On February 14, 2023, Avaya announced they were going into bankruptcy, their second filing since 2017. According to Avaya, “the financial restructuring will give the company improved financial flexibility to boost up its investment in communications products, solutions and services for customers”, including their Avaya Experience Platform, its cloud-based Contact Center offering.
However, bankruptcy can often make a business's customers nervous about whether or not existing services and contracts will continue during restructuring. Here's what customers need to consider and how to respond.
So What are Customers to Do?
From my perspective, this particular bankruptcy is different than the one in 2017, which took close to a year to recover from, with this one expected at 60 to 90 days.
Avaya is, of course, a company that is rooted in the premises-based area and is responding with cloud offerings. Other premise-based competitors include Mitel (including its recent announcement of an acquisition of Unify), Cisco, NEC, and Genesys among others. Latest trends now point to the cloud and UCaaS, CCaaS and CPaaS.
This could be an excellent time to be an Avaya customer, and here is why:
- Avaya should be offering strong incentives to stay with Avaya and upgrade within the Avaya family. Protecting the Avaya base is critical to them, and customers can leverage this when looking to upgrade.
- Several competitors are offering ‘no cost’ transitions for 90 days to one year for base features and functions. Therefore, Avaya needs to make sure customers have no incentive to take advantage of these no-cost transitions.
- According to Avaya, many of their customers want to adopt innovative new functionality without creating major business disruption, and the company says multi-channel contact center from the cloud, including email, chat, and text, can be added to its current customers’ premises-based contact centers.
- By staying with Avaya, customers can maintain features and functionality specific only to Avaya. For example, Avaya’s ‘bridged appearances’ feature is lost when migrating to several UCaaS providers.
- Avaya should be very competitive to win new business from its competitors. Many companies during a Chapter 11 period are ‘overshadowed’ by the state of their bankruptcy and even 12-18 months after emerging from bankruptcy
- Customers can take advantage of these aggressive pricing options (and competitors offering incentives moving to them)
If you are a customer of Avaya, I would encourage you to:
- Contact Avaya to find out how their bankruptcy filing will affect your account, service, or contract
- Consider exploring Avaya and alternative vendors or service providers (a.k.a., a Strategic Plan, read on)
- Review your contracts with Avaya to understand your rights and obligations, including any potential liabilities or termination clauses
- Stay ‘on top’ of news and updates related to Avaya's bankruptcy and any potential restructuring or reorganization plans post-bankruptcy
- Seek advice from legal, financial, or other professional advisors as necessary to protect your interests and mitigate any potential risks or losses.
Your Strategic Plan
Any enterprise user, in my opinion, should consider a strategic plan for your underlying IT and UC and contact center infrastructure. Any time a company that an enterprise must rely on as a part of their core business files for, it is an excellent time to weigh your options. The strategic plan's objectives should include the following:
- Managing costs for your current Avaya (or other vendor) infrastructure - consider costs, savings, managed costs
- Minimize product end of life and risks to the organization (any vendor)
- Due diligence for best "fit" for organization
- Help facilitate funding for product upgrade or replacement
- Stay competitive leveraging evolving market technology, especially anything to do with customer experience (CX)
- Transition the organization to the latest technology available that will help differentiate your organization
Your strategic plan should involve a specific nine step process, as follows:
1. Identify and Review Your Corporate and IT Strategic Plans. Identifying and reviewing your corporate and IT strategic plans will help identify and facilitate where your enterprise is headed in the next 2-5 years and will help tie in what technologies may make most sense for your organization. For example, if customer experience is front and center, then an upgraded Contact Center (premises) or CCaaS application with new tools available, including AI may make a lot of sense for your enterprise.
2. Identify What Technologies Should Be on Your Roadmap. Identify which technologies may be most practical for your organization. Could it be the UC, UCaaS, contact center or CCaaS, mobile workers, CPaaS, or other?
3. Closely Watch the Latest Announcements from Avaya (and others). Review the latest announcements from Avaya and determine how they could benefit your organization. If an announcement for a particular technology is significant, you can baseline that to your internal plans and see how that could tie in. Also consider major announcements about end user support whether direct or through a VAR and determine if that aligns with your expectations.
4. Obtain an NDA From Avaya and Go Deep (12 – 24 Months If Possible). Under an NDA, obtain which plans Avaya has and where they are headed with UC/UCaaS, contact center/CCaaS, and adjoining technologies. This will provide you Avaya’s perspective of their plans and alignment with your organization’s plans. Ask
- a. When particular releases will be available and when desired features and functions are available.
- b. If you can include such releases as a part of your upgrade platform.
- c. If you migrate from premises to a UCaaS or CCaaS platform within the Avaya family at some point, what incentives can they offer you?
5. Build A Pro-Forma Specification of Your Short (12 months) and Medium Term (24-36 Month) Requirements for Budgetary Purposes. Building a pro-forma specification for 12-36 months out will provide Avaya (and others) with enough financial detail for requesting CAPEX / OPEX budgetary requests for next the fiscal year and 2 more years out.
6. Ensure Your Current Infrastructure Is UC Ready. Consider all intra and inter-building cabling, Layer 3 switching, WAN bandwidth available are ready for UC/UCaaS, including all voice, video, data, and now extended technologies that require additional bandwidth.
7. Identify Areas for ROI. Many of our clients grab onto the notion of balancing any CAPEX or increased OPEX costs with ROI opportunities. For one client we were able to save them $1.5M annually leveraging SIP trunking. In another instance we identified $8.2M annually in hard dollar savings for a $10M Contact Center premises opportunity, paying for the entire system in less than 15 months. In a third case, we identified $3.2M savings annually for a $2M annual UCaaS and CCaaS spend. Providing these kinds of numbers to executive management goes a long way in regard to getting approvals for any major CAPEX or OPEX investments for the same of next fiscal year.
8. Document Your Plan, Present and Get Buy-In from CxO Management. Document your plan in the form of a report and slide deck to present to management. Consider your organization’s objectives, capital/non-capital monies available, options available, project objectives, any risks associated with each, general timeline for implementation, etc. Help provide enough documentation and support to help management leverage the funding needed for a system upgrade or replacement.
Develop a timeline, as a part of your plan, to include Avaya announcements, your due diligence, getting the assistance of industry experts when necessary, logistics required for a new system migration and UC readiness, and use of the newer technologies available that can (a) facilitate your organization's effectiveness, and (b) differentiate your organization from others; and one-time and ongoing costs.
9. When Ready to Upgrade, Get More Than One Bid. This is an excellent time to be an Avaya customer (or other vendor if Avaya is also bidding) in my opinion. When making a significant capital purchase or OPEX increase (cloud), a competitive bid via an RFI or RFP will always facilitate best pricing from any vendor. Get 2-3 bids and weigh advantages and disadvantages of each in terms of features and functions, services offered, SLAs (yes, a five 9s model, 99.999% uptime reliability, is still critical to most enterprises in my experience). Your ‘shopping’ via RFP will give you the results you will need in determining what services, technologies, and costs are available that will match closest to you and your organization’s vision and culture.
Summary and Conclusions
This is an interesting and excellent time to be an enterprise customer. With the dynamics of mergers and acquisitions, the rise of the UCaaS, CCaaS, CPaaS, AI, APIs, video/collaboration now mainstream, and this new age of Customer Experience, leveraging new technologies and integrating them with your culture to enhance your competitive edge are all critical considerations for enterprise customers.
We are hoping that Avaya's chapter 11 status is short-lived. I would include Avaya in any procurement RFP (upgrade within Avaya or new Avaya win) while closely watching their financials and growth over the next six to 18 months.
Enterprise customers need a competitive environment, especially in this age of mergers and acquisitions, as choices are always best for any enterprise organization. We are all hoping for Avaya to emerge as one whole company, post-bankruptcy, and continue its ’transformation’ to stay a viable option in our market.