Zoom and its partners are supplanting contact center software providers as multiple factors drive businesses to rethink their IT estate.
Seven of Zoom’s 10 largest deals in its fourth quarter — ended Jan. 31 — displaced a contact-center-as-a-service vendor, Zoom CEO and Chairman Eric Yuan told investors Wednesday. In many of these deals, the Zoom Phone offering replaces Microsoft Teams or Cisco Calling.
The migration credits Zoom offers to “defray transition costs” have helped win customers, executives said. The company has also gained market share by bundling its unified communications platform with its contact center platform and upselling new AI products.
“I think the inability to kind of have that full portfolio is one of the reasons,” Zoom CFO Michelle Chang said during the earnings call.
Zoom became a household name for its meetings platform, but the company is intent on layering its Phone and Contact Center offerings into enterprise accounts.
Six years after cloud UC and CC vendors swept through the enterprise during the pandemic, businesses are entering a second renewal cycle. Mid-to-large enterprises are growing weary of maintaining disparate UCaaS and CCaaS platforms and are looking for a single vendor, ATC of Ohio President and CTO Nick Enger told Channel Dive in an email. Zoom continues to make inroads against UC giants Cisco and Microsoft — often one product at a time, Enger said.
“We’re currently advising a very large organization evaluating whether to double down on Teams plus Phone or move toward Zoom Workplace plus Zoom Phone,” Enger said. “A year or two ago, Zoom might not have even made the shortlist — now it’s a serious strategic conversation because buyers are comparing AI value, licensing predictability, and how tightly UC and CX integrate.”
Zoom’s R&D push in contact center and AI is for real, ATC of Ohio CEO David Goodwin said. After its $14.7 billion attempt to buy Five9 fell through in 2021, Zoom’s decision to build its own CCaaS platform is paying dividends.
“Zoom’s CCaaS/CX/AI is quickly becoming, if it’s not already there, enterprise grade,” Goodwin told Channel Dive in an email. “I think we’ll see some opportunities this year where they’re competing head-to-head with Five9, Genesys and Nice, as well as RingCentral and Dialpad, and winning.”
Partners played a big role in the quarter for Zoom, and Chang said the channel drove nine out of ten of the largest contact center deals.
“Our channel base continues to grow,” she said. “And frankly, the proportion of new customers coming from channel to me is especially exciting.”
Partners are a key force in moving clients from one vendor to another. Zoom Head of Global Channel GTM Nick Tidd told Channel Dive that eight of the company’s ten largest deals in Q2 were competitive takeouts through the channel.
The Microsoft angle
Zoom and other UCaaS providers are displacing Microsoft Teams as Microsoft unbundles Teams from Microsoft 365.
Previously, many organizations already had Teams grandfathered into Microsoft 365. If the calling platform was already on everyone’s machines, why not get use out of it?
But the bundles are no longer so automatic.
“Microsoft changed the economics of collaboration by decoupling Teams from core licensing, which turned collaboration back into a line-item decision instead of something that was just assumed,” Enger said. “Layer AI into that — where some ecosystems monetize summaries and automation as add-ons — and we are seeing buyers start re-evaluating the entire stack through a total-cost and simplicity lens.”
Behind the scenes
Zoom’s partners point to broader trends for the takeouts, and they often don’t have to do with technology.
No vendor is inherently better than the others, C3 Technology Advisors President Matthew Toth told Channel Dive
"You have a whole bunch of capable product sets out there,” Toth said. “They all do something a little bit different.”
Toth, whose firm spearheaded one of the takeouts Zoom named, said businesses often displace their vendors because of their own internal missteps. Sometimes they fail to properly train their employees on the technology. In other cases, they don’t follow a mature procurement process. But when IT teams don’t lay a proper operational foundation for the technology, they’re often looking to make a change when the contract is up for renewal.
“We go into a place and most of the time find just as many organizational issues as we do technological issues, but the technology vendor gets it on the chin, because someone's got to be the scapegoat,” Toth said.
Moreover, an enterprise contains multiple stakeholders in the IT purchasing process, and they may disagree on their preferred vendor. Toth said companies have a dedicated contact center leader, while others roll the contact center under the CIO. Then CEOs ask to join sales calls because a CCaaS platform could affect their staffing.
"A lot of the vendors are going super hard on one person as their champion,” Toth said. “You need to actually run a process and talk to your organization and figure out the cultural problems and the policy problems that you have, because you think this is technical when most of the time it isn't."
