Real-Time With Avaya CEO Kevin Kennedy
Avaya's chief shares on everything from customer satisfaction to fan engagement, hosted enterprise services, development platforms, and collaboration.
Since becoming Avaya CEO in 2008, Kevin Kennedy has overseen the acquisitions of several companies, including Nortel Enterprise and Esna Technologies; the launch of the Avaya Aura UC platform; and a headquarters relocation from the East Coast to the West Coast. He is one of the industry's more technical CEOs, with a technical curiosity he says was spawned during the "space race" and cultivated while obtaining his B.S., M.S., and Ph.D. in engineering. He holds two patents, and still considers himself an engineer at heart.
Kennedy, who developed his leadership chops at JDS Uniphase and Cisco, currently serves as a member of President Barack Obama's National Security Telecommunications Advisory Committee.
He is an avid reader, mostly of nonfiction books. He's also written or co-authored a few, including the Devil in the Details (2012) and Going the Distance: Why Some Companies Dominate and Others Fail (2003). The book he most often gives as a gift, however, is not one of his own but rather The Fourth Turning, a take on the causality of economic cycles.
I recently had the opportunity for an in-depth chat with Kennedy, and took advantage by asking for his thoughts on a wide array of topics, from Avaya's financial standing to his leadership style. The conversation went something like this:
In your June keynote at the International Avaya Users Group conference, you indicated the company has never been more financially healthy. Would you elaborate?
Sure. Our EBITDA as a percentage of revenue has expanded for over five years. Our cash requirements have decreased. And about 18 months ago, we began paying down our debt for the first time. Finally, we have been free cash flow positive for three consecutive quarters, and have pushed out a 2017 debt wall with a recent refinancing.
In that keynote you also said Avaya was focusing on its "go-to-market and bundling phase." Would you clarify what this means?
Yes. We are focused on moving from basic coverage of accounts to more consultative selling, and will have training and playbooks in place. In the mid market, we will package our products to encourage partner investment -- in the market and across our product portfolio.
Avaya's Net Promoter Score (NPS) ratings, which I know are important customer satisfaction measures to you, have been increasing. What activities and changes do you believe are driving the improvements?
We have focused intensely on quality and cost of quality. In other words, we looked at the elimination of waste or operations where automation could significantly improve outcomes. We began in engineering and developed predictive systems so we aren't just measuring customer-found defects. The predictive systems assessed the process used in developing software, the individuals and their track records, some early characterization of code, and early test findings. We found that the early calibration of upstream process inputs could tell much about downstream quality. Then we began to systematize the approach across other functions. However, at this time, the NPS gains largely reflect a response to how customers perceive our products and services.
Are the NPS measures indicative of end-user customers' or channel partners' satisfaction with Avaya?
We primarily measure end-user NPS as delivered by both the satisfaction with partners and Avaya. And we measure product, service, and sales separately. For Avaya, all functions have improved NPS ratings, contributing to a significant growth of Avaya's NPS.
Let's talk about Avaya Stadium. Most sponsorships are simply financial, in San Jose Avaya is also providing a significant amount of technical infrastructure and services. How and why did that happen?
Avaya Stadium emerged as a very cost effective sponsorship relative to alternatives. It provided an opportunity to demonstrate our technology leadership, resulting in Avaya Stadium winning awards for the most innovative.
Specifically, the stadium allowed us the opportunity to demonstrate our technology leadership in key areas including wired and wireless networking infrastructure with our identity engines to support shared use of the network among guests, employees, and vendors. Other areas include customer and team engagement where our solutions are used for internal meetings, ticket sales, and team operations. And within the area we are calling fan engagement, Avaya Stadium uses the Fan Engagement Wall to promote an aggregated social media capability between the venue and team with the fans' selected social media platforms.
In February, the San Jose Earthquakes began hosting Major League Soccer games in the new stadium. How are you measuring success from Avaya Stadium, and what results have you seen, if any, so far?
We primarily use two measures. First is the measurement of awareness of Avaya in Silicon Valley. We already know this has expanded. Second, we have won at least five more stadiums based on this technology and intrinsic innovation of fan experience. This is all upside, as we paid for the sponsorship by eliminating nonproductive sponsorships at the start.
Avaya has recently lost market share within the UC space, according to industry reports. Is this correct, and if so, is the trend reversible?
The market is changing from CAPEX to OPEX, premises deployments to cloud deployments, and application-embedded infrastructure from standalone infrastructure. Our strengths have been in growth of private cloud services, small business, and contact center/UC-combined infrastructures. Our total demand under contract has actually held relatively steady over the past couple of years. And we continue to win new UC deals within the mid market and enterprise spaces.
About a year ago you transferred many Avaya services and employees to HP, which then became a major contact center customer. How has that outsourcing partnership fared?
Quite well. The managed service outsourcing with what's now known as Hewlett Packard Enterprise has been transitioning smoothly. We are fully engaged in the refresh of Hewlett Packard Enterprise's contact center capabilities, which is progressing and will continue to evolve. We've seen on-time achievement of all milestones to date and deployment is expected to continue to ramp through the end of 2015.
A third leg of the partnership will be the enablement of the HP Enterprise sales force to sell Avaya products, which will be expanded in calendar year 2016 and 2017.
Continue to next page for Kennedy's thoughts on Avaya acquisitions, the mid market, breaking down silos, and more