The Big Story

Connect takes off

AWS is quickly becoming a juggernaut in the rush among enterprises to digitize the call center.

After being disappointed by the options available in the marketplace, the company decided to build its own software. That would eventually become Connect, which launched publicly in 2017.

Now, it's one of the fastest-growing services in AWS history, according to Vice President Larry Augustin.

• "There's years of work, knowledge and understanding behind this. It isn't like we just got into the space overnight," he told Protocol.
• Sales reportedly grew 150% in 2020 to $175 million; Augustin declined to provide financial figures.

Those numbers still put Connect behind rivals. Five9, 8x8 and Genesys have more mature offerings, while Connect is still at an early stage. But it's easy to see how the company could quickly close that gap.

• The service can be set up remarkably quickly, requiring only an internet connection and a headset, customers said. Protocol verified this through a demo.
• That's a big paradigm shift for the industry that others are trying to mimic. In the past, call center software was defined by complex, multi-year contracts and on-premise deployments that could take months. AWS says it can prop up fully cloud-enabled customer service centers in a month or less.
• Over the first two months of the pandemic, AWS said it onboarded 5,000 new contact centers, ranging from global companies to small businesses.
• The application allows users to drag and drop modules to create an interactive voice response system, industry jargon for the prompts customers hear once they call in. While that can make set-up easy for tech-forward companies, less digitally-native firms and those with complex use cases could struggle.
• The backing of the cloud also lets customers scale usage as needed, which can lead to cost savings over legacy vendors which charge upfront for licenses. Intuit, for example, ups its Connect usage during tax season then decreases it during other, less busy parts of the year, per Augustin.
• And users also have the full spectrum of AWS capabilities to tap into, like Polly, a text-to-speech generator, or Contact Lens, which uses AI to analyze conversations for sentiment and other information. Even contact-center competitors are tapping AWS for its AI capabilities.

Amazon is expanding fast here, but there's room for others. Industry leaders don't expect to compete too directly with AWS.

• The company is getting traction "mostly at the very high end of the market," Five9 CEO Rowan Trollope said. "If we're both in a deal at the final stages, something has gone wrong. In our market, they tend to get eliminated very quickly."
• But Connect is also being used by small businesses. One of those is Traeger Pellet Grills. The company was able to replicate its previous setup in Connect in less than two days, per Bryan Teggart, the head of customer experience operations and analytics.
• "No one believes that it's that easy, that you can just sign up for an AWS account and in an hour and a half be taking phone calls," he told Protocol. "I think they're having a hard time getting customers to realize that."

AWS faces some hurdles. Many large organizations, for example, have invested significantly in their existing call center software over the years to customize it for their specific business needs.

• "There's often a little bit of skepticism at the start," said Augustin. "Explaining to people that you can build that out in Connect in a much shorter time, sometimes people have to see that to believe it."
• Gartner also cautioned that Connect "customers looking to deploy highly complex/bespoke use cases" would need to integrate outside applications into the platform, which may drive some companies to other providers.
• Trollope agreed: "Amazon's feature set is really not there, they need a lot of development to build a whole contact center offer."

Business is booming all around. Many contact-center software companies have equally robust offerings. They just need to move more customers to the cloud.

• Genesys, for example, is ranked as a "leader" in the industry by Gartner. Bookings for its cloud service rose 130% during the last fiscal year, according to the company.
• And while AWS touts its AI capabilities, Genesys is also investing in the tech. That, combined with its strong position as a legacy contact center provider, are driving customer adoption, according to Valoir analysts.

Amazon has the tendency to cause mass hysteria when it enters a new market. Some of it is warranted, some of it isn't. (See health care or video games.)

• But as the world's leading cloud provider, AWS already has inroads with many of the largest businesses, as well as slews of small to medium-sized businesses.
• And the company isn't as limited as others in how much it can invest.

Over the long term, client relationships will prove crucial. Genesys and Five9 have much longer-standing relationships with customers. And it's an area that organizations are hesitant to overhaul given the vital role the call center plays in connecting with customers. But the attention AWS is putting on growing Connect should worry rivals.

— Joe Williams

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Around the Enterprise

• It's been a rough few weeks for Microsoft's cloud. A DNS-related outage Thursday took out a wide swath of its services following another Teams incident in mid-March.
• Enterprise startups built around open source face an existential crisis. Tomasz Tunguz of Redpoint Ventures lays out the dilemma for such startups: There's short-term money on premises, but the long-term opportunity is in the cloud.
• Gerrit Kazmaier, the former president of SAP, is joining Google Cloud. He'll oversee its database and data analytics operations.
• The government of Israel is considering AWS and Google for a big cloud contract, displacing its previous work with Microsoft and Oracle, according to the Times of Israel.
• TSMC promised to invest $100 billion over the next three years in its chip-making operation, and it will also cancel price cuts as demand for chips explodes worldwide.
• The U.S. Army is preparing its cloud modernization strategy. It won't wait for a decision on the contested JEDI contract.