This post was written by Joe Rittenhouse, President of Sales Development. Read our follow-up article due to recent industry changes.
If you’ve not heard, Avaya recently filed Chapter 11 bankruptcy. As you know businesses do file Chapter 11 from time to time, and some companies come back stronger than ever and some turn to dust.
In the UC industry, it’s harder to make a good come back as some might lead you to believe. History shows only eight years ago a big change like this happened and disrupted the space.
Take a Lesson from Nortel
As stated here from Reuters:
"Nortel stumbled from ranking among the world's most valuable companies during the 1990s internet bubble to bankruptcy in 2009. The company was eventually liquidated, and by 2011 about $7.3 billion had been raised, sparking a complex, cross-border fight among former Nortel businesses in Canada, Europe, and the United States over the money."
Now Avaya another one of the BIG 3 in our industry just filed. Nortel’s company message back then is the same as Avaya’s message today. If you recall, it was spun with how they were going to be OK, and they were just getting rid of some bad debt.
Bad debt equaling 6 billion (yeah billion with a “B”) is not, in my opinion, some.
Holy crap! Here is a company that is trying to bail on 6 billion, yet they have no issues hosting events this week in Vegas featuring Cirque Du Soleil to entertain their partners.
Read into that what you will…
Avaya is now quickly campaigning a message of “We are going to be fine! We are going to come back stronger than ever! Our numbers show it!”
The reality is that’s exactly what they should say.
This is not the Titanic, but it is a sinking ship. My prediction is that we will watch it disappear into the history books.
What might those history lessons read that will teach what factors led to their downfall? Here are some thoughts:
- Cloud will never be huge
- Let’s stop support on our install bases investments and force forklift upgrades
- Premise Services Revenue is invincible
- We are too big to fail
Maybe you have some better ones. I’d be interested to hear them.
What Makes My Opinion Worth a Lick?
For years CT-Pros has been displacing Avaya, replacing them with ShoreTel’s phones and unified communications services. We’ve been watching Avaya slowly dissipate over time, and they no longer contend nor compete against us.
Sure they have a massive base and are a huge brand, but when you have a six Billion dollar anchor tied around your waist, it’s kind of hard to hide it behind you.
For many analysts, it was not a matter of “if,” it was a matter of “when.” Most in the industry now look at Avaya and say the same thing today as in the days of Nortel. Dust in the wind.
The Necessity of Cloud in Your Portfolio
Although there’s a multitude of reasons, the biggest factor for why I believe their ship will eventually sink comes down to one thing… no one is talking about Avaya cloud. We never see it across the Midwest and without cloud in your portfolio, you are doomed.
If your future UC vendor does not have a strong cloud base deployed, you probably should pass them up like you would a sketchy hot dog stand on the corner.
Even Cisco is Paying Attention
According to Cisco executives, Cisco has been outlining aggressive plans to transition more hardware based accounts to the subscription model to increase recurring revenue. They’ve seen 9% year-over-year growth which has accounted for 31% of total revenue, according to CFO, Kelly Kramer.
Advice for Avaya Clients
It’s not the time to panic yet. However, it is time to start thinking about alternative plans. It’s time to make sure that change is a part of the roadmap for your organization and that next year’s budgets are getting aligned to make the switch.
It’s time to look at companies that hold forward-thinking strategies, not ones that hold six Billion in debt because they didn’t keep up with what the market wanted.
The UC landscape is constantly changing. Eight years ago you never heard of 8X8 or Ring Central or ShoreTel Connect Cloud. Technology changes so quickly in this industry, and the new kings of the hill are in a tooth and nail fight for this market share which is about to open up.
Avaya Call Centers
If you have an Avaya Call Center, you need to dig even deeper into how this impacts your business moving forward, as you guys/gals are dealing with a complicated scenario and rightfully so. The Call Center space is constantly evolving, including the emerging new market of CPaaS (Communications Platform as a Service) which has now thrown their hat into the ring.
If you’ve not heard of Twilio (TWLO) who recently just had a Billion dollar IPO, you will. Companies like ShoreTel and others are also investing quickly to capture this space.
Use Time to Your Advantage
You’ve got time to build a contingency plan, but if that old monster sitting in your IT closet is hitting that six year or plus birthday you’ve got a responsibility to your organization to start considering where you are heading next.
You can start by looking at the marketplace and seeing where things are moving. Check out what partner can you align with, and what manufacturer is going to be best positioned to take you to where you need to be.
Our team at CT-Pros specializes in situations just like this. As I mentioned before, we’ve helped many customers transition from Avaya, Cisco, and others over to ShoreTel. If you’d like help in planning your roadmap for designing a system that works for you in today’s market and the market to come, we’ll be glad to meet with you and help you through the journey.
Contact the CT-Pros team today.