Finding the right CPaaS vendor using the Gartner® Magic Quadrant™ report
How the Gartner Magic Quadrant report for CPaaS can help you choose the right cloud communications provider for your business.
Introducing the Gartner Magic Quadrant for CPaaS
The first Gartner Magic Quadrant for CPaaS report has been published against the backdrop of a boom in the CPaaS market as enterprises of all shapes and sizes have recognized the benefits of leveraging the capabilities of specialist communication providers. Rather than creating their own solutions from scratch, they can integrate the mature communication functions and workflows of specialist vendors giving them instant access to both proven channels like SMS, email and voice, and new digital channels including WhatsApp, Messenger, Viber, and many others.
In this blog we look at how both enterprise businesses and platform companies can use the findings of the latest Gartner CPaaS report to find a vendor with the perfect combination of attributes to deliver maximum benefit.
How to use the findings of the Gartner CPaaS report
Whether you are a global enterprise business faced with the challenge of reaching your global customer base across all the channels that they use, or a small local business looking to start using a single new channel to send transactional messages, there is a CPaaS provider out there that can provide the service you require at an acceptable price.
Finding the right supplier is the key, and this is where we believe the Gartner report becomes invaluable.
While we believe that global enterprise businesses should be looking at the CPaaS Magic Quadrant Leaders that can deliver on all key requirements, smaller or regional organizations should cast the net wider and evaluate more niche providers that specialize in individual channels or regions. For example, if you have no plans to expand into the Chinese market then you will have no need to adopt WeChat as a messaging channel as it has limited adoption rates elsewhere.
In the same vein, if you are only looking at a single channel and use case, for example sending authentication messages over SMS, then channel coverage is not as important to you as a provider who can guarantee the highest possible deliverability rates for your OTP messages.
How does Gartner assess vendors?
The Gartner Magic Quadrant reports assess and categorize technology providers in various markets based on two key dimensions:
- Ability to execute
- Completeness of vision
We believe that this makes perfect sense as the two go hand in hand. What is the point of a vendor having a compelling vision of the value that CPaaS can bring if they aren’t capable of executing on that vision and helping their customers to benefit?
These two factors therefore constitute the vertical and horizontal axis of the Gartner Magic Quadrant that provides a graphical competitive positioning of four types of technology providers in fast-growing markets: Leaders, Visionaries, Niche Players and Challengers.
Gartner explains their overall process for assessing technology vendors in this publication. This applies to all Magic Quadrant reports across industries so there will be variations in the process for different reports, but we have pulled out what we believe are the key measurements that apply to the Gartner CPaaS Magic Quadrant and how we think each are scored.
Note that these guidelines are the opinion of Infobip based on our extensive experience of the global CPaaS market, and do not constitute official advice from Gartner.
Ability to execute
1. Market presence
This evaluates a vendor’s current performance and capabilities within the CPaaS market. It looks at factors like overall market share, customer base, revenue, and their influence in the sector. For businesses looking for a CPaaS provider, the crucial consideration is whether the vendor is capable of delivering communication products and services that can meet their customers’ immediate needs effectively. Using our example of a business looking to introduce OTP delivery by SMS, can they simply and quickly plug into the vendors API to start sending messages reliably, with minimal development and implementation overhead?
2. Service quality and performance
We believe that this is a crucial consideration in the CPaaS market where the reliable delivery of messages is fundamental. Further factors like feature richness, ease of scalability, and the overall robustness of the technology are also important. High scores for CPaaS vendors indicate that they are able to provide the highest levels of messaging reliability across all regions. For brands with a global customer base this is crucial. It would not be acceptable to have any marked difference in delivery rates of marketing and transactional messages between the various markets that they serve.
Just as important is ensuring that all business communication is compliant with local legislation and acceptable business practices. This is so much more than a simple box-ticking exercise. For example, when it comes to global SMS compliance laws there is significant diversity, even within regions. Did you know that in France businesses can’t send any SMS messages on a Sunday? Or in Malaysia, the SMS message header has to make it clear that the recipient isn’t getting charged for receiving it? These are the type of rules that CPaaS vendors need to stay on top of.
3. Strategy and execution
We think it is key that a vendor is able to explain their strategy to customers and prospects and show them how it applies to their own organizations. Every business is different, and it is vital that a CPaaS vendor can show each the benefit of adopting their solutions and the effectiveness of their go-to-market strategy, sales channels, and customer support. We believe that vendors that can effectively promote their solutions and support their customers will score highly in this category.
4. Customer experience
In all industries, high quality and consistent customer experience is crucial. In the CPaaS space we believe that it is no use meeting SLAs on the delivery of messages one month and then missing them the next month because of outages or issues related to product updates. A consistently high level of service and excellent customer support will lead to a high NPS and should result in a good rating from Gartner in this category.
Note that when we talk about ‘customers’ in the context of cloud communication services we mean both the organizations that work with the CPaaS vendor and the end recipients of communication, who will often be the first to notice a failure of service when key messages aren’t received, or they get duplicated or incorrectly routed messages.
5. Overall viability
This measures a vendor’s financial stability and long-term viability. Key factors to consider are revenue growth, profitability, and the investment that each vendor makes in research and development. A CPaaS company that currently has sound financials may have a bumpy road ahead if they aren’t investing in the R&D required to leverage new technologies and bring that value to their customers.
Due to the nature of the CPaaS market and the way that communication services are delivered by API, it should be fairly easy for brands to switch to another provider. We believe that it is up to a vendor to ensure that they are delivering the quality of service that doesn’t give their customers a reason to move.
Completeness of vision
1. Market understanding
We believe that it is essential that a vendor understands the markets they serve, how each is evolving, and what their customers require to keep being successful. The CPaaS market is definitely not uniform or stationary. Businesses of all shapes and sizes in every market imaginable can benefit from partnering with a CPaaS vendor.
There are constantly new channels and new technological advancements that force vendors to expand and enhance their offerings. Vendors with a deep understanding of market dynamics and the requirements of their customers should be awarded high scores in this category.
For brands in niche markets, when evaluating a specific vendor, we would recommend looking at their client list to ensure they have experience of working with similar businesses.
2. Product strategy and innovation
Understanding the market is one thing but translating that into a product roadmap and delivering solutions that deliver real value for customers is vital. For CPaaS, it is crucial that a vendor can align their offerings with market demands and the latest innovations in communication technology. There are two parts to this:
- To produce solutions flexible enough to be adapted to meet the granular demands of different markets, individual customers, and even individual use cases.
- To be agile enough to respond to rapidly changing market conditions, for example new legislation to combat fraud, or new technology that could give early adopters a competitive advantage or open up new revenue streams.
3. Marketing strategy
We believe that this dimension evaluates a vendor’s ability to translate their CPaaS strategy into a compelling story that will resonate with customers and show that they have a deep understanding of both their goals and current pain points.
Take the example of platform companies that leverage the CPaaS model to deliver communication solutions to their own set of customers. With a ‘vanilla’ CPaaS solution there is limited flexibility to differentiate between individual clients and entities when it comes to provisioning resources, numbers, and domains, but also when monitoring consumption and reporting. CPaaS vendors that are able to articulate these challenges and show how they are able to overcome them should be awarded high scores in this area.
4. Sales and pricing strategy
Beyond an easy-to-understand and competitive price sheet, CPaaS vendors should have a strategy for reaching customers in their target markets, including how they approach positioning and their global licensing and partnership strategies. A CPaaS vendor with global presence and a solid partner base of high-quality communication providers will undoubtably be viewed favorably.
Considering the diversity of customers in the CPaaS market, a one-size-fits-all approach to pricing is not going to fly. Customers should be able to negotiate pricing that is transparent, fits their usage patterns, and considers the natural peaks and troughs in messaging throughput during the year.
Using the Magic Quadrant report to choose the right CPaaS provider
By searching out the CPaaS Quadrant Report you have identified a need that your organization has that you believe can be addressed by working with a CPaaS provider.
Based on our explanation of each of the measures above, you should now be in a good place to conduct a critical analysis of both your own requirements, and the offerings of the vendors included in the report.
As is usually the case, the devil is in the details. For example, you may think that you have found the ideal provider, but with your medium-term plans to expand into the SE Asian market, you may discover that they do not have a regional office and do not cover all the messaging channels that are popular in the countries that you wish to target.
Step 1 – Identify use cases
You should start by listing and ranking all the uses cases that you are planning to cover in the short and medium term, and even further into the future. If you work for a large organization with multiple departments that manage their own communication, then you should be prepared for the ‘use case cuckoos’ which is when other departments see the cost and efficiency benefits that CPaaS provides and add their own.
Some organizations decide to approach CPaaS adoption in an iterative way, starting with their high priority use cases and then moving down the list. Others go for the big bang approach and move all their communication across at once. Both approaches have their merits, but when evaluating vendors, you need to consider whether they are capable of meeting all your key use cases.
This is the next step in the process.
Step 2 – List hard and soft requirements for each (primary) use case
This doesn’t have to be complete from the start as you will get a deeper understanding of your core requirements as you progress, but it is a very valuable exercise as it will help to clarify in your mind what is non-negotiable and what is a nice-to-have.
In the context of business communication some factors that you should consider are:
- Channel coverage: Does the provider support all the channels that you need to use to implement the use case across all regions. This is tied to geographic coverage as some countries will use specific messaging channels that have low adoption rates everywhere else. For example, if you wish to do business in Vietnam then the Zalo messaging app has an 87% usage rate, far ahead of any other.
- Geographic coverage: Can the vendor reach recipients in all the markets you serve, both reliably, lawfully, and at a reasonable price?
- Compliance: Is the vendor able to ensure that your communication complies with legislation in all the countries that recipients reside in? Significant fines and block listing may be the result if not.
- Volume: Is the vendor able to support the volume of communication that you intend to send throughout the year, including during peak times like the run up to the holiday season when their other customers will also be sending their highest volume of messages?
- Failover mechanism: For business-critical messages, does the vendor fully support failover messages when the recipient can’t be reached on the primary channel. This process should be automated and tightly monitored so that you always know when a recipient hasn’t received an important message.
- Management overhead: Does the provider take care of all onboarding, number provisioning and ongoing management of their clients’ communication? This is a significant factor when you don’t have the technical resources to do this yourself.
- Fraud protection: Does the vendor provide the highest levels of fraud protection, with automatic detection of fraudulent traffic, effective SMS firewalls, and continuous analysis of messaging traffic to protect your business and customers from scams like SMS pumping and smishing.
Step 3 – Create a vendor short list using the Magic Quadrant report
The two main pieces of the puzzle are now in place. With your list of your own requirements and the vendors included in the CPaaS Magic Quadrant report, you should have everything you need to make an informed decision about which CPaaS vendors to consider.
This is a perfect opportunity to create your own matrix to help you draw up a shortlist and present it to colleagues and the final decision makers in your organization. For example, you could list your requirements down the left-hand side in order of importance, and then include a column for each vendor with a check in the cell if they meet the requirement.
When you have a shortlist based on your hard requirements, you can then refine it further by applying scores for each vendor based on your highest priorities. A clear winner may emerge, or you may end up with a couple of vendors to take to the next stage of the process – negotiating pricing and contracts.
In either case we strongly recommend that you do your own research and due diligence so that you can have the highest confidence in your final decision and enjoy the maximum benefit of partnering with the best CPaaS vendor for your business.
Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
GARTNER is a registered trademark and service mark of Gartner and Magic Quadrant is a registered trademark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved.
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