This Industry Viewpoint was written by Hayley Hughes and Wes Faulkenberry
The way we generally refer to UCaaS has significantly changed from its early beginnings of basic voice-only communications. Today, we believe UCaaS has evolved into “Integrated Enterprise Collaboration” with the acceleration of API integrations, CPaaS, customer engagement and collaboration tools.
Cloud communications adoption, initially limited to single-office small businesses, now spans all entity sizes, as robust capabilities and improved security measures allow for the seamless installation of UCaaS solutions in even the largest enterprises. Enterprises transitioning to the cloud now demand full-spectrum, integrated solutions, causing a shift in the priorities of cloud communications providers. Standalone voice-centric communications technologies no longer entice prospective customers. Instead, high-growth offerings such as a cloud contact center with embedded customer engagement tools, integrated enterprise-grade communications platforms, AI / analytics and workforce optimization drive customer adoption. Gartner’s UCaaS Magic Quadrant key market trends highlight this shift to Integrated Enterprise Collaboration. Those trends include:
- Improved Dashboards, Portals & Tools: For onboarding, analytics & IT self-admin
- Workstream Collaboration: Facilitating conversational workspaces, sharing & search
- Globalization: Beyond English-speaking countries
- Video-Centric User Experience: Enhanced interface & video capabilities
Gartner notes that these trends are driving a market shift from discrete tools to integrated solutions due to emerging technologies such as virtual assistants, AI, conversational user interfaces, IoT, and greater use of platform environments.
Collectively labeled as “Customer Engagement and Collaboration,” these newer, productivity-focused solutions are at the front of mind for M&A and R&D teams alike. Though UCaaS maintains high value in terms of business productivity and widespread use, it is no longer the key driver of transformative growth. Customers today are looking for high-growth offerings, which include cloud contact center solutions with embedded customer engagement tools, integrated enterprise-grade communications platforms, workforce optimization, and AI / analytics. We are seeing that quality voice, chat and video solutions are no longer differentiators — they are the expected standard. Just look at the way industry players like 8x8, RingCentral and Vonage have changed their messaging over the last 5-10 years.
Some key takeaways here:
- Voice is necessary, but no longer the primary sales pitch. We see a clear shift from voice-only to voice-enabled solutions.
- Offering a full communications and collaboration suite is necessary to stay competitive, but integrating with other best-of-breed technologies, rather than starting from scratch, is often the best path.
- Lastly, market perception as a full-service collaborative software provider, with a demonstrable emphasis on new technologies, generates a valuation premium.
Hayley Hughes Morabito is a Senior Associate with Q Advisors. She joined the team in 2014 and has executed mergers and acquisitions, debt and equity financings and strategic advisory for clients across the telecom, media, and technology (TMT) industries with an emphasis on the cloud communications, managed services and digital media sectors. Specific clients on whose transactions she has been engaged include: TPx Communications, Starface, Swyx Solutions, and SwiftReach Networks.
Wes Faulkenberry is an Associate who joined Q Advisors in 2018 and has been working with the team on mergers and acquisitions and strategic advisory assignments for clients across the telecom, media and technology (TMT) industries. Specific clients on whose transactions he has been engaged include: Four Winds Interactive, Starface, and Meriplex.
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