Avaya: A Safer Pair of Hands?

UC Today spoke to Jim Chirico to find out why he thinks Avaya are a safer bet than the new cloud vendors

Avaya: A Safer Pair of Hands?

“Avaya is more recognised as a legacy hardware company”

After his first full year in the role as CEO Jim Chirico is under no illusions about Avaya’s perception in the market. One of the most recognisable communications brands globally, Avaya’s success had been traditionally within the realm of premise-based systems. This is something that Jim is looking to change.

Jim details various plans that Avaya are hoping can change that perception. They are investing heavily in emerging technologies, such as artificial intelligence, and are very keen to utilise those technologies within real world use cases. As well as emerging tech, they are heavily focused on emerging talent. Their global scheme for sales graduates saw the first year’s class graduate last month and with next year’s trainees already progressing it is a clear demonstration of Avaya’s faith in the next generation.

The Substance

Investing in new sales talent and emerging technologies will only go so far, if the elephant in the room is not addressed, and Jim is clear on his position there too. “I am not satisfied with where we are with cloud – If we’re not seeing at least 25 per cent of our revenue coming from the cloud in the next two years, we’ve failed.”

It’s an ambitious target. Currently Avaya’s cloud based revenues are significantly lower. Jim explains that a heavy focus will continue to be placed on enhancing their cloud proposition globally. We brought you the news that they have launched the Avaya Communications Cloud in Germany, their first public cloud offering now available outside of the USA. Avaya will also be looking to improve their cloud offering to SME’s. “We have a very strong IP Office cloud portfolio but it doesn’t get down to the single digit teams, so there is a market opportunity there which we haven’t capitalised on.”

The acquisition of Spoken, a more enterprise level contact cloud, will be leveraged by Avaya to see its capabilities expanded and made applicable to smaller organisations in the market.

In the enterprise Jim is more satisfied with the position of their public cloud offering and also reveals plans for a new virtualised public cloud which will made available to large organisations, with the Spoken platform covering multi-channel customer requirements in the contact centre.

“Things are in motion, and they will be bought to market in this fiscal year. I think if we are sitting here a year from now, I think it will be a completely different conversation.”

Cloud Competition

The cloud market in terms of UCaaS, CCaaS and CPaaS has been rapidly adopted by emerging players and new start-ups. Larger existing players have snapped up various businesses to add to their more legacy portfolios, as Avaya have with Spoken, and Cisco did with BroadSoft. Jim sees this consolidation and acquisition trend continuing.

“I came out of the disk drive industry when there were 26 disk drive manufacturers and today there are basically two. I am not suggesting you are going to see two, but I don’t think you will see as many as there are today.”

Pure, or native, cloud providers have sprouted and grown rapidly, capturing much of the emerging market, in the cloud communications space. CCaaS and UCaaS competitors such Five9, 8×8 and RingCentral all have market valuations which are amplified by their cloud focused business models. “If you look at a lot of the pure play guys, whose valuations are through the roof, they are not generating a lot of cash. Their business models are not very strong.”

Customer confidence in the disruptive businesses that have entered the space over the last 5 to10 years is critical to their success, but Jim is more confident in Avaya’s own position.

“You saw a lot of start-ups and new businesses come into this space, and there are still more. But I don’t think they can afford to do it long term. They don’t own their technology, we do, and they don’t have a large install base, we do.”

Jim explains that entering into a new or emerging market is one thing, but to maintain your status and then eventually to lead a market, as Avaya hope to do, are very different things. He believes Avaya’s current position is the stronger.

“Our incumbent base and more importantly our financial strength really sees us having the capability to see this through. We are one of only a few, frankly, that I can see taking this all the way. It will be interesting to see how the landscape unfolds.”

It certainly will be interesting to see. Jim Chirico, as you would expect, is clearly backing Avaya to see off the cloud competition.

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