The 800-Pound Cloud Gorilla Makes a Move

Amazon Connect

Oh-oh! First, books; then all of retail and cloud services. Now, call centers??? What is Amazon up to?

Got a problem with that new gadget you just bought? Call the manufacturer. How about that street light near your house that seems to be burned out? Call the power utility. What about that delivery that was supposed to be here yesterday? Better call the retailer. Call, call, call – that’s what 79% of us prefer to do. Despite the advent of the web, email, text, etc. our preferred form of interaction is talking to an individual on the other end of the line about our issue.

As a result, there is a giant call center industry that will reach over $407 Billion, worldwide, in just five years from now, and almost half of it is here in the US, employing over 3.5 Million people. While the biggest expense of these centers is the staff, the key to creating a superior customer experience is the contact center software and services.

Like many computer and telephony offerings, these were originally physically on-premise with big physical machines running software to distribute calls, measure performance, maintain product knowledge and references, etc. Today, this is increasingly moving to the cloud. Just like all the other “as-a-service” models, this one has it’s own acronym, too – CCaaS or UCaaS (Contact Center as a Service or Unified Communications as a Service). It too is big and growing rapidly, going from a little over $17 Billion today to almost $29 Billion by 2021.

Hmmm… Cloud, Customer Service, a juicy fast growing, large market, no real clear leader – I suppose it was only a matter of time before Amazon, using its Amazon Web Services (AWS) went after it. At the end of March, Amazon introduced “Amazon Connect”.

Being Amazon, it’s a pretty attractive and disruptive service. Everything you need is included including artificial intelligence to recognize speech and route calls. You don’t need to be an IT guru to set up the business rules and true to the AWS utility model it is “pay-as-you-go” with no commitment. Salesforce.com – who has an alliance with AWS – has indicated that it will integrate its own AI platform, Einstein, into Amazon Connect. Salesforce has over 150,000 customers – voila! Instant market share.

The call center marketplace is a bubbling caldron but you could not say anyone dominates. There are 105 SaaS or UCaaS vendors listed by GetApp. With lots of competition, there are casualties. Avaya, one of the old school premise based companies, recently went bankrupt. Its CFO admitted that its legacy financial structure designed to support an on-premise, hardware-based business was dragging them down.

The entry of Amazon Connect is bound to shake things up even more. But equally important, it illustrates a key part of the AWS strategy to move up the value chain. Ten years ago when AWS got started, it offered the basic building blocks of infrastructure – storage, compute and network. Since then it has moved up into more and more services built upon these elements. These services are higher margin offerings than commodity infrastructure and AWS’s financial performance reflects this.

Amazon Connect leverages the underlying infrastructure and some of the higher value services like Lex, which is the AI behind Alexa. It also works seamlessly with other higher value offerings like its database services. Thereby providing an inducement to put even more or your work into the AWS cloud. You have got to admit – it’s a pretty compelling strategy.

I wonder what the gorilla is going to do next.

By John Pientka

John Pientka

John is currently the principal of Pientka and Associates which specializes in IT and Cloud Computing.

Over the years John has been vice president at CGI Federal, where he lead their cloud computing division. He founded and served as CEO of GigEpath, which provided communication solutions to major corporations. He has also served as president of British Telecom’s outsourcing arm Syncordia, vice president and general manager of a division at Motorola.

John has earned his M.B.A. from Harvard University as well as a bachelor’s degree from the State University in Buffalo, New York.

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