Authored by Jon Arnold from J Arnold & Associates.
The technology world has always been rife with acronyms, and the communications space is no exception. Anyone who came up through the ranks in telecom has a hard-wired set of legacy era acronyms such as PSTN, TDM, POTS, PBX, DTMF, DID, DSL, etc. No doubt many of you can easily reel off dozens more.
Not to mention the ones that define telecom service providers, many of which have long fallen out of use - ILEC, CLEC, RBOC - along more contemporary providers, such as CSP, MSP, MVNO, WISP, etc. Then we have acronyms that define the next generation of telephony and associated technologies - VoIP, SIP, 5G, SD-WAN, OTT, and IoT to name a few.
Every wave of innovation spawns a new set of acronyms, and for those in the know, these serve as handy shorthand for terms that take a lot of effort to speak or spell out. In telecom, the breakup of AT&T in 1984 was the big bang that sparked numerous innovation waves that created the telephony we know today.
VoIP was the first big wave, followed by broadband, both fixed and wireless. The Internet opened new channels for voice communication, and as all these technologies matured and cross-pollinated, the stage was being set for the next big innovation - cloud. Today, most businesses are in some stage of cloud migration, mainly to modernize their communications capabilities and move on from legacy, premises-based technologies.
One indicator as to why cloud is important is the proliferation of its own set of acronyms, which will be explored in this article. More importantly, for service providers trying to offer the best solutions to business customers, the underlying capabilities for each type of cloud offering need to be understood. Every business customer will have a unique cloud journey, and will need a unique mix of cloud services to support it.
Telecom-based service providers are by nature, well-positioned to help their customers migrate to the cloud. The older the business is, the longer the tenure will likely be with the incumbent telco, so there is a trusted relationship to build on for cloud. Of course, many businesses moved on from their incumbent telco as competitive options opened up, so there are multiple paths available for cloud adoption.
Regardless of incumbent status, all telcos - and certainly all types of service providers - are in a position to offer cloud services. Before getting to the cloud alphabet soup, it’s important to note how the cloud services market is fundamentally different from legacy telecom. Not only was telecom regulated, but providing carrier-grade service required a great deal of capital and engineering expertise.
Fast forward to the cloud era, where telephony is just another data application, and the barriers to entry are much lower. Being a telco is no longer a necessary condition for providing telephony service, with the net result being that telcos must now compete with a wide range of cloud providers. Not only that, but telephony is only one of several services they can offer from the cloud, and in today’s market, no legacy telco can survive just offering telephony.
This brings us to the alphabet soup of cloud services. For any type of service provider offering cloud communications to businesses, there are three core platforms that need to be in your arsenal, either your own, or via a partner. First, the acronyms, and then the definitions - UCaaS, CCaaS and CPaaS.
UCaaS is Unified Communications as a Service, and is borne directly out of the telecom world. VoIP has been with us for some time, and is the successor to legacy telephony. That service has long been offered on a standalone basis - and still is - but it is also a foundational element for any UCaaS platform.
Being cloud-based, UCaaS holds great appeal for businesses - especially IT - as it shifts the burden of managing premise-based telephony to the cloud provider. Furthermore, the platform consolidates all the various workplace communications tools into one interface, making communication and collaboration easier for workers.
CCaaS is the next acronym, and stands for Contact Center as a Service. Legacy telcos would only have provided telephony to contact centers, with everything else coming from specialized contact center vendors. Once all of these capabilities became cloud-based, however, complete platforms could be offered that addressed most all contact center needs. While CCaaS has largely been the domain of contact center vendors, other types of cloud providers now offer CCaaS, so any service provider looking to help customers adopt cloud must also have this on their radar.
"...CPaaS is more of a Swiss army knife, a general-purpose platform for an infinite variety of communications applications."
The third acronym is CPaaS, and is the least well-understood - Communications Platform as a Service. Whereas UCaaS and CCaaS have clear use cases - workplace communication and contact center respectively, CPaaS is more of a Swiss army knife, a general-purpose platform for an infinite variety of communications applications. While there are purpose-built CPaaS solutions, this platform is just as likely to be used to complement UCaaS and CCaaS.
"(CPaaS) provide(s) valuable agility and flexibility to address an endless variety of use cases."
For example, in contact centers, CPaaS is great for creating outbound notifications, especially when things change unexpectedly, and customers need to be updated quickly. Unlike UCaaS and CCaaS, CPaaS is largely developer-centric, where open APIs allow for rapid buildouts of programmable communications applications These capabilities are not possible in the legacy world, but with cloud, they provide valuable agility and flexibility to address an endless variety of use cases.
"...most businesses will welcome the shift from Capex to Opex..."
UCaaS, CCaaS and CPaaS may be the latest acronyms for customers to learn about, but are likely the most important when adopting the cloud for communications needs. They are all branches of the SaaS tree - Software as a Service - and on that basis, the value proposition should be clear. First, most businesses will welcome the shift from Capex to Opex, and second, the subscription model makes life easier for IT on several levels. When it comes to modernizing communications and contact center capabilities, there should be little doubt now that cloud is the way forward.
Alphabet soup aside, these three acronyms don’t tell the whole story. Initially, service providers can offer any and all three of these platforms in standalone fashion. UCaaS is a great solution for driving workplace productivity, especially for businesses with a hybrid work model, as well as multiple locations.
"UCaaS is a great solution for driving workplace productivity..."
Separately, CCaaS can be offered to help modernize the contact center, and give businesses the right capabilities to improve customer service. CPaaS can support many lines of business inside an enterprise, with a leading use case being Sales and Marketing where outbound campaigns are being used to support the brand and drive new revenues.
"CCaaS can...give businesses the right capabilities to improve customer service."
For businesses new to the cloud, these are practical solutions, since each one addresses a specific problem set. However, as they get further along their cloud journey, convergence starts to make more sense, where all these capabilities can be supported on a one, highly-integrated platform. This will appeal to IT, not just for having fewer platforms to manage, but possibly dealing with fewer vendors.
Convergence between UCaaS and CCaaS has become common now, especially in cases where the contact center’s needs aren’t highly complex. This would typically be for mid-sized enterprises or smaller. However, in larger enterprises, there will be more complexity, especially for integrations with several specialized vendors. In these cases, an integrated UCaaS/CCaaS solution may not have a rich enough feature set, and it’s better to go with a purpose-built CCaaS platform on its own.
"Convergence between UCaaS and CCaaS has become common now..."
In this regard, service providers need a deep understanding for each customer’s situation to determine whether a converged approach will work, or better to stick with separate, best-of-breed platforms.
Aside from the fact that all three platforms address distinct needs, the vendor ecosystem must also be understood. Most UCaaS vendors are rooted in telephony, as UC represented the next-generation offering from the PBX, which carried their business for decades. Leading examples would include Avaya, Cisco and Mitel, along with others from the enterprise telephony world.
With the advent of the cloud, however, there’s another type of UCaaS vendor. What they lack in telephony DNA, they make up with being cloud-native. Familiar players here would be RingCentral, 8x8 and Vonage, but there are dozens of others - remember, the barriers to entry with cloud are much lower than with legacy telephony.
There is a similar profile for CCaaS, with two main types - vendors native to the contact center, and those who are cloud-based, and have developed their own CCaaS capabilities. For the former, NiCE, Genesys, Avaya and Cisco are well-known, all of whom now have CCaaS. Then there are the cloud-native players - some of whom only offer CCaaS, such as Five9, Talkdesk, UJET and Content Guru.
With CCaaS still being an attractive growth opportunity, there is yet another layer of cloud players to consider. These would be cloud providers who are not native to contact center, but who have added CCaaS, either by building internally, or via acquisition. These would include the UCaaS providers cited earlier - RingCentral, 8x8 and Vonage, along with others such as Zoom and Dialpad.
Completing the trio of cloud platforms is CPaaS, and there is a similar story here. There are native CPaaS players, with Twilio, Infobip and Sinch being among the best-known. Being rooted in the messaging space, they have less familiarity for enterprise communications, but business leaders are starting to view Sales and Marketing applications as part of the CX palette that CCaaS addresses.
As with CCaaS, there is another tier here, and it speaks to the broader convergence theme. This would be from cloud providers who have all three capabilities to varying degrees, with leading examples including Cisco, Vonage, 8x8 and Intelepeer.
There is a lot of value here for enterprises as they look to modernize their communications capabilities. All of these platforms are cloud-based, so service providers have a lot to choose from when helping business customers move to the cloud. With UCaaS, CCaaS and CPaaS, these platforms have certainly perpetuated the alphabet soup that telecom is well-known for, but they really are essential acronyms for what enterprises need from a service provider today. To help service providers make the most of this opportunity, here are three strategic takeaways.
Just as there is an alphabet soup of acronyms, the same can be said for the pool of vendors. This really isn’t surprising given how any cloud vendor can offer anything now. Having choice is a sign of a healthy market, but it’s also harder for service providers to choose partners. At minimum, the three main types must be understood, as each addresses a specific set of needs.
However, not all vendors for any of these types of platforms are created equal. Those who are rooted in legacy technology will have deeper core expertise in the applications, whereas the cloud-native providers will be stronger on building a platform than with the core applications. To be fair, that distinction is becoming less real as these technologies continue evolving.
More importantly, service providers need to become familiar with the range of cloud offerings, and the range of cloud providers. With such a rich variety of options, service providers should be able to offer highly-targeted solutions for each customer’s needs. This will require some homework to learn about the ecosystem, but should yield better results than offering a one-size-fits-all cloud solution for every customer.
Each set of applications - UCaaS, CCaaS and CPaaS - delivers distinct value, and getting business customers to adopt cloud needs to be more than a connectivity play. Having a full slate of cloud platforms to work with provides customers with a lot of choice; not only does this go beyond what service providers could previously offer, but it can go beyond what business customers were considering.
The starting point is for customers to see business value in the cloud for communications and customer service needs. For certain types of customers that’s still an issue, but once that bridge has been crossed, a whole new world of possibilities opens up, and this puts service providers in a great position to show that new value.
This also holds true for customers already doing some level of cloud communications, perhaps with a cloud provider. Service providers can bring a richer set of options to take those customers further along the cloud path, all from a single partner, instead of having customers go with a hodgepodge of cloud providers.
For service providers, the key here is having the flexibility these platforms provide to develop tailored cloud solutions for each customer. Some will just want UCaaS, and others will want convergence with UCaaS and CCaaS. More adventurous customers will see the value in programmable communications, and that brings CPaaS into the conversation.
Each vendor has taken a different path to the cloud, and customer needs should dictate the best fit. So me customers will have specific integration needs with existing solutions. Others will only want vendors with native expertise for the applications, especially for those in regulated sectors with compliance requirements. Larger customers will need cloud partners who can scale across all channels - voice, video, text - or may only trust purpose-built platforms for the complexity of their environment.
Not surprisingly, not all cloud vendors have equal capability, so there’s more to consider than just navigating the alphabet soup of acronyms. The right cloud partners need to be able to work well with the service provider’s business framework, as well as with the customer base you serve. There are plenty of UCaaS vendors to choose from, but not all will be ideal business partners, and not all will be a good fit for your base.
Their technology is important, of course, but so will their willingness to understand your customers and provide a cloud roadmap that takes things beyond selling point solutions. There is much more at stake here than a telephony refresh from PBX to IP phones. In fact, the opportunity for service providers has never been greater, given the range of services that can be offered with these cloud platforms. With that thinking in mind, it should be clear as to why careful vendor evaluation will be time well-spent.
"...the opportunity for service providers has never been greater..."
In the end, the real takeaway for service providers is this: the alphabet soup of UCaaS, CCaaS, and CPaaS isn’t just jargon, it’s the new language of competitive advantage. Success in the cloud era won’t come from offering a single platform or chasing the lowest price. It will come from understanding the unique value each service delivers, tailoring solutions to each customer’s business goals, and choosing vendor partners who can scale, innovate, and align with your strategy. Those who master this mix will not only help customers modernize, but also position themselves as indispensable partners in their digital future.
As Principal of J Arnold & Associates, Jon is an independent research analyst providing thought leadership and go-to-market counsel with a focus on the business-level impact of disruptive communications technologies.
