Internet of Business says
Telecoms provider Avaya has had an eventful couple of years. In January 2017, the company filed for bankruptcy as it grappled with debts of $6.3 billion. But just 12 months later, it was able to list on the New York Stock Exchange (NYSE) in a remarkable turnaround in its fortunes.
The company’s future was in doubt when it filed for Chapter 11, with Avaya owing millions to its channel partners, including $10 million to ODM Wistron and $8.8 million to Avnet, while the likes of HPE, Salesforce, Oracle, and IBM had extended millions of dollars in credit.
Avaya had to make sweeping changes to survive, let alone thrive. Among them was the decision to sell off its networking business to Extreme Networks for $100 million in March 2017, and securing a deal to restructure its debt with its largest creditor, which included wiping $3 billion off the amount owed.
But while finances were an obvious issue, there was a deep-rooted problem in Avaya’s strategy too; the perception of it as a leading telecoms firm had dissipated, and it had become synonymous with legacy systems. It urgently needed to present a more progressive outlook to investors, partners, and customers, and put together a new board and leadership team.
Part of this shift began with the promotion of COO Jim Chirico to CEO in October 2017. Chirico, who had been at Avaya for nearly a decade, was at the heart of many of its high points and had the technical expertise to turn the company around, according to those who know him well.
But even he acknowledged, at Avaya’s Academy Graduates graduation in Dubai in October, that it was “probably not the best idea” to take the company from Chapter 11 to NYSE listing in such a short space of time.
Despite this, the changes haven’t stopped, with Chirico telling Internet of Business at GITEX 2018 in Dubai that the company is launching a re-branding campaign. “We are more recognised as a legacy hardware vendor and we have a branding campaign we’re going to launch later this year to get a different perception of who we are,” he explained.
Investor day
The company’s first anniversary as a publicly traded company in January will be marked with an investor day, at which Avaya will showcase what it has invested in to date, and what it is doing to drive value to its customers and shareholders moving forward.
Chirico had previously suggested that the NYSE listing would free up $300 million to spend on R&D. But it also means that Avaya has to act differently, according to president EMEA & APAC, Nidal Abou-Itaif.
“Now that we’re a public company, we have to do a lot of things differently. We have to be careful of what we say and continue to be ambitious and ensure we comply with the rules.
“The listing gave us a lot of opportunity to reinvest, and I think now we are seen as a company for public cloud, contact centres, and more,” he said.
A future in the cloud
Despite Avaya’s stand at GITEX 2018 and its executives talking up the company’s vision for artificial intelligence, IoT, and blockchain, it is in the cloud that the company really hopes to make its mark.
Over the last year, the company has acquired contact centre as a service provider Spoken, formed a separate Avaya Cloud business unit, and, most recently, launched its public cloud offering outside of the US, bringing its Pure Cloud product to Europe.
The fact that the company is only now trying to reap the rewards of the cloud shows just how far it had been held back in previous years. However, Chirico revealed that by next year, the company hopes that 25 percent of its revenues will come from cloud solutions.
He explained that in the mid-market space, Avaya has grown 300 percent year on year, outstripping the growth of any of its competitors. However, he said there is still growth potential in every market, along with the opportunity for new products. This will include the launch of a virtualised public cloud.
Chirico added that channel partners in the US “would like to have more optionality to do more with cloud, particularly in the small-to-medium business space, which is about 25 percent penetrated.
“We have a very strong IP Office and cloud portfolio but it doesn’t get down to the single digits, so there is a market opportunity there which we haven’t capitalised on,” he said.
Emerging tech
Chirico said that the new technology the company is providing is “cutting-edge” and that customers are now realising that it is “more than just a dial tone company”. That said, he admitted it will take time to get real traction and momentum.
At GITEX 2018, the company demonstrated its Avaya Vantage device, which can be used for simultaneous live voice translation services, as well as a social platform, in effect, for chatbots to engage with one another. The idea is that chatbots from various industries and domains could securely share information and find answers to questions.
These products, as well as several others in the pipeline, will take one to two years to bear fruit in revenues, Chirico admitted. However, he said he is happy with the way the company is investing in R&D and with the company’s time to market.
“We’re starting to see the investments we made a year ago go to market now, and they’re here at GITEX 2018,” he said. “They’re not somebody’s dream, they are actual products. Some are released now, and others will be released by end of the year. But you can touch and feel them, and you can see how they will drive value.”
The company may well be changing from being a legacy technology business to one that focused on the cloud, AI, and other emerging technologies. However, the bigger challenge will be to see if it can convince its customers, partners, and resellers in the long term and build a sustainable business.
Chirico and his team sound like they’ve learned from previous mistakes, but the proof of that will be in the company’s balance sheets in the years ahead.