Analysis: VARs Impressed With Avaya Product Road Map, Channel Execution

There have been colorful words used to describe Avaya's channel management in the past, and "impressive" hasn't often been one of them.

But Avaya and Nortel VARs interviewed by Channelweb.com this week have been just that -- impressed -- with the speed, thoroughness and execution of Avaya's just-released Avaya-Nortel product road map.

If there are still some kinks to be worked out and plenty of training to be completed, the overwhelming majority of interviewees praised Avaya for starting to integrate two large networking channels with an eye toward minimal disruption and growth opportunities for both Avaya and Nortel partners.

"I've been very impressed by the level of commitment and touch we've seen from the channel organization," said John Wrona, executive vice president of sales and marketing at Ronco Communications & Electronics, a Tonawanda, N.Y.-based solution provider. "For us at least, they've been able to provide answers to a lot of our questions and advise us on how to engage in a consultative manner with these accounts. They've been very assertive and very thorough."

Avaya confirmed details of its product road map to Channelweb.com last week, with clarifications posted as the road map was formally released Tuesday.

Avaya's plan is perhaps most notable for what it preserves: namely, Nortel's entire data portfolio, and with a few comparatively small exceptions, most of the current Avaya and Nortel product lines. Session Initiation Protocol (SIP)-based architecture and Avaya Aura, the company's virtualized unified communications platform, will be the guts of much of Avaya's go-to-market strategy for unified communications (UC) and contact center (CC) products going forward.

Dr. Alan Baratz, Avaya's senior vice president and president of Avaya Global Communications Solutions, said on a Tuesday conference call for media and analysts that Aura will be crucial to what Avaya sees as a move from voice-integrated PBX solutions to open, flexible, modular communications systems that tie voice, video and data together.

"That move will be enabled essentially by the new SIP architecture and, moreover, will allow us to finally and truly start using communications to enable business processes," Baratz said. "We believe it is equally important that in the future we do not require our customers to rip and replace their current products or even cap growth on their current products."

That's not a surprise, VARs said, and a welcome sign that Avaya gets the deepness of Nortel's existing channel and installed base.

"I think it's dangerous when you have a base as large as Nortel's to aggressively whack products," said Jeff Hiebert, president and CEO of ROI Networks, a San Juan Capistrano, Calif.-based solution provider. "I like the story. I think Avaya's onto something with this session manager core, and I think they're going to get even more aggressive. The meetings that they've had this week, they've taken a lot of time to educate various audiences. They're going in as formal as possible and trying not to leave a lot to speculation."

"Overall, no big surprises," added Wrona, describing the product road map. "You don't want to give anyone a reason to go shopping, but I think they've got a very nice migration strategy that shows commitment to the Nortel base and to Avaya's architecture."

No dramatic changes, agreed Zeus Kerravala, senior vice president of enterprise research at The Yankee Group, although, he noted, Avaya hasn't made specific mention of the Innovative Communications Alliance (ICA) UC products Nortel developed with Microsoft. (Nortel laid off some of the executives in charge of the ICA in June 2009.)

"It's not a big surprise," Kerravala said. "I think if Avaya had wanted to have an ICA relationship with Microsoft they would have developed one before."

How Avaya would integrate the Nortel product portfolio into its channel was a source of concern for VARs following Avaya's successful bid to acquire the beleaguered Nortel's enterprise portfolio. Avaya won the bidding with a $915 million offer in September, and closed the acquisition in December.

Integrating the Nortel portfolio has also come at a time when Avaya is mounting a drastic channel revamp. Its new Avaya Connect program, announced at the Avaya Americas Partner Conference in Nashville, Tenn. in October, attempts to streamline how Avaya trains and certifies partners and structures its price lists. Among other changes, Avaya partners -- classified as Platinum, Gold, Silver and Authorized -- also see rebates processed more quickly.

Personnel changes at Avaya have also had an effect. Most of the company's channel management, including global channel chief Jeremy Butt and North American channel chief Carol Giles Neslund, were new to Avaya within the past year and a half. Avaya Senior Vice President of Global Sales and Marketing and President, Field Operations, Todd Abbott, confirmed on the conference call that 80 percent of Avaya's vice presidents in fact joined the company within the last 18 months.

With so many channel changes, a number of VARs wondered at the conference and into the new year whether Avaya would be able to execute on Nortel as well -- especially after Avaya stated it would have a product road map ready to go less than a month after the acquisition was completed.

Mission accomplished, many agreed.

"I could take the cynical view of things and say that by not end-of-sale-ing much, they're hedging their bets. They can also take credit for having a road map in place when they said they were going to have it in place, and now take time to work through some of the overlap," said a longtime Avaya solution provider, who requested anonymity. "That said, it's a new Avaya. Everything about this so far has been as agreeable as possible, and they're really working hard to make sure they don't blow it on this. The stakes are too high."

"I tell you, all of the old-guard Nortel guys who swore they'd never drink a cup of Kool-Aid again? I'm hearing a nice tone from those guys," said Stuart Chandler, president and CEO of Optivor, an Ellicott City, Md.-based solution provider. "They've been immersed in the Avaya inkwell. It's interesting because all of the early word from the Nortel salespeople was 'I don't know, I don't know,' and the natural human reaction to that is FUD [fear, uncertainty and doubt]. To the salespeoples' credit, not a single Nortel salesperson out there has called me and said they're not impressed."

Next: Lingering Questions Around Distribution, Partnering

The biggest question many VARs have for Avaya now is how it will leverage Nortel's data networking products. According to the road map, Avaya has preserved the entire portfolio, and said at the Partner Conference it had created a new badge for partners to sell it.

"They've dabbled in data over the years, but not having it hurts them if they're trying to compete with Cisco," ROI Networks' Hiebert said. "I think they're going to get some bang out of it."

Added Wrona, "We're a highly converged partner for Avaya now, and with voice, IPT and UC integration, we can represent a holistic approach. No one else can compete with Cisco when Cisco decides it's going to buy a job. This gives Avaya more ways to effectively and directly compete with Cisco."

Some observers said Avaya could make a mistake keeping the data portfolio if they don't make it a priority beyond keeping Nortel's data channel happy in the short term.

"History will dictate whether it was a good choice," Yankee Group's Kerravala said. "Don't forget, they have partnerships with current networking vendors like Juniper, HP and Brocade, and they might be putting those at risk. But there's strength in numbers battling Cisco. For Avaya, a communications-centric organization, can they let the data group go operate as its own group? There are a lot of things driving network upgrades right now beyond UC. Avaya might not reap all the rewards if they have too narrow a focus."

Others argued that Avaya's success with Nortel's data products may hinge on how well those products are distributed.

"If you're an Avaya reseller and all you're selling is Avaya voice and Cisco data, you're hurting your ability to compete long term now that Avaya has a data story," Chandler said. "Optivor is Nortel's largest data reseller globally, but we also know that if Avaya is going to be successful supporting that, it's gong to have to open up its distribution to allow the data products to into the hands of resellers. Avaya's traditional distribution model is not adequate for that demand."

"Again, it comes down to 'are you a data company' or 'are you a voice company' or are you both," Kerravala added, saying he guesses Avaya will move to maintain all the distributors. "If it's both, you can't make one decision and not focus on the other."

According to Avaya, it will make a decision on its future distributors by the end of March. In an interview with Channelweb.com last week, Abbott said only Westcon Group -- which carries both Avaya and Nortel -- was a sure thing going forward, and that Avaya was discussing future distribution arrangements with Nortel distributors like Ingram Micro and Tech Data.

"It's hard to say," Abbott said last week. "Some of these products are not necessarily ready for broadline distribution. This is a high-value business. Having said that, there's still tremendous value in having those, and the breadth of coverage [broadline distributors] can offer is extremely important to us. I go into this process without preconceived notions. We're not going to string this thing along." The answer should be pretty clear already, argued Chandler.

"Ingram Micro and Tech Data have been supplying the lion's share of that [Nortel data] portfolio along with Westcon," Chandler said. "It would behoove Avaya to open it all up. Would they be spreading themselves too thin and being disloyal to their exisiting distributors? Not at all. Look at it this way: Many of these Nortel dealers have established credit lines and long-term relationships around Ingram Micro and Tech Data. Avaya is going to miss an opportunity if it doesn't [use those distributors] and learn a very painful lesson."

Other VARs were impressed enough with Avaya's execution thus far that they trust the distribution issue will be resolved.

"Avaya has done enough at this point where they can tell me, 'We're working on it' and that's good enough for me," Wrona said. "We've never put our eggs in one basket with any distributor anyway. I'm not concerned."

Another by-product of the Avaya-Nortel integration will be partnership opportunities for Avaya and Nortel VARs. Several solution providers said they'd already been approached by other solution providers specializing in different pieces of the overall portfolio. Some had even had preliminary M&A discussions.

Hiebert said ROI Networks, for example, has been in frequent contact with Shared Technologies, Nortel's largest North American solution provider partner but only recently, within the past year, an Avaya recruit.

"We've been having several exploratory meetings about how we can help them and how they can help us," Hiebert said. "I'm not going to have my engineers go out and learn all those things when I can partner and have their guys know what they want. M&A in this channel wouldn't shock me at all. I think the bigger boys will be looking to go at some of those Nortel bases. Some Nortel VARs are weak from a year of bankruptcy. A VAR buying some skills sounds very realistic."

Chandler said he plans to leverage Avaya partners but also acquire expertise internally at Optivor.

"We're already making investments in products and personnel," he explained. "But it's interesting, I had a call today from a West Coast Avaya shop that expressed interest in us through a Nortel rep. I think the Avaya-Nortel consolidation is a clue that the partner community should consolidate as well. I've already been approached by two companies that do M&A, and they didn't seem to be representing anyone in particular, but they see an opportunity in this marketplace."

There will be opportunity to partner at other levels, too, Wrona offered.

"We have a long legacy with Nortel, and we believe the Aura architecture, and leveraging SIP, are going to be strong. We're going to grow this internally," he said. "But the other nice thing about Avaya is that they have a pretty good network of service-only partners that we can partner with temporarily."

At the very least, veteran Nortel partners said they're finally feeling optimistic about Nortel prospects again. Chandler was among those applauding Avaya for retaining much of Nortel's enterprise sales force.

"The thing about last year is that the Nortel salespeople did their job. They're very good," he said. "Think of it this way: You had people hanging around for a year and still working -- still selling -- even though their company was in Chapter 11 bankruptcy. When you have that kind of salesforce, that's commitment. That's what Avaya has embraced."

All VARs interviewed noted the speed with which Avaya completed the acquisition and served up a road map. In the Tuesday conference call, Abbott said Avaya had many advantages that allowed things to run more smoothly than they normally would with such a substantial merger.

"Usually you spend the first quarter or two [of an acquisition] trying to understand what you bought and how to restructure it," Abbott said. "Because we're buying a bankrupt company, we have the ability to manage much more aggressively going in. We had the organizations in place 45 days before the transaction."

Avaya also had the necessary platform in place with Aura, and its continued R&D investments were "not diverted" even though Nortel integration was Avaya's primary focus. Abbott said to expect more products throughout the year, and a continued focus on channels.

"We have a robust set of announcements coming in the spring and another coming in the fall," he said. "You're about to see a different Avaya."

Will Avaya now be able to target the type of market share that'll make it a broader competitor to Cisco?

It certainly seems like it, VARs agreed.

"You have two former competitors now both aiming their cannons at San Jose," Chandler said. "I think they've put good people in place. Nortel is dead. Long live Nortel."