In June 2016 Twilio (News - Alert) went public and has subsequently soared above all expectations to a multi-billion-dollar valuation – 15 times 2015 revenues for an enterprise that has yet to make money. In May, Vonage (News - Alert) acquired Nexmo for around four times 2015 revenue. Both of these transactions heralded the arrival of another category within the larger business communications market dubbed communications platform-as-a-service. In this brief piece I hope to put this opportunity in perspective, explain why it is so hot and give my opinion on how service providers can benefit from these cloud APIs.
The internet as an increasingly robust telecommunications network has allowed business communications to follow a rapid evolutionary path over the past 15 years. First came replacement – switched circuits gave way to packets (PBXs to hosted PBXs and IP PBXs). Next came ubiquity (hosted/IP PBXs are giving way to cloud/unified communications). Now comes engagement (cloud/UC expanding beyond business communications to business processes). Boiled down, it sounds like a summer action-film trailer – replacement, ubiquity, engagement – but understanding the underpinnings of how we got here in the business communications market is an important step for understanding what is possible and, therefore, how to innovate.
Clearly different businesses have experienced these changes at different paces. In the replacement stage the primary motivator was to save money on phone systems and service. With ubiquity the potential has been to support a workforce in motion with tools for communications efficiency – essentially to put communications on steroids by allowing it easily from everywhere. The next step comes with an understanding that, because millennials and the generations to follow have expectations that communications is already on steroids, businesses need to leverage the many tools of the digital world to engage customers, potential customers, vendors, and employees – hence communications embedded in business processes.
Companies like Twilio and Nexmo, which appear to occupy the top two spots in the world of cloud APIs, have created (and simplified) the building blocks that allow us all to integrate communications tools into business processes – like when your bank’s automated dialer calls you when its algorithms identify potential credit card fraud or when a taxi hailing service sends you a text when your ride is 5 minutes away. As you approach the capabilities of communications PaaS, here are some tips to consider.
Build Not Buy
As a hosted PBX (News - Alert)/business communications service provider, it is time to have someone on your staff who is comfortable working with these cloud APIs. This is not a huge hurdle – communications PaaS is viable because it has been dramatically simplified. If you rely on buying out-of-the-box software from outside developers, you will overpay and, more crucially, you will not be able to create the tailored product business customers expect, and innovate quickly and responsively to their needs. In short, there is a lot more variation required to integrate communications into a business process than to provide a business phone system, so you need to be nimble with the kind of integrations and the variations on those integrations that you can deliver.
Product Management is Key
During the replacement stage of business communications, product management was a mundane job – mapping old features to the same features on a new system. Ubiquity introduced several new interfaces, new potential features and challenges but always within a controlled environment of business communication systems (cooler PBXs). Now, your product manager really has the potential to be a rock star. Responding to how the communication systems you are selling have the ability to be integrated into your business customers’ business-process automation requires the ability to evaluate and parse the requirements of myriad different types of businesses and then to map those requirements onto communications system use cases. If you build a better product catalog, your sales people will win opportunities on innovation – not price.
The Customer Relationship: More Important than Ever
As usual, the cornerstone to winning communications business is understanding the specific needs – those that are PBX- and communications in business process-related – of your small, medium, and large business customers. From a service provider perspective, these needs are larger (by revenue), more varied (by applicability), and more segmented (by department/function within businesses). This means sales, sales engineering, and support need to engage more with the customer to understand how communications PaaS can augment their business processes.
Said differently, the customer relationship provides the ingredients; the product manager writes the recipe; and, now, you can use communications PaaS like Twilio and Nexmo to prepare the meal. This is not a perfect analogy but hopefully it is evocative.
We all walk around digitally connected to myriad communication systems all the time. We are beginning to expect to be kept abreast of relevant information in real time by our social networks and by the businesses with whom we transact. Integrating the communications technology providers deeper into business process allows this to happen.
Edited by Alicia Young