Communications platform Twilio is best known as a high-growth tech stock, and since Tuesday also as the prospective acquirer of email communications provider SendGrid in a $2 billion deal. To really understand what it does, you need to be a technologist and preferably a software developer. Its announcements yesterday for the opening of its Signal conference play to that same crowd — a chatbot toolkit called AutoPilot and a payment integration to Stripe.
But as I sat there in the keynote audience, it struck me that Twilio is an agent of a much wider trend, one that matters as much to business leaders as it does to their IT colleagues. This is a trend that for the past seven years or so I've been calling frictionless enterprise, and it was notable how often that f-word was mentioned throughout the morning session. Here's how we define it:
Frictionless enterprise is a business architecture that optimizes the use of connected digital technologies to strip out cost, delay and opacity when harnessing resources and delivering outcomes. Simply put, it erases the barriers that get in the way of getting things done.
Eliminating barriers to frictionless enterprise
The Twilio keynote saw a trio of barriers being eliminated in favor of frictionless operation. First of all, Twilio co-founder and CEO Jeff Lawson spoke about his own company's mission to make it easy for developers to harness communications functions in the form of ready-to-use APIs, making those functions more widely available than ever before:
The great thing about APIs is that they democratize the ability to build the future ... That's why at Twilio we concentrate on removing all the friction from using APIs.
Then Ken Natoli, Director of Delivery Technology at Domino's, spoke about how the pizza chain uses the Twilio platform to make it easy for customers to order pizza and track its delivery. When it's out for delivery, people want that information straight away, without the extra step of having to open up an email or fire up an app, he explains:
You want to figure out when that pizza is going to get to you, but that's more time sensitive. We saw a shift. Our customers wanted a way to get that information with less friction.
That was a motivator for us to go and develop our more advanced alerting on Amazon, Alexa, SMS and push notifications.
Finally John Collison, co-founder and President of payment network Stripe, used the exact same word when talking about the importance to its merchants of removing barriers to taking payments so that they can close the sale:
When we talk to our customers, what we hear very loudly is conversion, conversion, conversion. If you want to increase revenue, what is the simplest way to do it? It's just, hand off all that friction that tends to exist in the checkout process.
Imagine, you have a customer on the phone, you're talking to them, it's an incredibly intimate touch point. Obviously what you might want to do is actually finish the transaction, finish the sale, finish the upgrade, whatever, right then and there.
These three examples show why the phrase is frictionless enterprise — it's about getting the job done, whether it's the developer delivering an application, the customer getting some information or the merchant closing a sale. The technology is merely the enabler, it's the outcome that matters. That's why we position frictionless enterprise as the end goal of digital transformation.
Twilio's 'Great Communications Renaissance'
Nevertheless, you can't have frictionless enterprise without the underlying technology, and one of the fundamental tenets we've always emphasized about modern digital technology is that it's connected.
Here, Twilio is in its element, and Lawson opened his keynote with the proclamation that the human race is entering the 'Great Communications Renaissance':
Communications is changing humanity ... how we engage with each other as human beings, how we engage with companies and customers ... Communications is changing every aspect of human life.
Implicit in this message is the role of Twilio as a next-generation technology platform underpinning this transformative renaissance. Later during the session, the company celebrated general availability of its Flex contact center PaaS, which it launched earlier this year. Entirely built using APIs, both at the functional layer and at the user interface, the Flex Platform-as-a-Service (PaaS) represents a new approach to building applications that supersedes earlier Software-as-a-Service (SaaS), says Lawson:
We think this is an entirely new form of software. We believe that application platforms have the ability to transform the software industry again... I think this is going to change the software industry for ever.
E-commerce platform Shopify is an early release customer that is already fully live in production on Flex, just five months after first taking the decision to make the move. Chris Wilson, its Director of Merchant Support Technical Operations, praises its flexibility:
I would say this is the hybrid of [build or buy]. We're getting something that's out of the box that gets us running really fast, and then it gives us complete control over it. So as opposed to us having to start from scratch and build all of these things, we don't build components that may not have been there before. We get that for free. That allows us to spend more time tailoring it to exactly what we need.
At the same time, Flex has features in common with SaaS, such as the ability to start small and scale up, along with the option of an elastic pricing model based on usage. This is consistent with our view of the XaaS business model enabled by connected digital technologies, while the underlying architecture maps to the headless/serverless pattern we see starting to emerge.
The final announcement of the keynote was the launch of AutoPilot, a packaged AI service that allows developers to add customizable chatbots to a contact center, with full hand-off to human agents as required during sessions. We agree with Twilio that the future engagement model for enterprise applications is conversational, while Lawson's suggestion that call center agents will become an important training resource for AI reminded us of the concept of coaching networks that we discussed earlier this year.
We see a lot to like in Twilio's vision of the Great Communications Renaissance, given how closely it maps to our own frictionless enterprise framework. But there are two aspects that give us pause for thought.
First of all, we can't help noticing the Salesforce parallels in Twilio's rejection of an earlier generation of application architecture. It was almost as though APIs have become the new 'no software' mantra — although the acquisition of MuleSoft is bringing more of an API-first mindset to Salesforce, too.
There were other Salesforce echoes, such as Twilio Quest, a gamified interactive training scheme that reminded us of Trailhead, or the noble commitment to achieving gender parity in the Twilio workforce by 2023, along with at least 30% from 'underrepresented populations'. Though both initiatives are to be welcomed.
In targeting the contact center, Twilio is certainly going up against Salesforce, and no doubt thinks a lot about its rival. But as independent analyst Esteban Kolsky commented in a short discussion we had after the keynote, Twilio doesn't have any of the enterprise sales heft of Salesforce. There's a reason only developers have heard of Twilio.
Secondly, there was a jarring moment for me during the keynote when Lawson talked about two forms of communication — collaboration and engagement — and implied that collaboration isn't important because it's not a differentiator, saying:
Engagement, that's your brand, that's your voice. How you talk to your customers is how you're differentiating yourself.
While engagement is crucial, it doesn't happen in isolation. Internal collaboration is essential to follow through on delivering what has been promised to customers, and digital collaboration is a fundamental component of frictionless enterprise. In an increasingly distributed and digitally connected world, much of that collaboration requires a communications infrastructure. Therefore I suspect that Twilio is going to get pulled into internal collaboration processes a lot more than Lawson suspects. Indeed, I spoke to one customer today that rolled out its Twilio-based contact center application to its HR team first.