What Should Avaya Do Next?

B. Shimmin
B. Shimmin

Summary Bullets:

  • Assuming Avaya exits Chapter 11 bankruptcy in the next few months, what should the company do to succeed going forward? We entertain five changes we feel necessary for Avaya not just to continue, but to thrive within the rapidly changing unified communications and collaboration market.
  • We emphasize a focus on the public cloud and advanced analytics as well as a return to a more unified product portfolio.

A few days have passed now since I returned from my visit with Avaya at its annual user conference (Avaya Engage) last week in Las Vegas, Nevada. And my opinion hasn’t changed substantially. Avaya is in trouble. However, there is light at the end of the tunnel of its self-administered Chapter 11 filing with the bankruptcy courts. The question, of course, concerns the type of light that awaits Avaya. Will it be the warming rays of our modest sun, or will it be the blinding glare of an oncoming train? I believe it will be the former. I believe that Avaya can succeed long-term within a marketplace that is undergoing a highly disruptive change from hardware to software and services.

But I think the Avaya that will emerge from Chapter 11 ‘should’ look comparatively different than the company that has struggled over the past few years to find relevance with buyers interested more in how the cloud works than in how many ports are available on a switch or IPX. From my vantage point, here are the top five changes I think will help Avaya not just to survive, but to thrive in the coming months.

  1. Let its data and networking business go. Yes, there are some extremely valuable assets at play here, particularly with regards to software-defined networking and analytics-driven data center orchestration. However, there are some serious heavy hitters already well ensconced here, and with this being such a small part of Avaya’s overall bottom line, I think the company is better off leaving networking to those rivals and focusing on what it knows and does best.
  2. Buy Spoken Communications. As I outlined in an earlier GlobalData report, Avaya buying cloud contact center provider and current partner Spoken Communications would be akin to IBM’s acquisition of SoftLayer. It would instantly give the vendor global credibility as a cloud platform player. This on its own is the most important move available to Avaya in my opinion.
  3. Double down on analytics-driven professional services. You may not know this, but Avaya employs several well-respected data scientists within its professional services group. Not just within the contact center but beyond, Avaya is well equipped to tackle analytics at the point of decision, not within a third-party BI solution, but within actual business processes. If you look at Avaya’s push into healthcare via IoT, you can see a tremendous upside here, assuming Avaya can continue to invest in the sciences as they apply to both descriptive and prescriptive analytics.
  4. Bring Zang back in-house. Avaya’s decision to break Zang out as its own business entity, as a self-sufficient platform-as-a-service (PaaS), was the right one. It allowed the vendor to move quickly. Instead of rolling out two releases per 24 months, Zang is rolling out regular Agile sprint releases and leaping far ahead of Avaya’s in-house developers in terms of adopting modern, cloud-centric approaches such as containerization. However, the longer Zang remains separate, the less value it will bring back to Avaya in terms of modernizing Avaya’s core customer base. It must therefore be brought back into Avaya proper as the core PaaS for all Avaya solutions. Otherwise, Avaya risks losing sight of this valuable jewel.
  5. Simplify, simplify, simplify. By that I mean, once Zang is operating as the uniting PaaS running across Spoken’s global cadre of data centers, Avaya should – as a finishing touch – ditch its bifurcated go-to-market approach, which currently differentiates between customers of different sizes and means of purchase (direct vs. indirect). Avaya needs one code tree per capability (collaboration, contact center, etc.) which can follow customers as they evolve. This will drive home Avaya’s existing efforts to streamline its portfolio around Breeze, Equinox and Oceana.

Certainly, these changes would greatly alter Avaya, but I think for the better. Avaya’s long-standing history within the UC space was won through its own engineering fortitude and demonstrable value with customers. There’s no reason that fine legacy – like the company itself – can’t evolve to meet current market demands.

What do you think?

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