Avaya's Channel Progress Questioned As IPO Discussion Lingers


It's been nearly two years since Avaya closed its $915 million acquisition of Nortel's former enterprise business unit and also revamped its channel program to a more streamlined global model focused on rewarding partner loyalty.

But questions remain about the vendor's channel direction, as as Avaya partners descend on Las Vegas next week for the company's U.S. channel partner conference, what's top of mind is what one partner described as a tug-of-war -- between an Avaya focused on growing its channel leadership and an Avaya so concerned about paying off its private equity owners and reaching a planned IPO that it's squeezed channel partner profit margins and gotten frustratingly distracted.

"There's been a lot of pain for partners over the last few years," said Stuart Chandler, president and CEO of Optivor Technologies, an Ellicott City, Md.-based solution provider and one of Avaya's largest data networking and government-focused VARs. "The margins for partners have plummeted, and that's a trend that cannot continue. They need to come out to the partners about how they're going to support the partner community and keep the partner community whole going forward. We are cautiously optimistic."

Several partners noted the substantial sweep of changes to the Avaya partner community, including that Avaya had cut a number of partners -- about 400 of the 600 previously authorized unified communications partners in the U.S. -- last year, but was also seeking new partners. As a result, the Avaya channel looks very different than it did two years ago, they said, especially given the frequent M&A activity among Avaya and former Nortel channel partners.

"I'm interested in what they think they want the channel to look like," said Jim Maynard, vice president of sales at Parsippany, N.J.-based solution provider Strategic Products and Services, whose Avaya business is up more than 20 percent year-over-year. "There's a lot of consolidation going on, particularly in the middle and lower end of the channel, and I'm wondering how Avaya feels about that. Larger partners are getting substantially bigger, and does Avaya think it's good that we're putting on the heft to compete effectively."

Clarity is what Avaya partners are looking for, agreed David Johnson, president and CEO of Jenne, the Avon, Ohio-based value-added distributor and Avaya specialist.

Some of it is operational; for example, partners are still waiting for details from Avaya on how it will adjust pricing models for higher-tiered partners, he said. Some of it is strategic, including Avaya's motivation to recruit more net-new enterprise and SMB partners.

"I think we're anxious to hear the specifics," said Johnson. "We're all going to be there seeking some sense of the strategy and direction."

Avaya has made good on its promise to be more channel-friendly, Johnson said. But he also noted that in the past two years, it has, for example, offered fewer services opportunities for partners. There's a push-pull, Johnson agreed, between Avaya the channel-friendly vendor and Avaya the bottom-line driven company with an IPO on the horizon.

"They've talked about more going to the channel, but then more services to Avaya," Johnson said. "So what channel partners have to deal with here is a more balanced approach."

There's also been the distraction of constant executive changes, partners said, including, in the past year alone, the departures of former U.S. channel chief Carol Giles Neslund, and also Joachim "Joe" Heel, Avaya's former senior vice president and president, Avaya Global Services.

"I've told a number of folks on the executive team privately that this has been ridiculous," said the chief executive of a top Avaya partner, who requested his name not be used. "You can't set strategy, and build relationships, and get things done if it's a new face every six months. It seems like that's calming down now, but we've seen it almost every year for years now."

NEXT: Avaya's U.S. Channel Chief Promises Deeper Engagement