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Avaya Chairman and CEO Don Peterson discussed the vendor’s expanded managed services strategy and the role channel partners will play in an interview with CRN Infrastructure Editor Jennifer Hagendorf Follett at Interop Las Vegas 2006. Basking Ridge, N.J.-based Avaya launched a lineup of new hosted IP communications services and VoIP products for the midmarket at the show.
CRN: It looks like Avaya’s big push at Interop is around hosted communications services and products for the midmarket.
PETERSON: I think we would say that the whole set of announcements today is focused on the midmarket. It’s a space where we would like to be doing better. We’re doing OK, but I think there’s more room to improve. And this set of [new] things, the On Demand [hosted services], MultiVantage Express [VoIP platform] and the S8400 [Media Server] are all aimed at serving the midmarket better than we have. It’s a market that’s very price-conscious but also very interested in technology and what it can do for them. So I think [the new offerings] should hit a good spot.
CRN: Why are you launching this midmarket push now?
PETERSON: It’s not a lot more than that the products are ready. They’ve been on the drawing board and worked on, in greater or lesser detail, for about 18 months, and the market has shown interest in hosted solutions, increasingly. So we’re anxious to get that positioning there. That’s an offering that scales above and below the midrange as appropriate, but I think the biggest appetites will be in that midrange group.
In terms of the blade upgrade for the installed base of ProLogix, that’s something we needed to do. We needed small blade technology, small server technology, in order to get it into the footprint. Now we have that. The MultiVantage Express is a cost-motivated product where we’ve taken all of the applications that most midsize businesses would require, moved them onto the call platform with Communications Manager, and delivered a very cost-effective, single-box capability. We’ll see how people react to it.
CRN: What’s Avaya’s overall managed services strategy? Where do you go from here?
PETERSON: Well, historically, we’ve had a strong maintenance business. We had some telephony and network management customers, but not too many. Generally speaking, our involvement in those was pretty customized. We had difficulty in getting to a standard process so we could do it efficiently and, in the long run, reliably. So what we’ve done with Avaya On Demand is standardize that offer.
On the one level with managed services, we’re trying to bring to the market our learnings from that prior outsourcing experience with standard offers, standard billing processes, standard rates and costs, and so forth so we can extend the maintenance business and get more customers more fully involved with our offers. A lot of customers view the migration to IP telephony with some degree of concern. It is a somewhat complicated technology. It’s complex managing the dual TDM/IP telephony environment, which will almost certainly exist for a period of time in most customers, and in large customers it could exist for years. So with our managed service offering including the IP telephony migration, it’s something we think a lot of customers will find interesting.
CRN: You said in Avaya’s most recent earnings call that the uptake of managed services so far has been slower than expected. What’s been hindering it?
PETERSON: That’s a good question. I’m not sure we know precisely. There are cost savings when that happens in staffing, so there is a human reaction because there is some job loss. There’s also in some cases just a reluctance to let go of something as intrinsic and as often taken for granted--this is going to sound paradoxical--as the phone system. It takes some focus on how exactly you’re going to manage the transition and what you want to put into your investment in people to get your mind around the possibility of managed services. ... If you put the managed service out and you don’t cut your internal capability, you’re not going to get the savings that are available. That is just a slow process. It’s a hard decision for people to make sometimes.
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