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Predictions for the Cloud Communications Market in 2021

February 26, 2021

The cloud communications market is always on the move. The changes ahead over the coming year will be particularly dramatic based on input from the CCA’s 2019-2020 provider research. Here are our top five predictions for 2021:

1. Collaboration Will Leap From a Luxury to a Necessity

With 28% of providers already looking to differentiate their services with increased functionality around collaboration, full collaboration suites will become more essential to competing effectively.

As we step from the COVID to the post-COVID world, so many employees will continue to work virtually that it will no longer suffice for providers to limit themselves to standalone VoIP and UCaaS – or even just to lead with those traditional services.

Instead, even small contenders will need to provide bundles of voice, video conferencing, contact center, and messaging capabilities. Microsoft will continue to push its Teams collaboration suite which integrates all of these services. Meanwhile Zoom is adding more voice capabilities with Zoom Phone.

If you don’t already have a full collaboration suite, it won’t be a question of whether to get one going or not. The question will come down to whether to buy or build your own; and if you’re buying, from whom to buy.

2. Opportunities Will Be Optimal Upmarket

The CCA’s survey results show market penetration rates of 50% for SMEs of up to 50 users, 36% for midrange companies of 51 to 500 users, and only 14% among larger customers in the enterprise arena.

The SME market consists of low-hanging fruit, much of which has already been picked as it’s an easy target for even small providers to start with. Microsoft is currently dominating the enterprise market.

The midmarket, however, is still wide open. Market leaders have yet to be determined.

3. Agent Channels Will Fade While Affinity Partners Flourish

The traditional agent channel will continue to decline this year, while affinity partners (see more below) start stepping to the forefront. Master agents supplied only 14% of sales in 2020, and that number is projected to fall to 12% by 2022. Over the same time frame, direct-to-agent sales are expected to slide from 21% to 20%.

Why? As service providers become more and more sophisticated with their own digital marketplaces, there is less and less need for agents to do any heavy lifting with marketing and provisioning.

At the same time, affinity partners will soar in numbers. These partners are companies that show up in customers’ pertinent Google searches and then help drive traffic to service providers’ marketplaces.

One example of an affinity partner is a business magazine that runs a listing of top UCaaS providers. If customers click on names like RingCentral or Vonage from that listing, they’ll be transported to the service providers’ sites. Affinity partners receive lead agent fees in exchange for generating traffic.

4. SD-WAN Will Stay Strong, but It Won’t Be the Focus

SD-WAN is holding steady with 52% of providers offering that service in both 2019 and 2020. For success in the enterprise market, however, providers will need SD-WAN plus other offerings. 

Providers will be more focused on offering collaboration suites that are both comprehensive and high in quality. Quality of service (QoS) agreements and topnotch security will become increasingly crucial the higher they go upmarket.

5. Partnerships With Microsoft Will Blossom

Even in 2020, 52% of providers already offered Direct Route for Microsoft Teams, while 50% offered Microsoft Teams integration.

Despite Microsoft’s dominance in the enterprise collaboration market, Teams still isn’t very stellar on voice functionality. Many providers eyeing an upward trajectory will look to partnerships with Microsoft which add value on the voice side to the Teams collaboration suite.

Have your own thoughts on what cloud communications will see in 2021? Considering joining our forum for cloud communications leaders? Get in touch with the CCA today.

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