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Change in the Weather, Changes at Avaya

A very small group of industry analysts had the opportunity to hear from Avaya execs and channel partners last week in Cancun, where Avaya held its annual Executive Partner Forum. As the weather changed from hot and sunny to hot and cloudy, to torrential downpours and wind gusts, attendees were also witnessing the changes at Avaya in several key ways. We were introduced to a new team, new faces, and new energy, as well as a new focus on the midmarket and simplicity (I couldn't help but notice the similarity to the recent Cisco Collaboration Summit where there was also a new management team and new focus on the midmarket and simplicity).

Pierre-Paul Allard, SVP Worldwide Sales and President Global Field Operations, who replaced Tom Mitchell, acknowledged immediately that "Fiscal year 2013 was a bit of a bumpy ride," but said Avaya came out of the year well, and even overtook Cisco in terms of gross margin. While Avaya was focused on preserving its cash during the past few years of economic recession, the company is now focused on growth.

For many years, I've complained that at industry events, Avaya spent too much time discussing its technology, notably the value of SIP and session management, without discussing the more important issues of business value, use cases, and the role of the customer. I was pleased to realize that I hadn't heard the term "SIP" until several hours into the presentations, and I didn't hear "session management" until one of the analysts asked about it.

Allard was a breath of fresh air. Within the first few minutes of his presentation, he noted the changes in the company, claiming, "Every aspect of our business has changed--how we go to market has changed." Allard added, "It's about outcomes and how they drive value for your customers."

He urged the channel partners in the audience to transform themselves, and when meeting with customers to "go from products to business outcomes." When discussing the transformation of Avaya, Allard told the partners, "Avaya has become customer centric--everything starts from the customer. Let the customer pull you into the game. The customer is our destination, which pulls us to success." This is a far cry from the usual Avaya discussions that focus on technology first.

As mentioned, another theme was simplicity and simplifying operations. Allard stated, "Six months ago, our operations were complex--they were hard to bundle, hard to structure, and were very enterprise focused." Richard Steranka, VP, Worldwide Partner Organization noted, "We have serious process complexity. There are several issues to solve, including having multiple systems to access for quoting and pricing. Avaya is turning this upside down to drive ease of doing business."

Acknowledging that Avaya has dozens of pricing models, Steranka told the partner audience that the OneSource program will be rolled out in the US in January to improve the processes related to creating quotes (it has already been rolled out in other regions).

The other big change, which is actually a continuation of a change that began a year ago, is the focus on the midmarket. Allard stated, "If you're a hammer, everything looks like a nail. Until recently, if you're Avaya, everything looked like an enterprise." Since IP Office 8.0, and with the new 9.0 release, the midmarket is a big focus for both Avaya and its partners. Steranka encouraged the channel partners to enter the midmarket and SMB space, where Avaya's coverage is less than 5% of the overall potential opportunity. He stated that Avaya will grow the midmarket through coverage, and told the partners, "You cannot win if you don't show up."

Avaya claims that the TCO for IP Office is 20-50% lower than the Cisco Business Edition 6000, and 32% lower than ShoreTel. During a Q&A with analysts and channel partners, Ian Pugh of Gsolutionz stated that until last year, he struggled to compete against companies like ShoreTel that had strong midmarket offers. With IP Office, Pugh now has a strong competitive offering and has seen sales and revenues increase. However, Avaya and its partners acknowledge that there's still work to be done, as IP Office is still lacking a good contact center story and relies on third-party vendors such as Zeacom to provide more complete contact center capabilities.

Simplification was another theme at the event. Mark Wilson, the new Chief Marketing Officer, discussed how Avaya is simplifying its operations and marketing efforts. The company is more focused on listening to customers and "the Voice of the Customer," to increase brand awareness and preference for Avaya among buyers. Wilson said to expect to see a revamped website at the end of the year, as well as a new advertising campaign emphasizing use cases. Use cases--my ears perked up! This is the first time in years that I heard Avaya focus on use cases, and as I tweeted during the event: Let the Hallelujah chorus begin.

I heard many of the messages I had hoped to hear but haven't heard from Avaya in many years. I'm still cautiously optimistic, as it's always about execution and how well Avaya will follow through with new initiatives. Avaya also needs to get its story out to more partners and customers, many of whom are still concerned about recent financial challenges and executive shakeups. I left Cancun feeling much more positive about Avaya than I have in a long time. The company still has many challenges to overcome, but like my final day in Cancun, hopefully there'll be more sunny skies.

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