Despite its promise of greater ease of integration, flexibility, and scalability, just a fifth of enterprise contact centers have stepped into the cloud.
That’s according to estimates shared by Mike Burkland, Chairman & CEO of Five9.
During an earnings call, he stated:
In terms of cloud replacing on-premise, we believe that the [enterprise] penetration is still less than 20 percent.
Sometimes, CCaaS vendors understate this figure to inflate their total addressable market (TAM).
Yet, industry analyst Gartner also suggests low market adoption, predicting that only 33 percent have migrated – while including the midmarket in its calculations.
Meanwhile, CCaaS growth has slowed after it peaked during the COVID-19 pandemic.
Such slow growth has led to talk of financial instability across the CCaaS market – with Five9 one of the notable outliers, consistently achieving double-digit revenue growth.
Indeed, in the earnings call, Burkland revealed that Five9’s revenue had grown by 16 percent year-over-year (YoY) last quarter.
Convinced that CCaaS growth will accelerate again and bolster these numbers further, the CEO points to three critical market trends.
First, Burkland noted: "Companies are enthusiastically pursuing digital transformation initiatives to enhance customer experience, cut costs, and increase revenue.
Supporting this notion, Grand View Research suggests that the global digital transformation market will grow at a compound rate of 26.7 percent from 2023 to 2030.
Next, the CEO highlighted how prominent legacy contact center providers are encouraging customers to make the shift. Indeed, Burkland stated:
Enterprises are developing plans in a greater sense of urgency to replace their on-premise contact center solutions as legacy vendors have retrenched and slowed or even stopped development in some cases.
Genesys is the obvious example here, with the provider publicly stopping its legacy innovation last year and pumping all R&D resources into its Cloud CX offering.
Yet, Burkland also notes how Avaya – which works with 90 of the Fortune 100 – is trimming its on-premise portfolio.
Indeed, he shared a $2.3MN - in annual recurring revenue (ARR) – customer win with a healthcare insurance organization that shifted from an "Avaya on-premise version that was being end-of-lifed."
Such actions may well inspire further shifts to CCaaS. Yet, perhaps the primary driver will be AI.