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Generating Revenues with CPaaS

You may not have heard of Telestax previously, but they currently deploy technology in about 80% of the tier one carriers worldwide. Born from the open source community Telestax is looking to the next phase of communications which will impact the market… namely CPaaS (Communications Platform as a Service). In this interview founder and CEO Ivelin Ivanov explains why he thinks the Channel ecosystem is the key to delivering his CPaaS vision.

Comms Business Magazine (CBM): What are you currently seeing in the CPaaS market?
Ivelin Ivanov (II): Over the last year or so we have noticed that the western market are almost exclusively looking to consume communications as a cloud service so that’s where we focus. There is a very clear split in the pathway for markets which will happen in a few years. We will have developed markets that are cloud first and there will also be a lot of markets which still have a lot of on-premise software.

The fast paced growth for us has been in the CPaaS where our traditional service provider customers are virtualising their core networks for the next phase of this contextual communications shift. Their business customers are now talking to them about they get voice and SMS interactions, CRM integrations into their software so they can deliver a better customer experience.

I would broadly break down Channel Partners into two groups. One group has a traditional ‘box-shifter’ mentality written into their DNA and they may have scale but are looking to grow by optimising costs, consolidating and removing duplicate operational costs. Then there are smaller, more agile partners, which are all about innovation. These smaller partners tend to be the faster growing of the two groups but are looking to grow by recognising business opportunities which involve communications.

CBM: You are now targeting UK Service Providers, how is the UK dealing with the CPaaS opportunity?
II: The UK is a pretty active ecosystem and there are several smaller players which are looking for disruptive ways to capture revenues. There are all kinds of interesting approaches, such as replacing or adding value on existing UC or contact centre systems with intelligent, contextual, IVR.

We are finding the smaller and mid-sized service providers which are licenced that are really realising the opportunity with business customers. One of our UK customers has been traditionally selling hosted PBX to taxi companies and now they are finding strong demand from these companies who want to keep up with the Uber experience. Our customer has been very successful within the taxi space, they are adding a few customers every week. Essentially they are selling an Uber-like experience under their own brand. They have completely transformed their business by getting margins from these sticky use cases where they are embedding the behaviour into the apps and CRM and they are very happy with the relationship with their customers.

Editor David Dungay discussed CPaaS with a group of industry stakeholders on Comms Business Live. See that episode below.

CBM: Who is winning the CPaaS battle? Is the well established companies looking to transition or the newer market entrants?
II: I think somewhere in-between. Companies that are established in the communications landscape and understand the value of a high quality communications network where a business cannot compromise on the quality of their voice. They have experience running good quality voice networks but they are also set in their ways. They are also yet to build something that leverages that core expertise but also gives them growth. They need to get into their customer base and ask them about all the things that are happening in their business which could benefit from integrated contextual communications which would enable them to better engage their customers.

IT long ago lost the battle of standardisation for many of the tools utilised within the enterprise. But they still hold a level of power over large strategic platform decisions. Selecting a CPaaS platform should be a very strategic decision. The challenge is they are masked behind applications. As lines of business or departments within an enterprise begin to adopt real-time applications, the CPaaS that supports the app comes along with it. If IT is not thoughtful or out in front of this, they will unwittingly wind up supporting more than one CPaaS platform. This trend is the service provider’s opportunity to become a strategic partner to their customer.

CBM: So what is your message to the UK Channel?
II: At the board level, it is now clear that companies that move from traditional telecoms business models where they may get 1x 2x valuation multiple can go into the 7x to 10x realm if they become a SaaS innovator with CPaaS because that is where the margins are. In terms of where we see our customers win, it’s where they have established trusted relationships for with their business communications partners and can layer on top of that more value and business use cases.

Retail is an interesting space for us right now. One recent example was a solution developed for a music store who would conduct repairs. Customers would call in and need a part for their amplifier, for example, and the most common question is which amplifier is it? Customers can text a picture of their amplifier in and immediately get a response and the part would then will be shipped. Musicians aren’t always technical and there is a lot of equipment involved so to just be able to take a picture makes it so simple.

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David Dungay

Editor - Comms Business Magazine