CPaaS and the Channel: Adding Value, Making Connections

Kevin Nethercott

By Kevin Nethercott, Vice President, Telestax

A new market segment has emerged to help enterprise customers consume carrier resources through programmable interfaces. Cloud-based communications platforms as a service (CPaaS) enable developers, enterprises and service providers to add real-time voice, video and messaging to their own applications and systems without taking on a hefty infrastructure build. Many CPaaS providers have successfully courted developers and enterprises, enabling them to create these apps directly with a self-service model. Now, the channel ecosystem of agents, VARs, distributors and consultants must consider whether they, and their vendor partners, will gain – or lose – business from this new communications model.

The good news is, the expertise and customer focus that the channel brings to bear offer many ways to add value and remain relevant. But to thrive, service providers and channel partners must accept that it’s “API or die” time. (Editor’s note: We run down the API economy from a channel POV In this free report.)

As we saw TDM make way for IP and SIP, we are now in the midst of the next great transition, to API-based communications. Enterprise customers have made it clear that they would much rather interface via an API than any type of telecom protocol. CPaaS enables creation of omni-channel solutions by mixing and matching exciting new applications over the top of services from their current network and termination partners. Applications for CPaaS include:

Sounds good, right? So how do we execute?

Changing Economics of CPaaS

It isn’t uncommon to hear this feedback from early adopters of CPaaS: First-generation tech was useful for creating initial proofs of concept, but it gets expensive and inflexible as deployments scale. Plus, IT teams may have contracts with existing providers that they wish to maintain for convenience and economies of scale. It is also not feasible or cost-effective to …

… do the heavy lifting of building the back-end infrastructure from scratch on their own. They need innovative, API-enabled partnerships with trusted, highly capable providers.

Related trends include shifting business models that are creating openings in the traditionally top-heavy telecom market: The OTT model of service, content and application delivery; the increased outsourcing of digital transformation efforts to managed service providers; and the continued rise of cloud deployments and everything as a service, including CPaaS, are not going away. The rapid-fire pace of innovation, enabled by DevOps, open-source platforms and low-code development, is a disruptive force and may prove favorable to smaller, more nimble upstarts.

Yet established players have buying power, cutting-edge infrastructure and existing customer relationships on their side.

CPaaS providers have disrupted the real-time communications value chain, inserting themselves in between carrier service providers and enterprise customers. To reclaim a more generous piece of the value-chain pie, service providers can become CPaaS providers themselves.

The Opportunity for MSPs, Channel Partners

The channel is in a unique position to leverage years of investment in growing their business customer base and earning trusted-adviser status. Channel partners should seek out CPaaS providers that can help deliver higher margin and increased ARPU, bringing value to the customer and service provider alike. Making the leap presents risks, but laggards may be left in the cold if they miss the chance to bridge telecom and business verticals to create new revenue streams — not to mention hurting their clients if they don’t transform customer engagement. There is a significant opportunity to boost (even double or triple) revenues by delivering flexible, scalable, value-added solutions to enterprises through CPaaS enablement.

Channel sales organizations expect their service-provider partners to equip customers with the latest products and tools. Managed service providers have to be quick to respond to channel and customer demand for CPaaS features, or competitors will be eager to take their place.

The future is programmable. Application developers need a marketplace that allows them access to enterprise and channel clients. Consumers are hoping they all figure it out quickly so they can keep running their lives from their smartphones, tablets and laptops anytime, anywhere, with no disconnects. Embedded communications is a rising market, and everyone is scrambling to find an open chair before the music stops. Trusted channel partners seeking seats at the table should look to open CPaaS marketplaces and tackle the API learning curve before the main dish is all carved up.

Kevin Nethercott has over 25 years of experience in launching companies and doing business development globally. His focus has been in the unified communications, VoIP and WebRTC spaces. Kevin’s leadership has forged successful strategic relationships with leading companies like Microsoft, NEC, Hitachi, Cisco, IBM, Amazon and NTT.