Avaya's big bet on Session Initiation Protocol (SIP) technology will define its future, said Avaya President and CEO Kevin Kennedy, who on Tuesday argued that customer embrace of SIP in this decade is a story playing out much like how the growth of TCP/IP boxed out proprietary networking protocols like AppleTalk and Novell IPX in the 1990s.
"Open standards prevailed," said Kennedy, addressing U.S. partners at Avaya's U.S./Government Sales Leadership & Partner Conference in Las Vegas. "Customers chose."
As Avaya charts a growth course for 2012, Kennedy and Avaya's top executives are urging Avaya solution providers to make a commitment to selling the full Avaya portfolio and shift their customer conversations toward business collaboration. Avaya solution providers are keying in closely on Avaya's 2012 strategy, with concerns about partner profitability and Avaya's partner enablement continuing to linger.
Kicking off the conference -- a pared-down version of last year's event, now that Avaya has split its formerly large partner conference into more intimate regional events -- Kennedy portrayed 2010 as a step-back year. Avaya completed integrating its $915 million acquisition of Nortel's former enterprise business, and while it has continued to grow revenue every quarter, Avaya has also invested a lot of its cash in restructuring as well as acquisitions, he explained.
"We have a lot further to go," he said.
Conspicuously absent from Kennedy's remarks was a mention of Avaya's pending initial public offering. But Kennedy and other Avaya executives did offer several growth metrics, including that Avaya's U.S. sales theater grew 5 percent year over year, that there's been overall revenue growth for the last eight quarters, and that Avaya now derives 55 percent of its revenue from products versus 48 percent two years ago, part of what Kennedy said was a focus on higher gross margin products. Overall growth is happening the mid-single digits, said Kennedy.
Regarding customer buying habits, Kennedy said flexible business collaboration is the next phase of voice and unified communications, and Avaya will attack it behind SIP and fit-for-purpose technologies.
Consumerization is one compelling trend, Kennedy said, noting that "the only way to participate is to provide enterprise experiences on consumer platforms going forward."
"CIOs can't keep iPads out. They can't keep mobile phones out. That's the way people do business," he said.
Data networking, virtualization and cloud are all fundamental to Avaya's strategy, he said. One third of all UC deployments, Kennedy said, will stall over the next five years because of misconfigured LANs and WANs, not because of flaws in the application, meaning smarter data networks are needed. In addition, he said, it will be "hard to win" without a virtualization strategy, noting that the cloud, with SIP as a driver of that model, is first and foremost a business model.
Avaya is organized to attack those trends around platforms such as Avaya VENA, its data networking architecture and Aura, its virtualized communications platform, not to mention tools such as the collaboration platform Flare and the Agile Communication Environment (ACE), a software platform used for embedding communications into business applications.
But a lot of the conversation comes back to SIP, he said. About 85 percent of enterprise businesses have deployed or will be deploying SIP in the next 18 months, he said. Kennedy likened the move to SIP to how programmers shifted from Fortran to C++ programming languages: a gradual shift that changed how programmers approached their jobs. SIP, said Kennedy, will break customers out of "proprietary islands of communication."
Kennedy urged Avaya solution providers to grow with the company by selling more of its products and services. It was a message later reinforced by Joel Hackney, Avaya senior vice president, global sales and marketing, and president, field operations, who urged VARs to find new ways to expand their coverage and focus on a "value selling" approach that identifies business issues and develops use cases to get to a customer solution.
"Make a commitment to sell the full stack," said Kennedy.