Microsoft Move into CCaaS Market (Part 2)

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For the second part of our new editorial series, we dig deeper into Microsoft’s announcement that they are entering the Global CCaaS market. This week we talk to Christopher Sly (Digital Expert at HGS UK) and Iain Banks (CEO at Ventrica) for their views and opinions on the effect this move will have, both on the market and the competition.

Why have they entered this market?

“The big question is in terms of timing…why now are Microsoft choosing to unveil a Contact Centre solution?” Say Christopher Sly, Digital expert at leading Customer Outsourcer HGS UK. 

“I’m a big fan of Microsoft and all it has done to provide evolving functionality to applications, but the announcement in 2022 for cloud contact centre might seem to some, a little late to the cloud contact centre party. 

Perhaps competition and the success of Amazon Connect (the intelligence led contact centre built on the AWS ecosystem) has been too much of a good proposition for Microsoft to ignore. Back in 2017, Amazon built their own contact centre solution called Amazon Connect because the functionality they required for their internal CX was not available in the marketplace. 

Take the Amazon Connect proposition, throw in the pandemic and bingo, the thirst for an agile contact centre sees sales of Amazon Connect in 2020 increase by 150% ($175 million) according to theinformation.com.”

How will the platform sit in the market and what impact will it have on the competition?

“As Microsoft itself made clear, the Dynamics 365 Customer Service CCaaS platform is not a single product. It is instead a set of solutions that can individually integrate to a customer’s existing CCaaS platform”. says Iain Banks, CEO at leading Customer Management Business, Ventrica. 

“This will enable customers to extend their existing contact centre platforms with some of Microsoft’s most popular, best-in-class solutions. Those include MS Teams for UC and collaboration, Nuance for conversational AI, Power Platform for analytics, and Azure for cloud compute and storage.

Not that you couldn’t do that before, but having all those elements available in a single CCaaS suite supported by over 700 built-in connectors, definitely makes it simpler to do. It’s also a much more attractive proposition when you know there is all this support from Microsoft to enable customers to deploy these tools in a contact centre environment.

Microsoft’s CCaaS platform can also be used to build an end-to-end contact centre solution. Although it currently lacks some contact centre standards such as QA and WFM, you can easily integrate these functionalities from other vendors.

It is potentially a powerful, game-changing offer that Microsoft has assembled. Power is by some distance the leading Business Intelligence platform according to Gartner, with only Salesforce’s Tableau in the same ballpark. MS Teams is the leader in the UC and collaboration space with 270 million monthly active users. Teams Phone reports 80 million users, and Teams PSTN 12 million. That’s quite an existing customer base to build from.

Integrating these Microsoft enterprise products, and others, into the contact centre will make the customer contact function an even more integral and strategic part of the business by increasing the depth and availability of customer information that can be mined from customer contacts. Strategically that’s another important step in the ongoing journey of the contact centre from specialist function to the heart of the business.”

“The powerhouse Microsoft continues to evolve against market demand. As of August 2022, according to canalys, the estimated market share between AWS, Microsoft, and Google Cloud stands at 63%”, continues Christopher.

“Upon a closer look, the 63% can be further broken down with AWS currently leading a 31% market share, Microsoft Azure follows at 24%, and Google Cloud with an 8% to secure 3rd place in cloud market share.

Why are these cloud stats important when discussing CCaaS? Well, CCaaS solution design is based on improving employee & customer experience (CX) and the CX element is a major contributor to innovation through agile service. 

To be more agile is why cloud application migration sitting as a top 2022 objective for both the Chief Information Officer and Chief Technology Officer. More interestingly, this fight for cloud dominance to influence CX is further re-enforced by Microsoft’s recent Inspire event and their unveiling of a CCaaS solution to which they use the naming convention “Digital Contact Centre Platform”. 

Microsoft no doubt had its finger on the pulse for offering the market a platform approach to CX and the components that make up Microsoft’s Digital Contact Centre Platform including “Dynamics” has been around since 2018. You first must understand that the Microsoft Digital Contact Centre Platform is not a single end-to-end product that you can buy off-the-shelf. This Microsoft proposition is more of a recommended inventory that clients use to build out the proposed architecture for what Microsoft refers to as a “Next Generation Contact Centre”. The components to architect are the combination below:

  • Dynamics 365 for omnichannel, CRM, Virtual Agents (BOTS).
  • Nuance Contact Centre AI, providing services including IVR, Voice biometrics, Authentication and Fraud Prevention. 
  • Power Platform for low-Code/No-Code Application Development, for automation and reporting (Power BI). 
  • Teams for collaboration, communication between the contact centre and the rest of the organisation.
  • Azure – Global Cloud Infrastructure, data centre, operations, and further communication innovations.  

One component that cannot be underestimated within the Microsoft ecosystem (it is an ecosystem not a single product) is the 2021 Microsoft acquisition of Nuance. Nuance have been instrumental in transforming speech recognition and contact deflection throughout the CX marketplace (even the word Nuance means a subtle difference in or shade of meaning, expression, or sound). 

HGS UK has experienced Nuance with one of our clients and the accuracy of their intelligent IVR saw a 65% take-up of customers opting-in for the automated service when requiring identity and verification. The history of Nuance is interesting as this company developed Apple’s AI speech recognition engine “Siri”. 

What will this mean for customers and pricing?

“Microsoft, like AWS before them when they entered the CCaaS market, has a potential advantage over niche contact centre vendors in that they already have existing Microsoft Enterprise Agreements with lots of organisations, and it is likely that any new purchases specifically for the contact centre would get wrapped into those. Not only does that make the pricing quite opaque, it’s also a real disruptor as it enables Microsoft to be flexible and possibly quite generous – at least at first to build an installed base.” continues Iain.

“Existing Microsoft customers can in effect broker themselves an end-to-end CCaaS solution that can be built from the ground up with Microsoft’s category-leading tools, complementing them as need be with best-in-class functionality from other providers where Microsoft still has a gap in its offer. Or if they don’t wish to start again, they can integrate Mircosoft’s enterprise tools – many of which they’re already paying to use in other areas of their business – into the contact centre. It’s a win-win really.

For Microsoft customers it’s an opportunity to leverage Microsoft’s scale – particularly Azure – and its sophisticated AI, CRM, and analytics tools to deliver enhancements to the customer journey and deploy hyper-personalised omnichannel contact channels. 

The fact that Microsoft is partnering with traditional contact centre solutions vendors, such as Avaya and Genesys, shows an openness to integration and the ability for customers to broker and augment their existing investment. That the platform is launching with 700 built-in connectors enabling customers and partners to integrate to it is a sure sign that they mean business here.

In the longer term the question is whether the CCaaS market will consolidate to a few large players such as Microsoft, AWS and maybe two or three of the specialist contact centre vendors. This could potentially reduce the competition and, over time, increase the cost to serve. There are enough niche offerings to counter this, and if Google gets involved too, outside of its current AI-focussed CCaaS offering, we should still see healthy competition. For contact centre operators choice is great as not only does it keep a lid on prices, it also forces vendors to continue to push innovation.”

“HGSs UK market strategy is to be open with technology vendors and this places us in a fantastic and unique position to openly share what is moving the needle for CX. It would be rare for clients to put all their eggs in one basket by investing their customer related technologies into one single stack.” says Christopher.

“Our own experience has included the above bulleted Microsoft components and we have used these in siloes and as combinations to other omnichannel platforms including an ecosystem with Microsoft Azure, Dynamics, Power BI, and Amazon Web Services with Amazon Connect.”

What does the future hold?

“Our view is that Microsoft is playing the long game. They already have an incredible suite of services that can be integrated to extend the use case of any customer’s existing CCaaS platform.” says Iain.

“The leading sector players like Genesys, NICE CXOne, and Talkdesk have full-featured suites for contact centres, but of course they do not have anything like the breadth and depth of Microsoft when it comes to wider enterprise tools. Integrating tools like Power BI and Teams extends the scope and capability of any contact centre.

We think that initially Microsoft will target existing users of Dynamics 365, Nuance, Teams and the Power Platform, enabling them to start the CCaaS conversation with customers they already know and who understand the potential use case of those products. Which one will be the key anchor point? Logically it will be Dynamics 365 with the focus being on CRM as the key solution, and also Nuance, both of which already form part of many CCaaS solutions.

At the same time as building that installed base of contact centres that are integrating some of their products into their CCaaS solutions, we believe Microsoft will continue to build out their full, end-to-end platform offering. With MS Teams Microsoft has demonstrated how quickly they are able to innovate, add features, and move from literally nowhere to a position of market leadership. They have most of the building blocks in place, and if it takes some more acquisitions on the scale of Nuance to fill in the gaps, which is a strong possibility. 

We are talking about a $20 billion a year market by 2031 according Allied Market Research’s latest estimate .”

“Forgive the direct comment here but Microsoft’s AI system “Cortana” would probably be seen as a failure if that measurement was based on comparison to competitors Google, and Amazon” concludes Christopher.

“The 2021 $19 Billion acquisition deal of Nuance is potentially the compelling and missing jigsaw puzzle piece that Microsoft needed for a go-to-market with an AI enabled Contact Centre. 

Integrating and/or replacing contact centre systems can be painful and organisations already using Microsoft will buy into the sales message that talks about a simple pivot. 

The potential to spin-up a painless sales pitch by pivoting with an additional component or two can be a game-changer and particularly when those technologies are already known to the market as being able to work together. Microsoft can really shake things up with a story based on interoperability and I suggest we watch this space!”.

Thank you to our editorial contributors:

Christopher Sly, Digital expert at leading Customer Outsourcer HGS UK

Iain Banks, CEO at leading Customer Management Business, Ventrica

Sources:

“Top Ten Goals for 2022” by Imaginovation – https://imaginovation.net/blog/10-goals-ctos-focus-2021-and-why/Imaginovation
https://www.techtarget.com/searchcio/tip/9-top-CIO-trends-and-priorities
https://www.theinformation.com/articles/sales-of-amazon-call-center-service-increased-150-in-2020
https://tomtalks.blog/understanding-microsoft-digital-contact-center-platform/

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