Originally published by Spiceworks

The shift to hybrid and remote work environments driven by the COVID-19 pandemic accelerated the adoption of unified communications-as-a-service (UCaaS). So what’s next for this hypergrowth industry? Cass Gilmore,FluentStream CEO, shares his thoughts on trends to watch within the UCaaS space in 2023.

Organizations scrambled to adapt to remote or hybrid work to meet social distancing mandates during the pandemic. For many companies, the first step was implementing UCaaS services such as video conferencing and business phone systems that can be accessed from any device or location with an Internet connection. This created a global surge in demand for UCaaS solutions across all industries, fueling significant industry maturation in the past two years. 

With the pandemic (hopefully) in the rearview mirror, research firms such as Grand View Research and Market Research Future still forecast over 20% annual growth in global UCaaS sales, topping $210 billion by 2028. What will continue to fuel such high growth? Here are UCaaS growth drivers as well as key trends to watch in 2023.

Bye Bye Legacy; Hello Cloud

During the pandemic, many organizations accelerated their cloud migration plans to enable their Work from Home (WFH) environments to thrive. Through that acceleration, organizations discovered the numerous benefits of cloud-based infrastructure, and many have expanded their cloud migration plans. In fact, according to Gartner, more than half of enterprise IT spending will shift to the cloud by 2025.

As organizations further embrace the benefits of cloud environments, they are abandoning on-premises hardware and early VoIP systems that lack the reliability and modern security measures required to meet customer expectations and compliance regulations. Additionally, organizations realize that UCaaS can ease the burden on understaffed IT departments and enable greater flexibility, security, and cost-saving opportunities. These benefits are often enough for organizations to pursue a complete cloud migration and abandon legacy on-premises equipment once and for all. 

Cybersecurity Takes Center Stage

As part of the trend toward hybrid work environments, BYOD (Bring Your Own Device) is now an accepted and expected practice. Employees are downloading company applications on personal devices, creating new struggles for the IT personnel who have to manage the vulnerabilities introduced by these devices and applications to networks. Additionally, telecom providers have experienced increased cyberattacks in recent years, degrading reliability and data loss prevention. UCaaS providers will increasingly invest in cybersecurity measures to thwart hackers and address more sophisticated customer security requirements, such as SSO (single-sign-on) and TLS (transport layer security). 

AI Harnesses Customer Experience and Efficiencies Gains

Artificial intelligence has become incredibly sophisticated in areas such as natural language processing, decision-making, and predictive analysis. When this functionality is paired with UCaaS, AI can offer greater personalization throughout the customer experience to improve interactions. For instance, AI-enhanced communications tools can answer customer questions and provide step-by-step instructions to resolve issues. Expect companies to increase their reliance on AI to personalize and enrich the customer experience.

In 2023 and beyond, organizations will increasingly adopt UCaaS features powered by AI to harness new efficiency and productivity gains. For example, AI enables the conversion of voicemail messages to text messages, automates notetaking during meetings, and improves workflows. 

Mobile Integrations

UCaaS adoption has grown rapidly due to its ability to allow employees to work remotely regardless of location or device. Today’s mobile-dominated workforce requires integration with iOS and Android devices to ensure calling, texting and emailing from a mobile device is seamless. That same workforce expects messaging integrations with CRM tools and mobile voice integration with ERP and supply chain management tools. Watch for increased tool integrations that provide more efficiencies to the mobile workforce.

5G and Satellite Fuel Work-from-Anywhere

The work-from-home (WFH) model only works if people have access to consistent, reliable connectivity. Wi-Fi powered the WFH model during the pandemic, but now WFH is morphing into work-from-anywhere (WFA). 5G and satellite, which enable users to access cloud communication services from literally anywhere on any device,  are expected to be key technologies fueling this evolution. Keep an eye on the uptick in 5G and satellite adoption for business communication next year.

Vendor and Service Consolidation

Rather than investing in technology innovation, a faster and more cost-effective way to acquire new services and capture more market share is for vendors to participate in mergers and acquisitions. Increased M&A activity is expected across the full spectrum of UCaaS vendors in 2023, largely driven by the need to fill gaps in service offerings or consolidate resources to increase profitability.

For example, UCaaS providers are seeing increased opportunities to add communications platform-as-a-service (CPaaS) space and/or expand their contact center-as-a-service (CCaaS) offerings. Gartner predicts that 95% of global enterprises will use CPaaS functionality by 2025. Additionally, while CCaaS has been popular among SMBs for several years, we see higher adoption rates among large enterprises, motivating vendors to acquire or expand their CCaaS offerings.

Anticipate UCaaS customers to make similar shifts. During the pandemic, organizations opted for essential services like phone and video communication. Now, hybrid work is expected to be the default by 2024, pushing organizations to consolidate their communication providers. While some use Zoom or Microsoft Teams for specific services, organizations are increasingly demanding a comprehensive, scalable ecosystem of UCaaS services from one provider capable of meeting all their needs.

Consolidating services into one provider presents a cost-saving opportunity for organizations, as bundled services often lower the total investment cost. Additionally, working with one vendor condenses multiple invoices and decreases oversight management to a single point of contact. As organizations look for cost-cutting measures, service and vendor consolidation will certainly be a top consideration, fueling growth opportunities for organizations that can offer compelling bundled services, streamlined account management, and stellar customer service.

That’s a Wrap

Expect 2023 to usher in a deeper focus on cloud migration, cybersecurity measures, AI, 5G, and mobile integrations, and further vendor and service consolidation. UCaaS will maintain its superiority over legacy, on-premise communication systems. It will gain even more momentum as organizations solidify their post-pandemic work environments and seek resources that ease the burden on IT and provide cost savings compared to legacy options.