Deconstructing the Fastest-Growing Segment of the Global Communications Industry: CPaaS

5 min read

There’s been a lot of gear shifting in the communication industry over the past few years with many of its segments skyrocketing post pandemic and slowing down in 2022. The demand for business messaging traffic that was fuelled by mass adoption of remote work policies and digital communication strategies is currently plateauing but is projected to grow by 91.2% between 2017-2027 according to Mobilesquared.

Along with it, the CPaaS market will continue to gain in value as the “fastest growing segment of the global communications industry”. CPaaS Acceleration Alliance State of CPaaS 2023 report expects it to increase from $16 billion in 2022 to $100 billion by 2030, establishing a new era in enterprise communications and a new focus for Mobile Operators.  

CPaaS Growth Projections: From $16 billion in 2022 to $100 billion by 2030

To identify key drivers of CPaaS market growth and discuss its future outlook, we sat with Junaid Ahmed, Enterprise Business Director Middle East at Global Message Services, who shared his expert views on the topic.  

Q: Welcome, Junaid! The latest report by CPaaS Acceleration Alliance covers several significant points about the future of CPaaS. What are your biggest takeaways from it?

A: Thanks for having me! The report indeed offers a comprehensive perspective on what is one of key business focuses for both enterprises and Mobile Operators. My biggest takeaway is the growth projection which is aligned with Gartner’s estimate that 90% of enterprise organisations will be using CPaaS by 2026. Another important point is the growing number of enterprise use cases as it’s clear that CPaaS has significantly evolved from a simple SMS API. This is a very important point for Mobile Operators as they are looking for ways to support the evolving communication needs of enterprise customers with solutions tailored to their needs.

Q: What do you think are the key drivers behind this massive growth?

A:  The report itself mentions the changing consumer mindset as one of the biggest drivers of CPaaS growth. Their increased expectations of personalised brand communications are pressuring enterprises to provide seamless, integrated experiences across multiple channels and CPaaS enables them to do so.

Here, I would also like to mention AI chatbots, which is currently the fastest-growing brand communication channel. Promising to deliver significant results in terms of saving on labour costs and increasing conversions, conversational AI should be in focus for CPaaS provides as an additional solution to offer to enterprise buyers. Juniper’s recent market insights also indicate that CPaaS vendors must consider more automation services in order to stay competitive.

To go back to growth drivers, another important factor that is fuelling the adoption of CPaaS and AI Chatbots is their ability to optimise internal processes across all departments communicating with consumers. By helping streamline some of the repetitive tasks for sales and support agents (such as bookings, appointments, delivery notifications) they provide operational efficiencies and help boost productivity. Couple that with the increased conversion rates and repeat purchases through personalised communications, and you get significant ROI boost potential.

On the Mobile Operators’ side, the key driver is the need to diversify and grow the B2B segment of their business. When enterprises increasingly look into additional communication options, Mobile Operators need to position themselves as partners who can support all their emerging needs.  

Q: You briefly discussed the value of CPaaS for both enterprises and Mobile Operators. How would you say CPaaS contributes to innovation in these organisations?

A: That’s true and there are several ways it helps fuel innovation:   

  • Enhanced Customer Engagement: CPaaS helps organisations deliver customised services and targeted marketing campaigns, resulting in improved customer engagement and satisfaction.
  • Digital Transformation: CPaaS streamlines internal operations, leading to improved efficiency of Sales, Marketing, and Support teams. Brands that successfully use CPaaS to communicate with their consumers across their preferred channels are likely to see an increase in sales profits as well.
  • Developer-Friendly Environment: CPaaS platforms typically provide APIs that developers can use to integrate communication functionalities into their applications. This encourages innovation by enabling the creation of customised solutions and integrations that meet specific business requirements.
  • Innovative Use Cases: There’s a lot of different use cases for CPaaS already and its future development is likely to bring even more. One particular area that will bring a lot of innovative use cases is the possible convergence of CPaaS and IoT. Joint use cases in this respect would include:
    • Real Time Monitoring and Alerts
    • Remote Asset Management
    • Supply Chain Optimisation
    • Predictive Maintenance
    • Energy Management
    • Smart home Automation
    • Environmental Monitoring

Q: Despite the fact its value is widely recognised by both enterprise and MNO organisations, they often struggle to adopt it. What do you think are their main challenges?

A: As with any new technology implementation, there are often multiple internal factors slowing the adoption. I’ll list only a few here:

  • Stakeholder buy-in: enterprises may find it difficult to give proper ROI estimates to stakeholders. This is usually due to the fact the real potential of CPaaS can be realised if its used across multiple departments and tailored to the organisation’s specific needs, so building a detailed plan and strategy to showcase its value can be quite challenging. To overcome this challenge, enterprises should work with their vendor to provide them with some market insights and use cases they can leverage in the planning phase.
  • Knowing what options are available – with CPaaS being a mature market, there are quite a few vendors offering or claiming to offer CPaaS capabilities. However, discovering the right solution might require extensive research and multiple POCs to choose the right one.
  • Choosing the right platform: the best practice for enterprises to choose the right CPaaS platform is to make a list of requirements for their business and then find a vendor that can mee their needs at the right price.  
  • Cost of production for Mobile Operators – assembling development, product and sales teams who would be focusing on building a CPaaS platform from scratch can be quite costly. In addition to this being a complex project, Mobile Operators are also afraid of bringing their core projects to risk if CPaaS development takes too long. However, this doesn’t have to be the case as they can minimise much of this risk and operational costs by working with a white-labelled solution, which is an option that GMS also offers.

Q: In the light of what you described, what do you think are the best practices for choosing and driving value from a CPaaS solution?

A: Naturally, this will depend on each organisation’s use case, but some of the key values to have in mind are:

  • Look for flexible solutions that can be tailored to your needs
  • Consider vendor’s reputation and credibility (industry awards, success stories, etc.)
  • Make a list of expected features and requirements
  • Inquire about the integration process and support
  • Ask your vendor for GTM consultancy option (Mobile Operators)  

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