Last week, Unify CEO Dean Douglas shocked the industry by announcing the company would be reducing its workforce by almost 50%. The company will cut 3,800 jobs of its existing 7,700 headcount as it shifts its strategy to a channel-driven, software-first company. This is part of the ongoing transformation of the company formerly known as Siemens Enterprise Communications that went through a rebrand in October and at the same time announced Ansible, its upcoming flagship product.
While I wasn't surprised they were cutting heads, I was surprised at the magnitude of the layoffs. Since then though, I've had some time to think about what was announced and I wanted to share my thoughts on Douglas' bold move.
First, I think it's pretty clear that change is needed at Unify. In Michael Finneran's blog, he points out some of the struggles that Siemens Enterprise has had in growing share, particularly in North America. There's an expression that the definition of insanity is trying the same thing multiple times but expecting a different result. What the company was doing wasn't working, and continuing to do the same thing would be by definition, insane, hence change is not only good but required.
The company has actually had some great innovation over the years--OpenScape was the first true UC product; the company had partnered with Microsoft when OCS was launched; the HiPath 8000 was the first true software platform. But despite some cool innovation, the company continued to lose share.
Why? Well there's no single answer to that. Part of the problem was that even though the company had built some great software platforms, the sales force was hardware-centric and stuck in a legacy world. Also, the channel dominates some markets like North America, and much of what Siemens Enterprise did was direct. Those two factors alone warrant change.
Channel transformation has to be at the top of the Unify priority list. I believe this is why the executive team is heavy on channel expertise. Dean Douglas joined the company from Westcon, one of the premier distributors in the industry today. The new EVP of channels, Jon Pritchard, has a pedigree that includes Comstor and Ingram Micro. Additionally, CMO Bill Hurley also came from Westcon.
Attracting new channel partners means you can't be competing with them, and that requires Unify to completely retool how it goes to market. The clean slate created from the layoffs means Unify can put the right programs in place and make channel-first part of its culture instead of something it has to phase in over time.
The next question is the size of the layoffs. When cutting headcount, it's better to do what you need to do now and get it over with. Since the announcement, I talked to some people that were at Lucent and Nortel when those companies were trying to transition themselves. Since both organizations were publicly traded, they couldn't be as bold as Douglas was with privately-held Unify, so changes were slow but crippling.
One former Lucent employee I interviewed told me that employees had started calling Tuesdays "Layoff Tuesday," as that's when layoffs would happen seemingly on a weekly basis. The net result was a highly unmotivated workforce where everyone was paralyzed by fear. Anytime anyone got a call from HR or his or her manager, there was a feeling the shoe was about to drop. Employees spent time packing boxes and taking things home instead of focusing on work.
That's why I believe Douglas did the right thing by cutting what he needed to and moving forward. The employees that are there know they are part of the organization and won't constantly be looking over their shoulder.
For much of the UC industry, software and cloud-based solutions augment the products that are currently in place. From what Unify has been saying and the actions they've taken, it appears that Unify will focus almost all of its R&D efforts on Ansible, allowing the company to lead with a software/service approach instead of having to migrate to one.
For customers, the obvious question is how this will affect the maintenance and upgrades of products currently in place. I would be asking the company what the transition plan is to move from the current platform to Ansible and what's required in that transition. Given Unify's focus on Ansible as the future of UC, I'm sure there's a transition plan in place, but it's important to understand the details to know how disruptive it could be.
The announcement by Unify was certainly a bold one, but given where the company is today and where it wants to go, bold is needed. I'm sure the decision was a tough one for CEO Douglas, but at the end of the day he did the right thing.
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