I’m constantly researching the cloud communications market, and my most recent focus has been on selling to SMBs. As I interview cloud providers, channel partners and end customers, trends emerge, and I’m going to address a few of them in this post.

My perspectives are shared in various forums, including posts directly here on my blog. For this blog post, I’ll look at some approaches cloud providers are taking to have success in a crowded market where it’s hard to differentiate. I’ve grouped these approaches into two areas – how they’re growing today, how they plan to grow tomorrow.

These approaches are worth noting since the cloud is really a dual-edged sword. On the one hand, cloud means you don’t have to be a facilities-based operator to sell services to SMBs. The barrier to entry is lower with cloud, so it’s easier to get in the game, and with the SMB market being so big, there’s a lot of opportunity.

Conversely, with everyone using comparable technology, there’s a sameness to most of the offerings, so to stand out, you somehow need a point of difference, or a niche that you can defend. Each of the following approaches represent distinct opportunities for cloud providers to chart their own course with communications technologies.

Approach #1 – Driving growth today for SMBs

The starting point for all cloud providers here is to address today’s pain points with their end customers. This usually pertains to the phone system, where end of life has somehow been reached, or the limitations of legacy technology have reached a point where an upgrade is needed. Another scenario that is becoming more common is in the contact center, where legacy systems simply cannot deliver the level of service and experience today’s customers expect.

These scenarios are tailor-made for cloud solutions, where the provider can offer a path to modernization that is both easy and quick to deploy, with economics that SMBs can afford. Shifting from on -premise to cloud means a move from Capex to Opex, and with the core technology hosted in the cloud, the limited IT resources typical for SMBs does not present a barrier to adoption.

Many cloud providers are still rooted in the telephony business, and for them, migrating their customers from legacy systems to hosted VoIP and maybe SIP trunking is the end game. At face value, that definitely solves today’s problems, and these cloud providers may have little inclination to move out of that comfort zone.

This really just speaks to the bottom end of cloud provider ecosystem, and many others have moved further along the technology spectrum, and addressing richer opportunities with their end customers. A prime example would be vertical market specialization, where a cloud provider has developed a sizable customer base. As a deeper understanding is gained around the communications needs of a particular vertical, the provider can leverage the cloud to develop specific applications and capabilities that have business value today. This is especially effective in regulated markets like healthcare or financial services, where the end customers know the regulations really well, but lack the IT expertise to ensure that new technologies will properly support them.

These types of SMBs have specialized needs that cannot be left to generic providers, and when they’re ready to go, they won’t wait around for someone to build it from scratch. While they have pressing needs today for better communications technology, they won’t likely know what to look for in a cloud services provider.

Phone.com is a good example of a cloud provider that has developed a strong healthcare niche with a deep understanding of how communications services need to align with regulations and compliance requirements. In this market, that means HIPAA and HITECH, and by providing an end-to-end solution, Phone.com can ensure that all forms of patient communication will be secure and private. I’ll address these needs a bit more later, but here’s a recent example where over 400 dental offices had a data breach and succumbed to ransomware because their cloud provider didn’t take the right precautions.

Approach #2 – Driving growth tomorrow

Cloud communications providers can have lots of success addressing today’s SMB needs, but that’s really the low-hanging fruit. To build stronger, more sustainable revenues with end customers, they need to push beyond POTS, and show where there’s new business from cloud services. This takes the conversation beyond VoIP and into UC and the broader collaboration space. Instead of selling commodity voice and conferencing services, tomorrow’s growth is about workplace productivity and making team-based work more effective.

Many cloud providers are well-along that path now, and adoption of cloud-based UC – UCaaS – is really growing. This is great news for SMBs, as they can now access the full suite of UC capabilities that only enterprises could previously afford with premises-based deployments. Of course, this is the same rationale that came when IP PBX opened up the switched telephony market to a broader pool of end customers. Over time, this led to all phone systems becoming a commodity, and not surprisingly, the same is happening now with UC.

As such, moving SMBs along from VoIP to UCaaS is no guarantee that cloud providers will have their future needs covered. The UC market has reached critical mass, and is pretty much table stakes for all businesses, so that’s not the vehicle for differentiation.

The key is for cloud providers to have a strong innovation mindset, with an eye to constantly developing new applications that add value to UCaaS. In some cases, the focus is on automation, where emerging AI-driven applications can take on manual tasks, such as scheduling meetings, or transcribing conference calls. Another example would be using APIs to customize applications quickly and easily, such as IVR scripts or time-sensitive notifications. The sky is the limit here, and that’s what makes the innovation focus so promising. Again, Phone.com has been on this track for many years, and just one example would be using APIs to create custom integrations for UCaaS with workflows such as over mobile devices, or with 3rd party applications like CRM.

Noble Systems is another notable example, and one of their differentiators is the use of conversational AI and real-time speech analytics to improve CX – customer experience – along with agent performance in the contact center. Both AI and APIs are still in early stages of adoption, especially among SMBs, but they’re both great innovation drivers, and will be key for cloud providers to meet tomorrow’s needs for end customers.

Taking things a step further – and with a nod to the healthcare vertical cited earlier - Noble Systems is also doing really interesting things in the field of debt collection. This speaks to the unsavory underbelly of our spend-now-pay-for-it-later economy, and it’s particularly troubling in healthcare. With so many people uninsured, a lot of hospital bills go unpaid, and this Washington Post article just hints at the scope of the problem, especially around aggressive practices from hospitals to sue patients for unpaid bills.

Coming back to cloud services, this translates directly into outbound calling applications where contact centers for debt collection agencies are tasked with contacting these patients to reach some form of a settlement. This is certainly part of the broader scourge of robo-calling, and Noble’s AI-driven speech analytics applications have a role to play in ensuring that agents stay on script and not engage in aggressive tactics that will draw the ire of regulators.

They also provide compliance tools to ensure people are not called more often than regulations permit, among many other criteria. You may not be thinking this far along the healthcare value chain, but this is very much part of the conversation around how cloud communications providers can differentiate. Similarly, for SMBs considering cloud providers, this end-to-end capability reflects a deep understanding of their needs, and should be key for choosing which provider to go with.