How Communication Service Providers Can Remain Competitive In The Era Of XaaS

By Al Castle, Flowroute, a West Company

Today’s customers expect speed, customized experience and flexibility, driving more communications service providers (CSPs) to use cloud-based models to meet these demands.

With the emergence of the Everything-as-a-Service (XaaS) model, enterprises are realizing they need to adapt to a more personalized, customer-centric approach to remain competitive.

According to a Q4 2018 Nemertes Research White paper, today’s enterprises “are under constant threat of disruption to their business models, new competitors and even potential elimination of the need for their products or services.”

In 2019, customers expect quality, speed of service and customized experience, now more than ever before. To remain relevant, many enterprises are adopting cloud-based communication capabilities and making their products available “as-a-service” to meet customer demands.

Communications Service Providers (CSPs) are an example of a group impacted by this trend. To adapt to the growing XaaS market, CSPs are repositioning themselves by leveraging cloud-based innovations. For many CSPs, the migration to the cloud can enable a more improved customer experience, lower costs and provide greater flexibility of services. However, as traditional CSPs look to the cloud to provide a more customer-centric approach, cloud-based communications providers are also emerging as innovators to accommodate this industry need.

Agile cloud-based communications providers empower enterprises and developers to take control of their communications, which has led to an evolution of communications platform as a service (CPaaS) offerings and created new potential for CSPs to add value. As a result, CSPs are often utilizing CPaaS offerings to make XaaS more accessible.

As CSPs pivot their traditional focus and decide where to compete and where to consolidate their offerings these five tips can help CSPs navigate and succeed in the cloud.

1. Understand your customers’ needs and adjust accordingly. It may sound simple, but in the constantly changing XaaS market, it is imperative that CSPs truly understand customer preferences and are nimble enough to innovate offerings in response to changing demands. Customers expect their needs to be met quickly, if those needs aren’t met, they’ll look to competitors. CSPs that leverage cloud-based innovations will be easily and quickly able to expand offerings and build customer loyalty.

Cloud-based innovations help CSPs easily integrate customer engagement capabilities into their existing applications, and through a software-centric presence, can create more tailored experiences for customers.

2. Adopt APIs to remain agile in the growing CPaaS market. Evolving customer preferences and improvements in cloud technology have created an opportunity for CSPs to provide more compelling cloud solutions that leverage mobile integration and analytics. CSPs embracing the cloud are remaining competitive and playing a larger role in the CPaaS market by building their offerings or partnering with cloud-based communication technology vendors to integrate APIs that evolve the customer experience.

Utilizing APIs will help CSPs to distinguish services from competitors and provide advanced capabilities that can be directly tied to improved customer satisfaction and revenue growth. For example, telecom APIs allow developers to quickly add calling and messaging capabilities into their existing applications for customers without needing to invest in additional hardware or IT support.

Through partnerships and API integration, CSPs also have the potential to expand their presence globally, which is essential in the competitive landscape of enterprise communications in the era of XaaS.

3. Select a CPaaS provider that offers scalability. According to the Nemertes Research White paper, if CSPs are looking to partner with an existing CPaaS provider, they should evaluate a broad set of CPaaS players to determine who can give CSPs’ customers what they need today, as well as help the company grow over time. CSPs can uncover these elements by assessing a CPaaS provider’s breadth, experience, and ability to rapidly deliver new features using agile, software-based, platforms.

When a CSP chooses to select a CPaaS partner, it’s also important to have a solid understanding of customer preferences and look at the scope of a CPaaS provider’s offerings, geographic reach, reliability and quality of service. For example, if a CSP’s customers need global support, it is best to select a CPaaS partner that has a network and presence in those countries.

Additionally, a CSP is likely to benefit from partnering with one CPaaS partner that meets all the criteria versus using different vendors for individual features (e.g. securing phone numbers, developing APIs, helping customers transition services to the cloud, etc.).   

4. Shift to horizontal service offerings model to increase customer loyalty. CSPs that provide horizontal offerings to customers will see increased customer demand for their existing expertise - like access to networks - as well as the opportunity to partner with cloud-based providers to maximize expansion. With a horizontal offerings structure, CSPs can provide a more collaborative model for enterprises to work with partners and be able to take the next step in evolving their go-to-market approach — through bundling services specific to each customer.

Operating in this model and through continued adoption of APIs, CSPs can provide customers with tailored communication offerings for different industries, such as a secure cloud-based reporting tool for medical applications for hospitals or streamlined call and messaging capabilities for the transportation and e-commerce industries.

5. Increase customer value by reselling your cloud offerings. CSPs are also competing with traditional CPaaS offerings by expanding focuses and embracing a value-added reseller (VAR) model. The transition of CSPs to VARs and cloud brokers is attractive to enterprises because it provides a one-stop solution, but also can raise issues for CSPs as they need to lower costs and will likely begin to attract new competitors that may have previously been partners or customers.

On one hand, optimizing this one-stop solution model can improve customer experiences and attract enterprises that are drawn to the flexibility of “as-a-service” solutions without having to invest in additional IT support and on-premise options. However, as mentioned above, CSPs aiming to become cloud brokers may also encounter complications associated with identifying old customers as new competitors and must be willing to embrace the reality of needing to lower costs to remain competitive among new entrants and other cloud-based telecom solutions. As such, acting as a reseller may not be the best option for all CSPs.

For CSPs, being agile and adjusting to customer demands equates to remaining viable in today’s fast-paced, digital-driven market. The migration to cloud-based models offer an array of benefits including more enhanced user experience, increased customer loyalty, greater scalability and flexibility of services. Whether CSPs choose to integrate cloud offerings or select a cloud partner, it is clear that cloud-based solutions are helping CSPs remain competitive and nimble in the XaaS economy.

About The Author

Al is the vice president of product and engineering at Flowroute, a West Company. He brings more than 15 years of operational experience in software engineering and B2B SaaS platform management. Prior to joining Flowroute, Castle was the director of engineering at Motorola Solutions, where he built and launched the organization’s first SaaS platform and IOT enterprise software system in less than five months.