The top takeaways from the Cavell Summit Europe
There is a “huge opportunity” for selling UCaaS solutions throughout Western Europe according to research from Cavell Group.
In the first session of the day at the Cavell Summit, Dominic Black, Director of Research Services at Cavell outlined the trends we can expect throughout the European UC&C market. According to Black, market penetration for Western Europe stands at 37% from a UCaaS perspective, and there is a particular opportunity in France and Germany as businesses begin to migrate communications to the cloud.
However, it was not all good news. According to Cavell research, 44% of service providers are seeing a reduction in average revenue per user this year, described as a “big challenge” by Black.
“Margins are eroding,” said Black, “we’re seeing that in the enterprise space with Microsoft Teams starting to change the business model for all the businesses and service providers but also we’re seeing a transition to other solutions in the SME who are looking at mobile solutions.
“We’re also seeing a big change in the channel which has gone from a resale model to now where we are seeing insufficient sales support, deal registration becoming more complicated, and the margins people make through the channel change as well which is putting pressure on the channel.”
As a result of this pressure, Black went on to say that a major trend Cavell has picked up on is the introduction of new services that resellers are offering. Nearly two-thirds (62%) of resellers selling voice services are diversifying their portfolio in order to make the business more resilient.
According to Cavell, the most popular services sold alongside UCaaS are IT Consulting Services, Network Security, Connectivity, Endpoint Security, and Microsoft services.
“The role of the channel has moved from a point sale of UCaaS to bolting on other services to the solution,” said Black. “Ninety-two per cent of UCaaS resellers say they’ve started bundling one or more services when they are selling their solution.”
The necessity of bundling services was emphasised by Black, who went on to reveal that the proportion of new business coming from competitors is growing.
“As part of our research, we’ve been asking ‘where do you get your business from?’ In 2021, 75% of business was won by migrating on-premise solutions to UCaaS. At the end of 2023, just under 50% of new customer are migrating from PBX to the cloud and we’re now seeing much more cloud-to-cloud migration, which means that everyone has to look at how they are going to diversify their product set because everyone could end up with looking the same.”
DiversifAIng
With diversifying in mind, the ‘Role of AI’ seminar turned into a must see event for many at the Summit, as Finbarr Goode Begley, Senior Research Analyst, Cavell unveiled how businesses and service providers are viewing the role of AI.
According to Begley, the answer to the fundamental question of ‘Are people adopting AI?’ “the obvious answer is yes,” primarily enabling a more productive workforce as well as for “data management analysis and reducing human error” rather than personalise customer experience citing concerns about customer data.
“When you ask the question, ‘are enterprises ready for AI’, it’s a bit of a yes and no answer,” said Bagely. “They are ready for it in specific deployments, but for deployments en masse, they clearly don’t trust it.”
This distrust was born out in the data, as 74% of businesses say they are concerned about the improper usage of AI, and 55% are worried about data usage and management. When asked about AI Policy, Badley went on to emphasise the “immaturity” of the current AI landscape.
“Policy is also another place where we see the enterprise begin to adjust but not yet deliver,” said Bagley. “Fifty-four per cent said they already have an AI policy, but when you look at what those policies allow for, 38 per cent include using Public AI Tools, and we’ve already heard from some large companies that when they first heard that employees were using public AI tools, they shut it down straight away.
“This is the kind of immaturity to the policies that are out there. A lot of companies aren’t going to be happy with whatever employees are actually doing, especially if they don’t know what that AI tool is doing with the data, so the fact the policies are allowing it indicates they haven’t grasped the depth and complexity of the solution.”
Informal Opportunity
One area where AI has become an established tool is in the contact centre, a sector that, like communications, presents an opportunity for resellers.
Patrick Watson, Head of Research at Cavell, outlined the confusion over the contact centre, as it transitions from only dealing with customer service calls to handling the experience the customer has when interacting with the business.
On top of communication systems PBX systems, Collaboration platforms, and traditional telephony systems, Watson outlined that modern systems can include a myriad of features like day to day management, customer interaction data, marketing and sales systems, agent and employee experience tools, as well as industry-specific systems.
Despite these features, according to Watson, said that only half of businesses in Europe recognise having a formal contact centre solutions, whether a dedicated contact centre system or CCaaS platform, a figure that drops to 10 per cent amongst SMEs.
“There’s about 3 million total contact centre agents in Europe, but only 250,000 work for businesses with fewer than 50 employees, so the SME is massively disproportionately represented in terms of the formal contact centre market. To give you an idea, the sub-50 employee business sector represents 30% of the total employee market but only 9% of the call and contact centre.”
According to data from Cavell, over a third of SMEs are expecting to grow their contact centre agent base by between one and
nine per cent, demonstrating that it is an important factor. However, Watson said that the CX market is far wider than just Call and Contact Centre.
“Something we’ve been talking about for a while is an informal or light contact centre market and customer communicator. A significant proportion of the potential European market don’t have formal contact centre seats, wouldn’t fit with a formal Contact Centre solution, but have a requirement for some of the capability there.
“There is a market for customer communicators outside of the formal contact centre, who need capabilities across any of these different systems like a communication system, or data management, or marketing and sales.
“According to data from Cavell, the average price for a UCaaS is €16.30, the average price in this segment for CCaaS licences is €67, so somewhere in there is a sweet spot market depending on the level of features that are required.
“A lot of providers already have tailored packages, which piece together either bits of data management and communication capability, vertical specific integration into a particular product. At Cavell, this is something that we’re tracking as a particular opportunity within the industry.”