaS can offer a good-enough and cost effective local market call routing offer.

Diversity will reign for at least the next decade. Google, Amazon, Microsoft in the long run are a significant threat in developed markets. Especially when Google and Amazon get their enterprise channel strategy sorted. But they have much execution to get to that point, the future is not yet written. To get a better handle on all of the above CPaaS segmentation, with quantification on market sizing, TADSummit is the only place to be.

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