Avaya Americas Conference: 10 Key Takeaways10:00 AM EST Wed. Nov. 21, 2012
Avaya brought several hundred of its top partners to an invite-only confab in Cancun, Mexico, this month. Based on main-stage presentations, interviews and plenty of behind-the-scenes conversation, here are 10 impressions of Avaya's channel heading into the new calendar year.
There's little argument that Avaya now has the strongest product portfolio in its 12-year history. From home runs such as the midmarket-centric UC System Avaya IP Office (pictured), which now boasts 300,000 shipments, to the Aura platform, the Flare collaboration dashboard and a boatload of opportunities behind Radvision Scopia video, partners are able to have a confident technology conversation.
"I've had about a hundred in-depth partner and customer conversations in the past month to two months," Tom Mitchell, senior vice president and president, Avaya go-to-market, told CRN. "I have not had quality come up in any of those conversations. That was a headwind that's now declined, and we're getting back to very favorable grounds on that."
Avaya took a $166 million loss for its most recently reported quarter, and both analysts and competitors have played up the company's shaky financial position, as well as the fact that its IPO -- first announced in June 2011 -- seems to have been shelved. But don't pay attention to competitive FUD, urged Matt Booher, Avaya's vice president of finance, corporate treasurer and investor relations officer.
Booher told attendees in an unusual main-stage presentation that Avaya will be up in top-line revenue when it reports its September quarter and is just now emerging from a lot of the restructuring headaches it took on when it bought Nortel three years ago. What's more, Avaya's made five successful acquisitions in the past 18 months, has preserved its spend on the channel even with cuts happening in other places, and has incrementally grown R&D spending to the point where it is 17 percent of revenue -- higher than the industry average of 14 percent.
John DiLullo, vice president of Avaya Americas, told partners he's instituted a policy for Avaya's Americas sales force in that all direct deals to midmarket customers and smaller must have his personal approval to proceed. "And my approval will not be forthcoming," he said.
Looking to deepen that exposure, Avaya Senior Vice President Mitchell recently confirmed to CRN that Karl Soderlund (pictured), vice president of Americas channel sales, will now report to him instead of DiLullo -- thus making the channel that much more visible to Avaya's executive committee.
"We see it as a statement of commitment. Find me another company of our level where a North America channel head reports to an officer of the company," Mitchell told CRN.
Avaya is spending less time recruiting former Nortel partners and competitive partners these days and spending more time growing the partners it does have. Barat Dickman, senior director, global channel programs and go-to-market strategy, said that Avaya now sells 76 percent through the channel in the Americas -- a nearly 30-point swing by the company since it acquired Nortel's former enterprise unit in 2009.
Compared with a year ago, there are 34 percent more Avaya Platinum partners, 20 percent more Gold partners and 16 percent more Silver partners, Dickman said. Avaya also has 14 percent more sales and design specialists in the channel than a year ago, and has issued three times as many services credentials. That, combined with other statistics such as Avaya passing along 1.5 times the number of qualified "hot" leads to partners than it did a year ago, nets out to a growing channel, with more competencies, and better enablement from Avaya.
Here's a stat presented by Avaya that got to a few partners: Forty-six percent of Avaya's current revenue comes from its services business. While it's little secret that Avaya has been challenged to give solution providers a uniform, profitable services strategy, Mitchell said they will see the fruits of Avaya's deep, recent investment in those efforts in just a few months' time.
In addition, an Avaya employee with direct knowledge of the services business said the overhaul will be comprehensive, and partner profitability will be a key component of every piece of the program -- dubbed Avaya Client Services -- introduced or reintroduced next year.
Avaya talked a lot throughout the conference about how to attack Cisco and ShoreTel, which Avaya made clear it considers its two most immediate competitive threats. Partners, however, feel that Avaya should spend at least as much time on the UC threat posed by Microsoft Lync (pictured), and better direct Avaya partners on how to sell to customers who want or already have Lync implementations.
"I struggle with this with Avaya," said John DeLozier, senior vice president of sales and marketing for Arrow S3, the Irving, Texas-based solution provider arm of distributor Arrow. "You want us in the Lync discussion. If we're not in that discussion, [customers will] just pull the whole thing out and go with Lync. Avaya works with Lync."
"If a customer says they're going Lync, we have to say yes," said Dan Ferguson, president and CEO of AdvanTel, a San Jose, Calif.-based solution provider. "We can sell Avaya for voice and Lync for presence and chat, and inject Radvision for video. If we say 'no Lync,' they'll just go work with a Microsoft partner and we lose them."
Avaya's data networking business has seen slow, but steady progress, and what's helped, according to many Avaya partners, is that Avaya has shifted from a stance of selling data against Cisco and the other infrastructure incumbents to approaching data sales as an underpinning of the UC and contact center solutions customers are already buying from Avaya.
"The strategy is not to go toe-to-toe with Cisco in data. That's a losing strategy," Avaya's Mitchell (pictured) told CRN. "But we have a unique slice of the data center, and in the midmarket, you have two major benefits: one, that the customer gets it all in the same rack, bought from the same place, and two, a very favorable price and removing costs to the partners."
"We need data to be part of a total solutions approach," said Steve Leidholdt, president and CEO of STL Communications, a St. Louis-based solution provider. "We'd approach it not as a lead product but as part of a solutions package offer that we make to the client."
One of Avaya's undeniable strongholds has been the contact center market but, as of late, Cisco, Genesys and other intriguing competitors -- such as Interactive Intelligence -- have been attacking Avaya's position with gusto over perceived partner frustrations and a lack of follow-through by Avaya following the Nortel integration.
Partners attending the conference, however, let Avaya know they feel things have gotten back on track, especially with the well-received updates to Avaya Aura Contact Center (pictured).
"We owned that space for years and years, and there were poor decisions made at Avaya in contact center," said Arrow S3's DeLozier. "It's going to be a long road back but they're getting back to the right strategy."
Major vendors with would-be iPad killers, such as Hewlett-Packard with TouchPad or Cisco with Cius, decided to wave the white flag after slow sales and no market oomph after the initial hype subsided. Avaya, however, is sticking by its enterprise-grade tablet computing device, the Avaya Desktop Video Device, while also expanding what it can offer for mobile UC and application integration on iPad and other devices.
"Keep in mind it was first announced and released before the iPad was even available, so you see the pace of consumer innovation," said Brett Shockley, Avaya senior vice president and general manager, applications and emerging technologies. "It's still a viable product. It's an enterprise-class device that incorporates concepts in awareness and gives you things like a fabulous audio experience. There is an audience."
During private conversations with CRN throughout the partner conference, more than one Avaya solution provider expressed disappointment that Mitchell and Shockley were the only SVP-level Avaya executives in attendance, compared to previous years and bigger conferences, when CEO Kevin Kennedy (pictured), global sales and field operations boss Joel Hackney, and other top Avaya names spoke and met with partners.
"I don't like that they're not here rallying partners and meeting with us, especially considering how many of us came down here so close to the holidays," said the chief executive of a well-known Avaya Platinum partner. "There's so much talk about getting the Avaya partners more visibility with the executive officers. OK, great. Where are they? I mean, can you imagine [John] Chambers not showing up at a Cisco partner conference?"