Digital Channels Are Driving Customer Contacts to the Cloud

Dec 18, 2015

Customer contact centers will continue to lift their solutions to the cloud. A new Frost & Sullivan research report, North America Hosted/Cloud Contact Center Market, found that the hosted market earned revenues hit $2.17 billion in 2014 and is expected to reach $3.66 billion by 2019, at an 11% compound annual growth rate (CAGR). In contrast, the demand for on-premise systems is expected to slide further, from $1.4 billion to $1.12 billion over the same period, according to the companion research report, North America Contact Center Systems Market.

But there is an even greater and more profound shift of customer interaction applications to the cloud underway than even what these strong numbers indicate. A Frost & Sullivan survey forecasts that, for the first time, a majority of customers will use digital channels in 2016 instead of the traditional (email, IVR, and live agent) channels. The change is being led by double-digit growth in social, mobile, and web demand. And digital applications and channels tend to be more often hosted than installed on-premise.

The contact center hosting and system reports indicate the underlying digital movement by forecasting a double-digit CAGR between 2014 and 2019. Hosted outbound notifications is the prime driver behind a nearly 10% CAGR for hosted outbound dialing, while on-premise dialer demand will decline by nearly 3% over the same period.  However, these reports do not cover the separately the entire range of digital channels: web self-service, mobile apps, SMS/text, social media, messaging, WebRTC-enabled voice and video, and IP-based video.

Digital channels will hasten the movement to the cloud over the next several years. The “digital generation” is now the mainstream. They are eschewing desktops and laptops and landline phones for their smartphones and tablets.

To meet customers’ needs, companies are making their web sites more personalized, targeted, omnichannel, and mobile-friendly (these developments will be covered in an upcoming Frost & Sullivan report on web personalization). Digital applications are rapidly evolving with new features, refinements, applicability, and business cases. As one such example, the Oracle Service Cloud Social Monitor now allows precise, fine-grained assignment of social incidents to the best skilled agents. Meanwhile WebRTC received a small, but key push on the adoption curve with Microsoft’s preview release of its ORTC API in September (Frost & Sullivan discussed WebRTC, including ORTC as its next likely iteration in this report).

As a result, in a few years customer contact organizations may no longer have to decide whether to go to the cloud.  The customers will have made that choice for them.

Brendan Read


Brendan Read is Senior Industry Analyst with over 25 years’ experience covering business, communications, staffing, and technology. He has worked in, prepared reports, and blogged on a wide range of topics including customer contact, CX, CRM, IoT, social media, supply chain, and BC/DR. He also has backgrounds in construction, manufacturing, materials, resource extraction, site selection, and transportation. He examines the broad economic, environmental, innovation, political, and social mega trends, and their impacts on businesses, markets, and society.

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