Any earnest discussion of Avaya has to start with the uncomfortable facts: Avaya's financials are shaky, it's planning layoffs, its executive team is in a near-constant state of flux, and its plan to return as a public company, first announced in June 2011, has more than likely been shelved.

What Avaya does have, on the other hand, is the strongest technology portfolio in its 12-year history, big bets made on areas such as data center convergence and videoconferencing that expand its traditional UC and contact center purview, and one of the deepest installed bases in the enterprise communications market, with little, if any, market share lost in its key segments over the past few years.

"An IPO is certainly in doubt, but any time you have an installed base the size they have, from a corporate perspective, that's gold," said Zeus Kerravala, founder and principal of ZK Research. "Traditionally, market share in telephony has been very difficult to gain and lose. The only company that was really an exception to that was Cisco, which struck at the right time, when VoIP got hot. Outside of that, there's been a few points of share shift here and there, so one of Avaya's biggest assets is being able to hold that base."

[Related: 10 Sticky Questions For The Avaya Channel]

Avaya's future is top of mind as it convenes several hundred partners at its Avaya Americas Executive Partner Forum this week in Cancun, Mexico. While Avaya's channel bosses and product experts are expected to set the tone for Avaya's partnering strategy going forward, the event will be a lower-key affair than the sprawling partner conferences Avaya's held in Las Vegas for the past two years. CEO Kevin Kennedy and most of Avaya's SVP-level executives are not in attendance.

The big question for Avaya partners is whether Avaya has delivered on its promise to be a channel powerhouse. It sells more through partners than ever before -- its percentages have inched up going back to when Kennedy told solution providers, at Avaya's 2009 partner conference, the acquisition of Nortel's former enterprise unit would get Avaya to more than 80 percent channel-sales in a three-year time frame.

But, challenges persist. The overall market for UC and contact center sales hasn't been particularly kind over the last few years, and with so many big transitions happening at Avaya, from the 2009 revamp of its Avaya Connect global channel program to ongoing makeovers of its services businesses and pressure on partners to sell data networking and other products beyond its UC core strength, some partners view Avaya as eternally distracted.

Channel hearts, however, are in the right place, especially with Tom Mitchell, senior vice president and president, Avaya Go-To-Market; Karl Soderlund, vice president of channel sales, Avaya Americas; and the rest of Avaya's current channel management at the helm. Mitchell and Soderlund in particular, partners say, have emphasized better collaboration between the field-level channel operation with the broader Avaya direct sales organization and also Avaya's executive committee.

"There's always the knock that Avaya is difficult to work with. It's the old Lucent, and with Nortel, so yes, it is a big organization, and it is complex," said Rick Hirsh, CEO of Transcend United Technologies, a Wayne, Pa.-based solution provider and Avaya Platinum partner. "But I can get to Mitchell and get to Karl and the team. They've helped us on complex bid situations. They have made themselves accessible. We've found Avaya to be a good partner, and it's like any other partnership, where you have to learn the rules, the lingo and the process."

"There was a lot of bad behavior that they have fixed," said James Marsh, senior vice president of Carousel Industries, an Exeter, R.I.-based solution provider and Avaya Platinum partner. "I think Karl is doing a pretty good job righting the ship, and Tom has brought a lot more credibility to their approach. It's not nearly as negative as it used to be. My message to my team is that we know it's been bumpy with Avaya, but we can get shoulder to shoulder and win business together. They need us to be competitive."

"Progress has been good," said Mike Ferney, vice president of merchandising for distributor ScanSource's Catalyst Telecom division. "When we have concerns, we feel like we have a tremendous connection. That's a benefit because sometimes partners will share info with us that they'd be less comfortable sharing with Avaya. So we're able to consolidate the feedback, provide a little anonymity to the resellers, but tell Avaya what's really going on so they can adjust. And, they've responded well."

NEXT: Has Avaya Made Real Progress In The Channel?

Some see Avaya's channel promises still unfulfilled.

"Confidence in Avaya from the channel is low right now," said the chief executive of an Avaya Platinum partner, who asked that his name not be used. "The economy, coupled with Avaya's sloth-like bureaucracy, spells trouble for what we see is an already troubled brand."

Avaya is challenging to work with, the partner said, highlighting such things as the need to have special pricing approved by many levels and shrinking margins, even at the Platinum level, on services opportunities.

The partner said too many executive changes and too much effort spent on integrating the Nortel assets -- along with the other, smaller acquisitions Avaya's made along the way -- have kept Avaya from getting its channel house in order.

The partner said he did not believe Avaya's Mitchell and Soderlund had the buy-in from the company's top executives to make channel a true priority for Avaya's growth, especially with the company so focused on returning to profitability.

"They're well-intentioned, but they don't strike me as empowered," said the partner of Mitchell and Soderlund. "Things still take the same escalations and the same complaints to get accomplished, however, and the difference is that in many cases, there is less margin available to Avaya partners because the company wants to take so much of the services and incremental value for itself."

Other partners, however, see a much-changed, much-improved Avaya. Steve Melchiorre and Kevin Rubin, managing partners of Converged Communication Systems, a solution provider based in Evanston, Ill., said the past year in particular has brought a renewed focus to their Avaya business.

Converged's Avaya revenue has grown 20 to 30 percent most years over the past decade, and the partners expect the same this year.

"The Nortel acquisition put Avaya behind on innovation and growth for a while, and I think they've finally come out of that," Melchiorre said. "They can re-focus and spend less time on migrating Nortel partners to become Avaya partners."

Converged's Avaya relationship was challenged during 2011 when, according to Melchiorre and Rubin, Converged wasn't seeing the attention and resources it had come to expect from the Avaya team. Converged sought to partner with ShoreTel to diversify its base, but a return push from Avaya -- coupled with a lack of follow-through by ShoreTel -- convinced Melchiorre and Rubin to mend fences.

"A lot of the things that we used to get from Avaya in 2008 and 2010 had fallen off in 2011 -- there wasn't money or resources to go around as they were still spending a lot of time on the Nortel acquisition," Melchiorre said. "But the MDF and other support have already started to come back strong. We had a very successful interactive client marketing event August 2012, and Avaya provided outstanding support, and we're planning future lunch-and-learns and other continued joint marketing events."

NEXT: Rationalizing The Avaya Base

Avaya continues to rationalize its partner base. Heading into last year's Avaya partner conference, it had completed a paring-down of the global channel community in which it parted ways with more than 400 UC partners in the U.S. alone.

At the time, it also began emphasizing cross-portfolio sales, urging Avaya partners specialized in areas like telephony systems and virtualized UC to push its data networking strategy and wrap more services around their deals.

Avaya observers say it's hard to tell how effective that effort has been.

The chief executive of one Avaya solution provider said the company tried to do "too much, too soon" with both the channel overhaul and the Nortel acquisition in the same year, but it took them two years to truly work their way through each.

"In many ways, Avaya is still playing catch-up to their own ambitions. Nortel was integrated from a product perspective but you still have a legacy Nortel base and a legacy Avaya base that aren't nearly the same thing. Same with partners," said the executive. "I think what you have seen in the past year, especially, is Avaya acknowledging to partners it bit off a lot when it did those things. If there's one thing I hear from them now that I didn't two years ago, it's that they want to empower good partners, cut bad ones and make sure we're all aligned."

The right channel approach will bolster Avaya's effort to maintain its customer base.

"They're in trouble," said Jon Arnold, principal of analyst firm J Arnold & Associates. "I think anyone who watched them wouldn't answer that in any other way. They've held on to big customers and on verticals where they're strong, like government and healthcare. But, those segments will be vulnerable over time, because they are not perceived as the best and brightest solution."

Arnold, like many partners and analysts, believes that shifts in how customers want to buy -- their embrace of cloud computing, their interest in building converged networking and data center architecture to consolidate IT assets -- can threaten Avaya's UC and contact center dominance.

That's especially true as Cisco -- at $46 billion in annual revenue, more than nine times Avaya's size -- leads the charge on converged infrastructure, and a host of other challengers, from Microsoft, with its Lync platform, to ShoreTel, with its aggressive inroads into cloud-based UC, gnaw at the Avaya and Nortel customer bases.

"There may be a run of a couple years where they're going to bleed a lot of business -- legacy incumbent business that's going to eventually go elsewhere," Arnold said. "It could be Cisco, it could be other places. But if buyers aren't comfortable with them -- if they're not perceived as having the best solution -- and their financial stability stays in question, that's a huge problem for Avaya.

"It is a worry, but most of the competition has their own financial challenges," said Converged's Melchiorre. "We've gotten used to it. They've made a major commitment to the channel by saying we're going to reduce the sales from a direct perspective. So we're always concerned, but we're comforted to know what a large company they are, and we are confident in their new innovative solutions like cloud solutions."

NEXT: Where Avaya Thrives

"When I got in here and had my first partner executive meetings, I found organizations that were not well-aligned," said Avaya's Mitchell, a longtime channel hand who was Cisco's first well-known channel chief until departing in 2001 and has worked or consulted for most of the major IT networking players over the years. "The difference this year is that four out of five conversations I've had with partners in these past few months are positive and on the theme of working through the legacy issues to do better."

Mitchell became an Avaya SVP in early 2011, but had joined Avaya nearly a year earlier in a behind-the-scenes consulting role. When former global channel chief Jeremy Butt left Avaya in March 2012, Mitchell assumed worldwide channel duties and took on Butt's reports.

Soderlund, who became Avaya's vice president of channel sales, Americas, in October 2011, also came in with a channel pedigree, having held channel and sales roles at Extreme Networks, Fortinet, HP ProCurve and Certeon.

A year into the job, Soderlund said there's a lot of work to be done but a lot that's been accomplished already. He and Mitchell hosted a webinar over the summer with key Avaya partners and explained that Avaya's improved things such as time to implementation and maintenance for SMB solutions and the level of time needed for training on some Avaya UC solutions. Credentialed partner associates over the last two years have increased 300 percent on a "range of solutions," they said at the time, and Avaya promotions such as "Triple 7" -- which extends discount of up to 70 percent for customers refreshing the Communication Server 1000 product -- have also been successful.

Overall, according to Soderlund, Avaya has invested more than $60 million in what it described as "quality processes," which cover product quality, service performance and other tangibles such as time-to-market.

"I think what you'll hear this year from Avaya partners are better stories," Soderlund told CRN in September. "I think you'll hear that we've responded to a lot of their concerns. You'll see, for example, the partners that maybe looked at ShoreTel and then came back to Avaya. You'll see a lot of momentum for us in areas like IP Office and also the new areas like Radvision Scopia."

Partners say they've appreciated the leadership Mitchell and Soderlund have shown since taking their current roles.

"One of the big changes is that the channels organization has been well-integrated into the direct sales force," Catalyst Telecom's Ferney said. "Karl's been adamant about making sure his people are aligned with [Avaya Americas Vice President] John DiLullo's people. In any channel structure, there's usually a big opportunity for friction, but those guys have done a good job of marrying those sales forces and starting in on demand generation."

Some partners have been concerned with the non-stop exodus of top-level Avaya executives. But at the same time, Avaya's hired well-known executives from bigger competitors like Cisco, including Marc Randall, senior vice president and general manager of Avaya Networking, and Pierre-Paul Allard, senior vice president of corporate strategy and development.

Avaya can still attract top talent, Carousel's Marsh said.

"I don't take too much concern with that," he said. "Guys are going to move around. We get the information we need."

Among other key 2012 hires, Avaya recently brought on Sandy Devine, a former CGI and HP executive and now vice president and global lead for Avaya Professional Services, and Karl Meulema, well-known for the work he did heading up Cisco's global services channels. Meulema, who left Cisco during its 2011 restructuring, joined Avaya in August as vice president, global services and partners.

Avaya expects to take more of an integrated approach with its executives' various channel and sales responsibilities, Mitchell said, meaning the leaders from individual groups will work more in tandem. That's something partners have been asking for.

"Kevin Kennedy said at the Nashville partner conference in 2009 that Avaya wasn't going to get caught up in silos, but I still think that has been going on -- occasionally it can be difficult to find the correct Avaya resource and getting Avaya staff to step outside their core responsibility to help us find the correct resource," Converged's Melchiorre said. "With some recent changes to roles and responsibilities, it has gotten better lately."

NEXT: Avaya Can Still Hit Product Home Runs

Avaya told partners at its 2011 partner conference in Las Vegas, roughly a year ago, that it had the strongest technology portfolio in the company's history, following more than 60 new products released in an 18-month stretch.

There's little argument about that from Avaya observers, especially with major Avaya initiatives such as Aura -- the virtualized platform that powers its enterprise-grade UC and contact center products -- nestling comfortably within overall industry trends toward software-defined networking and virtualized infrastructure.

"We are also really seeing momentum and market demand for the longtime strategy of keeping their solutions SIP-compliant and open to integrate into other best-in-class SIP solutions," Converged's Melchiorre said. "Avaya was passionate about this many years ago, while competitors were not, and now we're seeing clients demand broad integrations like UC via Microsoft Lync, BYOD integration via Avaya Flare, and more."

Avaya's hit some definite home runs as of late, too. IP Office, which is Avaya's flagship UC system for SMB customers, is sold 100 percent through partners, and earlier this year, Avaya launched version 8.1 of the platform -- a seminal release, because it added a number of key features as well as increased IP Office's single-site user capacity from 384 users to 1,000 users.

In Avaya's view, IP Office can now be a better fit for midmarket customers not yet in need of higher-end platforms like Avaya's Aura Communication Manager but with more sophisticated requirements than traditional small businesses.

"It's going even better than we had hoped," said Avaya's Mitchell, who said that within four weeks of IP Office 8.1's launch, Avaya quote volumes on the product multiplied by a factor of 10. "The size of the deals is also three and four times higher than usual. So that's coming together well. And we're not talking about four or five deals; we're talking hundreds that have gone this way."

Avaya said in news released Wednesday that as of this month it had surpassed 300,000 shipments of IP office, and that sales of the system have grown 50 percent in the past two years. Over the product's 10-year history, Avaya has sold more the 10 million IP Office lines.

"We do very well with IP Office, and that includes selling it with digital endpoints because we have smaller clients who like that and ask for it, but still have options and flexibility to deploy full IP solutions to other clients," said Converged's Melchiorre. "We're thrilled that it can now scale up to 1,000 [users] so you have a lot of options for a wider range of customers."

The hard part now, Avaya partners and analysts agree, is getting more partners selling across the portfolio, and tying Avaya's other key product lines -- including its Virtual Enterprise Network Architecture (VENA) and the rest of its data networking portfolio, and the videoconferencing wares it acquired through Radvision this past spring -- to the bigger networked communications story.

"Product-wise, they are fine," ZK Research's Kerravala said. "Some of the struggles are in the channel. Do they have the right resellers in place? With the voice and data pieces coming together you need to have more IT-type skills than you do telecom skills, and you can argue Avaya's channel doesn't have that. When you look at VENA and Aura, both have much more of an IT bent to them and are presumed to be next-gen platforms. Are partners doing things like network design around that?"

NEXT: Avaya's Data, Video And Cloud Strategies

One of the big questions following the Nortel acquisition was how Avaya would take Nortel's data networking portfolio to market. Avaya invested heavily in the products and frameworks, including VENA, which is intended to address the virtualized converged networking and data center challenge.

But one Avaya executive who asked not to be named said that as of September, fewer than one-third of Avaya's IP networking and UC partners sell Avaya data networking and that percentage hasn't changed much in the past year.

Some of Avaya's recent data networking moves have been about evangelism. In January, Randall, for example, was brought in to run the newly named Avaya Networking business. Another move was a program called Networking Angels, in which Avaya provides staff experts to solution providers to help come up with data networking sales strategies and generally connect the dots on how to tie Avaya data in with the UC or CC sale.

Still another move was the recent launch of Avaya Collaboration Pods, which tie Avaya wares with EMC and VMware products in converged infrastructure frameworks, similar to the reference architecture approaches favored by data center-focused networking vendors like Cisco, HP and Brocade.

Many partners feel that little has helped Avaya's data networking traction, however.

"They're giving it away in some cases," said one Avaya partner, referencing a recent promotion that packages Avaya PoE switches with UC phone purchases. "It's just not something they've been able to make work and not something we're spending time with."

Another major product transition for Avaya is in videoconferencing, where it has previously partnered, but, thanks to the $230 million acquisition of Radvision this spring, it now has an in-house option for tying video to UC sales. In October, Avaya opened up sales of Radvision Scopia video products to its broader channel, and Scopia authorization for all qualified Avaya Connect partners is expected to be available by January.

It's one more move by Avaya toward a "stack," versus ecosystem partner, approach to a growing area of the market.

"They used to be everyone's friend," ZK Research's Kerravala said. "But with the video, Polycom is no longer a friend. With data networking and compute, Extreme and Brocade/Foundry are no longer friends. More and more Avaya is starting to look like Cisco, with an increasingly larger pallet of stuff. Avaya hasn't yet proven it can do it, though. Can they find a way to make one plus one equal four, or are they wrong to cut off partners?"

What Radvision does is put Avaya partners in an uneasy position with other, far-more established videoconferencing vendors. Many, like Carousel Industries, already have established video practices, particularly with former Avaya strategic allies like Polycom.

"Radvision will be part of our solution mix," Carousel's Marsh said. "Polycom understands that we have a significant investment and relationship in Avaya, and vice versa. There are certain situations where each makes sense, so our job is to lead with the right one."

"We have lots of runway on this," Avaya's Soderlund said. "Video is all about the user experience and not having to deal with infrastructure every time you want to make a call. The early reception on Scopia from our partners has been 'let's get to know it.' "

A final area where Avaya will be tested is in cloud. Avaya has been perceived as slow to market with a partner-centric cloud strategy, but more elements of that strategy have come to light in the last few months, and Avaya is pushing behind them aggressively.

Back in the spring, Avaya made a series of announcements around a concept it calls Collaborative Cloud, including a suite of public cloud-delivered communications services called AvayaLive. Those services include AvayaLive Connect, an all-in-one UC offering for small businesses, powered through Level 3 Communications, and including an affiliate program for solution providers that want to refer business Avaya's way.

Partners are likely to hear more about those efforts at this week's conference, too.

"It's hard to get people to agree on an approach," Avaya's Mitchell said of the company's cloud efforts. "Everyone wants to figure out how to monetize the cloud, and the problem is every vendor customers look at, a lot of them can't definitely tell you they'll be in business in three years. A lot of these guys are one outage away from being completely wiped off the map. So you have to be thoughtful in how you do this."

PUBLISHED NOV. 14, 2012