Avaya, With Nortel Under Its Belt, Gets Ready For Action

Avaya is done making significant changes to its channel strategy and solution providers can once again feel comfortable making investments in the company without worrying about more upheaval, according to Todd Abbott, senior vice president of global sales and marketing and president of field operations for Avaya.

’We need to get the noise out and give you a clear line of sight where to invest. There are no more changes,’ Abbott told solution providers Wednesday at ScanSource’s 2010 Catalyst Telecom Partner Conference in Myrtle Beach, S.C.

Avaya VARs have asked a number of nagging questions regarding the vendor over the last several months, including how will a planned initial public offering impact the company, how is the Nortel integration progressing and how will Avaya’s services push impact solution providers’ own services offerings.

Solution providers have been skeptical of Avaya’s services competing with their own because of a checkered history they believe Avaya has mitigating channel conflict between its direct and indirect sales forces.

Abbott acknowledged the transition hasn’t been smooth and he thanked Catalyst Telecom solution providers for being patient. But he also asked them for continued patience as Avaya implements the announced changes just as the economy starts to grow again.

’There are no rapid fixes. We need predictability. You need predictability to invest in the business. We haven’t been as predicable as we need to be the last 6 months. Our number one commitment to you is no more change. The only thing you will see new for us until the end of the year is new products,’ he said.

Avaya wants solution providers to transition away from break/fix services into more professional services, an adjustment that requires some VARs to make internal changes within their own companies. Some partners are concerned about Avaya looking to decrease VARs’ services opportunities under the Avaya flag, but that won’t be the case, Abbott said.

’I don’t want to be in the fulfillment business or the integration business of third-party products. That’s what the channel does extremely well. You can do better complete end-to-end solutions for the customer,’ he said. ’We are exponentially improved by leveraging your companies. It took Avaya as company a year to realize that, but we have stayed committed to this in the long term.’

Abbott also noted that Avaya is looking to streamline its channel programs to make them easier to understand and act upon. ’It’s a work in progress, a journey. You don’t take disparate channel programs around the world and force them into one program,’ Abbott said.

Avaya currently has more than 400 schedule discount programs, Abbott said. ’Every product team could design their own BPA [blanket purchase agreement] schedule. Over the next year, we will have [three] discount schedules: hardware, software and maintenance. We will also simplify certifications,’ he said.

More specifically, Avaya is moving toward system-level certifications and away from product-level certifications, Abbott said.

Next: Avaya's Long-Term Plan

Regarding concerns about an IPO, Abbott said Avaya’s strategy is a multi-year plan and the company is not just positioning the business model to take advantage of a possible IPO or a quick flip. The company was publicly traded before being purchased by a couple of private equity firms in 2007.

’The first year of privatization, we were figuring out what the company was. This is not a quick, flip it story. This is a long-term rewiring of the company. There’s a lot of misperception that this about getting an IPO and the team and executives leaving. That’s not the way this is played. Our private equity firms are long-term investors and this is about driving sustainable process capability for us to be No. 1. There’s nothing quick about this.’

Avaya is transforming a business that had 27 product groups, 12 regional services organizations (all with different SLAs and contract terms) and 22 internal ERP systems, said Abbott, a process that required getting hands dirty to replant Avaya for the future.

’Today I stand in front of you 18 months from when the change started. The company has deep roots, deep processes in place,’ he said.

Only about 6 percent of Avaya’s business now comes from new products, a figure that the company hopes to increase to 20 percent within a year and a half as new products roll out this year to complement the reorganized company, Abbott said.

’We haven’t done a good job of introducing new technology with short sales cycles, strong ROI. If we do this right, we will deliver technology with that product pull,’ Abbott said. ’Technology has to be able to churn new customers as well as accelerate business to existing customers.’

Finally, Abbott reinforced that Avaya's session initiated protocol (SIP)-based offering, centered on its virtualized UC platform Aura, will be around for the long term, and that it will be applicable to not only enterprise customers but also to midmarket customers after some new product announcements in June and July.

’We’re confident we can take it down to the midmarket and enable us to have more opportunities to sell,’ he said. ’SIP is a fundamental architectural change. It’s very analogous to TCP/IP. Before that, stack of applications were owned by one company. IBM gave you everything right to the end point. Innovation was owned by one company.’

TCIP/IP disaggregated the system and created an ecosystem of innovation, Abbott said.

’What was created was a wealth of new applications around the Web that’s changed the way companies work today,’ he said.

Avaya’s SIP strategy is a key breakaway for the company compared to Cisco and Microsoft which are looking to protect their own vertical stacks, Abbott said.

’They’ll give you e-mail, directory, IM, as long as it’s theirs. We fundamentally believe the innovation will be at the application layer,’ he said. ’SIP is going to put the unified in unified communications. Today, you have fundamentally unique applications. When you’re put on hold, there’s nothing unified about it. What’s required to capitalize on the next generation has to be an open ecosystem to embrace all different forms of communication and be able to move across them.’