After a long restructuring, Avaya now has its two core next-gen offerings available, and has a systematic and well thought out plan to take them to market, leveraging both its channel and internal resources better than in the past. They still have to execute on these better than in the past however.
SAN DIEGO — Avaya believes that it has reached a critical nexus in its long seven-year journey to transform itself from a traditional hardware infrastructure player — a threatened commodity in an IT world moving to software and services — to a cutting edge IT leader. In so doing, they think they can escape the trap they have been in, where they had respected legacy products, but also a small share of the UCC and networking markets compared to powerhouse Cisco. At its Avaya Executive Partner Forum here this week, the company outlined how it believes its plans will come to fruition this year. However they stressed they still have to execute effectively — not always a company strength in the past. They also need to mobilize partners more effectively, getting them to lead with their new offerings, becoming much stronger in the mid-market and the cloud, and supporting them with effective marketing and channel policies. If the go-to-market strategy fails, the company acknowledged the entire strategy will fail as well.
“About seven years ago, at the advent of Web 2.0, we realized there was a need for change,” Avaya CEO Kevin Kennedy told the partners in his keynote. “In particular, the decision to diversify to add a mid-market focus was made because our concentration of profits was coming from about 200 customers. That was a springboard for change in the company.”
Kennedy said Avaya focused on four terms in the reinvention – open, increasingly mobile, enterprise, and engagement beyond just a flat communications layer.
“What transpired was a disassembly and reassembly of almost the entire company,” he said.
The company struggled at times during this transition, as the decline of infrastructure sales whacked top line revenue and inevitably lowered maintenance revenues as well. Flat or falling numbers led to recurring senior executive churn. These conditions were common throughout the sector, and not unique to Avaya, but the sight of new C level execs almost every year at major events was demoralizing.
Kennedy said that the company is now poised for significant growth.
“We were a $4 billion company after Q4 of Fiscal Year 2015, down from $5.2 billion in FY 2010,” Kennedy said. “But revenue per employee increased from $270,000 to $342,000. Our statement that we have evolved to a software and services company is supported by this.” Software and services revenue rose from 63 to 72 per cent over the same period — and is around 80 per cent in the US. By the end of the year, everything that Avaya sells will be purchaseable in a software or an as-a-service form.
Kennedy compared the company’s flagship enterprise communications products to the long distance market.
“There will be a predictable ebb year after year for many, many years,” he said. “That is why we are doubling down on contact centre, workflow automation and networking.”
Avaya’s Engagement Development Platform – a rather clunky term for their workflow automation engine that several executives admitted could use a rebranding from the marketing department — is at the centre of Avaya’s next-generation solution sets.
“We want to be that hub to integrate disparate technologies, because in a world of engagement, communities will dictate what technologies they want,” Kennedy said. “The notion of the co-existence of collaboration tools is increasing, with 15 to 20 per cent of customers I meet having rallied around Google Docs as their path forward. That means our big bet here is continuing to numerically play out.”
Pierre-Paul Allard, senior vice president of Worldwide Sales and President of Global Field Operations for Avaya, stressed that the Engagement Development Platform is very different from the traditional infrastructure business.
“We still sell a lot of phones, but it’s a dying business,” he said. “There’s still break-fix, but we have to transition. It’s now about how we can serve a customer on a platform of their choice, through a very strong partner-led play.”
The Engagement Development Platform is a middleware layer which enables applications.
“The game is about applications now,” Allard said. “We have become an application enablement engine. That’s what we do – one middleware layer that enables applications. Everything else is just resources The platform is the force that drives you up 1, 2 3 layers with customers. For every dollar spent on middleware, there’s 21 dollars of other stuff to be sold – 12 dollars of which are partner-led services.”
“We are starting to see very significant progress with the Engagement Development Platform, said Gary E. Barnett, SVP & GM, Engagement Solutions at Avaya. “We have been seeing transactions close in the last 90-120 days, at over one million dollars. Instead of seeing one dollar of technology to one dollar of services were are seeing one dollar to ten dollars of services. The only way you can get it is virtualized, so it’s cloud-ready.”
Along with the new platform, Avaya sees its second disruptive investment on the networking front, specifically its fabric layer.
“We have moved to a world where applications have defined specific networking resources that will be used,” Kennedy said. “Applications pull networking. The networking industry, on the other hand, remains overly complex. A network has to be implemented hop by hop, which is very hard to troubleshoot, creating debates between carriers and customers. So we decided to take the hop-by-hop configuration out of it.”
“The fabric layer is software-defined networking [SDN],” Allard said in his keynote. We lead the market – just no one knows about it!!” He said Avaya now has over 500 deployments of large-sized [enterprise and midmarket] fabric.
“There are partners out there selling and winning competitive advantage through sales of fabric,” Allard added. “We have a major competitive advantage. None of our competitors can bring together the fabric layer and evolve it to SDN like we do. It’s 10 times the speed for a third of the cost. Any time you can get a customer into a proof of concept or a pilot with this, you will win.”
Jean Turgeon, Avaya’s VP, Chief Technologist for Software Defined Architecture, Worldwide Sales, gave partners an enthusiastic endorsement of the fabric’s revolutionary potential.
“We provide business workflow automation — but the old network underneath it is NOT automated.” he said. “It means we can’t move at the business speed we need and gain the agility. It’s great to automate business workflows, but take a second look at the infrastructure supporting it. You must have an automated network to move forward.
“All our competitors are focused on the data centre, but that’s not where people sit to access services,” Turgeon continued. “We provide a bridge and this is where the partner community is so important. It’s a unique opportunity to bridge client-server into a new services-based architecture better than any of our competitors.”
Sales and marketing resources have also been marshalled behind the initiative. The marketing strategies now emphasize joint go-to-marketing initiatives with partners, with an emphasis on generating case studies for customers, ideally from the customer themselves indicating how the Avaya solution was a strong investment for them. Avaya’s channel programs are being restructured to direct more resources to strategic areas as well.
“We’ve hired about 100 network sales specialists globally distributed, and have a lot of case studies to share with you,” Turgeon said. “Now we need the partner community to come help us scale.”
So with Avaya’s two core next-gen offerings actually available now, and the company having a rigorous strategy to sell and market them, the future looks bright. In the end however, it will come down to executing this strategy better than Avaya has in the past.
“I think this year is where all the calendar stars align all together,” Barnett said. “But none of the solution stars will come together if we don’t have the right go-to-market. It won’t matter. It’s all about pure execution.”