Gartner Market Guide For Com 737675 NDX CPaaS p.1-p.10
Gartner Market Guide For Com 737675 NDX CPaaS p.1-p.10
Gartner Market Guide For Com 737675 NDX CPaaS p.1-p.10
Service
Published 27 September 2021 - ID G00737675 - 41 min read
By Analyst(s): Lisa Unden-Farboud, Brian Doherty, Daniel O'Connell
Initiatives: Software Engineering Technologies; CSP Digital Transformation and
Innovation
Additional Perspectives
Overview
Key Findings
■ CPaaS business adoption remains robust as software engineering leaders seek to
deepen digital engagement with customers and stakeholders on a variety of use
cases. Their teams are increasingly embedding communications APIs into
applications and business systems.
■ Many large and multinational organizations have IT staff members with the API and
software engineering skills to leverage CPaaS tools today. Those lacking such skills
can hire third-party consultants or SIs to get them up and running.
■ End customers are requiring deeper engagement with enterprises over the
communications channel of their preference. CPaaS vendors have moved to
advanced messaging capabilities (led by WhatsApp with omnichannel that
combines traditional modes of communications) with advanced components to
enhance customer engagement.
■ Engage their developers in the CPaaS selection process by empowering them with
access to the rich ecosystem of APIs, SDKs, IDEs, blogs, training and events
available for understanding CPaaS vendor emerging offerings.
■ Evaluate visual builders as part of their CPaaS selection process. They are a
valuable tool for designing business flow logic, enabling noncoders to access CPaaS
and make logic modifications in a low-code environment.
By 2025, at least 40% of midsize enterprises will scale up digital capabilities for customer
experience using CPaaS tools, up from less than 10% in 2021.
Market Definition
This document was revised on 12 October 2021. The document you are viewing is the
corrected version. For more information, see the Corrections page on gartner.com.
Market Description
Figure 1 captures the framework of services that can be offered in the CPaaS market. A
given CPaaS provider typically only offers a subset of these modules. The five layers in
the middle of Figure 1 represent the communications modules and intelligence layers. The
colors indicate market demand and maturity.
CPaaS vendors now have programs (left side of Figure 1) to improve their competitive
positioning. This includes:
■ Marketplace — Vendors are expanding their partner capabilities through internal and
add-on marketplaces, via partner programs and ecosystems. An example of this
could be at a networking level for connectivity into regions where they don’t have
local capabilities. Another could be for working with specific agents or professional
services companies for integration capabilities. CPaaS vendors may provide
marketplaces of third-party add-ons such as those for sentiment analysis or
language translation to complement their own offerings and to further build a
partner ecosystem.
■ Customer success plans — These plans help customers get the most out of their
CPaaS deployments (often at an additional charge), and in many cases go on to
build new CPaaS use cases across business units.
The right side of Figure 1 presents the assortment of tools and capabilities CPaaS
providers bring to the table. Visual builders are more important. Now, most vendors offer a
visual builder or low-code capability in addition to their developer toolsets. They allow
business analysts or other nontechnical roles, such as knowledge workers, access to the
CPaaS toolset. Through a graphical user interface, nontechnical, noncoding roles can
design business workflows by configuring drag-and-drop communications modules.
Market Direction
Spurred by COVID-19 in 2020 and into 2021, the CPaaS market has witnessed growth of
at least 30% over the past five years. It is forecast to grow with a CAGR of around 30%
through to 2025 (see Forecast Analysis: CPaaS, Worldwide). Enterprises recognize a need
to build a digital DNA using CPaaS for contactless engagement and for driving business
efficiencies. Gartner often sees a single business unit adopting CPaaS for a particular use
case. It then virally spreads to other business units as they learn the CPaaS value
proposition, in such areas as marketing campaigns, e-commerce and field service
automation.
Growth is projected to continue across all CPaaS segments, while SMS APIs increasingly
part of A2P represent nearly 50% of enterprise CPaaS spend. WhatsApp is a major CPaaS
growth engine, followed by Apple Business Chat (ABC), Google Rich Business Messenger
(RBM), WeChat, LINE and Telegram. The adoption of messaging apps enables richer
conversations through enabling mechanisms such as artificial intelligence (AI), bots and
natural language processing (NLP).
Market Analysis
Top Emerging CPaaS Trends for 2022
Advanced Messaging Apps Grow for Richer Communications
Consumers want to converse with their brands on their terms, in their preferred
communications channels for a richer engagement. This means messaging apps like
WhatsApp (now a foundational service), Google RBM, ABC, Facebook Messenger,
Telegram, WeChat, Viber, KakaoTalk and LINE are being assessed. These messaging apps
provide deeper conversational capabilities than basic SMS. They support such use cases
as customer support, e-commerce and food ordering, ticket purchasing, location tracking,
loan payments and others.
WhatsApp is the most prevalent advanced messaging app brought up by Gartner clients,
particularly in the financial, public sector and utility industries. Other messaging apps are
strong in a particular country market, such as WeChat in China.
Bots, both chatbots and voicebots, are increasingly attached to messaging apps. They
can be used to completely fulfill simple requests, such as a password reset or address
change, or they can be used to automate routine tasks, such as gathering name, address,
account number and reason for calling. Amazon Lex, Google Dialogflow, [24]7.ai,
yellow.ai, Kore.ai, and OneReach.ai are among the many available bot options. Some
vendors like Twilio and Infobip have their own bots.
Not all CPaaS vendors aggressively pursue video solutions, but others view video as a
strategic growth market. Building in-app video with APIs enables integrated workflow,
boosting the overall value proposition. Enterprises can build according to their specific
uses and requirements, removing the friction of OTT video (Zoom, Microsoft Teams and
Cisco Webex). The CPaaS video application can embed adjacent CPaaS capabilities, such
as voice, chat, authentication, AI and analytics, for customized solutions.
With CDP intelligence, the CPaaS customer secures insight into its customer behavior.
This is valuable in predicting customer buying behavior, financial wealth, brand loyalty,
sentiment, unmet needs and frustrations. CDP within CPaaS is relatively new, and only
came on Gartner’s radar screen in 2020. Twilio (Segment acquisition, October 2020),
MessageBird (Hull acquisition, March 2021) and Route Mobile are examples of CPaaS
vendors investing in CDP.
Other Trends
CPaaS and CCaaS
In some ways, the CPaaS and contact center as a service (CCaaS) markets are starting to
overlap. CCaaS platforms support SMS, advanced messaging and social media channels.
They are also incorporating chatbots for automation and self-service. Meanwhile, CPaaS
user journeys sometimes involve use cases in which customers interact with a live agent
(specifically for complex problems that cannot be resolved via AI).
CPaaS providers have offered 2FA for more than five years for enhanced security over
traditional usernames/passwords. But 2FA is vulnerable to compromise by malicious
hackers. CPaaS providers are starting to roll out more robust security capabilities,
including silent mobile verification (which matches both the device and the phone number
for authentication).
There is a shift toward more robust multifactor authentication (MFA), which layers in
additional resiliency through biometric security tools such as voice recognition, facial
recognition, iris scanning and palm print/fingerprint verification. Investments have
expanded in this space, such as Twilio’s May 2021 acquisition of Ionic Security.
Application and software engineering leaders should evaluate CPaaS security tools as a
means to address critical application security requirements, including those in industry-
specific scenarios such as Strong Customer Authentication (SCA) in open banking.
Payments
COVID-19 spurred demand for B2C digital engagement, with enterprises increasingly using
CPaaS platforms to build customized apps and flows for customer journeys. Customers
on messaging apps expect simple “click through” to purchase via digital wallets and
credit/debit cards. They expect a similarly effortless experience when paying via voice as
well.
As a result, CPaaS vendors such as Clickatell, CM.com, Twilio, Vonage API, Infobip,
Kaleyra and IntelePeer are promoting their payment capabilities. This may be through
their own payment capabilities or through partnering with third-party payment
providers/gateways. Payments are typically integrated with messaging apps like SMS,
WhatsApp, WeChat, Apple Business Chat and Google RBM.
Pricing
CPaaS pricing is becoming more complicated because CPaaS vendors are expanding
their base of services in such areas as bots, advanced messaging, email, video and voice
translation. In addition, not all CPaaS vendors offer the same CPaaS modules. As a
general rule, Gartner sees list prices staying firm, but street pricing going down, because
buyer total spend goes up as CPaaS becomes a foundational IT tool.
Many customers seek professional services to build customized solutions. Some CPaaS
vendors make this a core competency. Other CPaaS vendors call on partners to fulfill this
role. Some CPaaS contracts include customer success fees (perhaps 5% of the total bill)
for ongoing customer service and support.
Representative Vendors
The vendors listed in this Market Guide do not imply an exhaustive list. This section is
intended to provide more understanding of the market and its offerings.
Market Introduction
Representative Vendors
Table 1 shows 20 representative vendors of the CPaaS market, spanning North America,
Europe, Africa, Asia/Pacific and Latin America. CPaaS is a fragmented, emerging market,
and Gartner expects new entrants to emerge, with many large telcos evaluating the
landscape. Mergers and acquisitions will continue. See Note 1.