Avaya Sales Boss: We're A Collaboration Company

Following the acquisition by Avaya of Nortel's enterprise business unit, where he was previously president, Joel Hackney this summer became Avaya's senior vice president, global sales and marketing, and president, field sales.

Charged with the continued growth of Avaya's fortunes, channel and otherwise, Hackney says his greatest challenge is how to get the market to understand "the new Avaya": a collaboration-centric technology powerhouse with the channel acuity and services programs to match.

Hackney sat down with CRN this week for a wide-ranging discussion of Avaya, past, present and future, as Avaya's Americas partner conference got underway in Las Vegas.

Looking at all the things that defined your year, I wanted to start off from the perspective of channel growth and the perspective of Avaya's overall growth. What is your biggest challenge right now?

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It's getting the market to understand the new Avaya. That has several elements to it. You've seen us do a lot of innovation this year, and we've redefined the company. It's not something we just did overnight. The single biggest challenge from a channel organization and a sales force is getting that messaging out and making sure customers understand it. It's real. It's not just a set of promises. Ninety percent of my time right now is focused on working with our partners to go to end users and let them know we're the new Avaya.

What do you have to convince them on, exactly? Your perspective is interesting here because you came from the Nortel side and knew Avaya, in its previous reputation, as a competitor. What do you have to sell people on?

That we are a collaboration company, not a telephony company. We've moved the market and people are starting to get that. We're not a telephony company. We're not a voice company. We're a collaboration company. That's the consistent theme throughout the company and for our partners, and that's something our best partners understand the most. And the fast growth partners are the ones that can take that message out. It's not like we have to disprove anything -- it's not like there's a perception that we're not a collaboration company -- but it's a positive positioning for customers. It's, hey, you helped us with our communications -- our voice network -- in the past, and now you're talking about where we can take this in the future.

NEXT: The Idea Of A Collaboration Company

So it's more that the idea of a 'collaboration company' is itself pretty new?

Yeah, even the term is still relatively new. People define it in so many different ways and throw the word around, our competitors included. But what we do is leverage the real-time element. It's people first. It's not document-centric. It's not e-mail-centric. It's not database-centric. We've always been good at bringing people together and making them work better as a team and as individuals. I mean, that's what the phone did right? Go back 100 years, and it allowed us to work better together and and work quicker. So our DNA and our essence isn't changing. You don't have to fight uphill – people know that's what we do at Avaya. What's different now is showing them a new way to do it. They know we're passionate about doing it, but with our product launches this year, they're just seeing us prove how we're doing it.

OK, so the real-time aspect is one way in which a voice plus telephony plus infrastructure company is versus a true collaboration company. What are the other pieces?

Ease. Ease of use. And that's our advantage, we're doing with Apple's done in terms of the consumerization of applications. What they've done there, we're doing with communications in the enterprise. I don't know how to put it any simpler, that's what's happening. We're making collaboration easy. Today, you try to collaborate, you can do it, but it'll take you 10 minutes to set up your video if that's what you want. Or, it's going to call for video and not go to your voicemail. Or, it's hey, they didn't pick up the video call, let's try their phone. Our ease-of-use is you're doing things in seconds versus minutes. You have an integrated infrastructure.

This didn't happen overnight. A year ago, we were talking about Aura, which had tremendous interest, but also had a missing piece. The missing piece was we didn't have an easy way to show customers what was the benefit of that single architecture. So now we have the endpoints, i.e. Flare, that brings it all together. They see the power of that architecture and it becomes a much easier way to communicate.

NEXT: Measuring The Message To Partners and Customers

How are you measuring how effectively your message is getting out?

Ultimately, it's, "Are we making progress is revenue growth in the areas we're investing in?" But there are a few steps to that. One is brand awareness: is our message out there, are you seeing it in the C-suite, are we being talked about as a collaboration company instead of a voice company. Just go and look at where Gartner placed Avaya a year ago as a collaboration and UC company, and look at where they placed us now. They pushed a lot of companies now, and there are really only three companies that have a right to talk about a leadership position: us, Cisco and Microsoft. We all come at it from a different angle.

The second proof point is the level of interest we're seeing in the partners themselves, and whether there are quantified leads that we can help generate for our partner base and that our partner base can help generate for us.

Assuming the Gartner metrics are correct and you are growing market share, from whom are you taking it?

If you look at the latest market share it shows us growing both line share and revenue share. Where we took it was a combination of some people. I think it was from Siemens, and from Alcatel-Lucent. And Cisco stopped growing. We didn't take it from them, but they stopped growing. And Microsoft has not gotten any measurable traction.

NEXT: The Threat From Microsoft

Do you see Microsoft as an especially prominent threat in the UC space? They made their UC splash some years back and now they have Lync...

...And what is Lync about?

Well, they're pushing similar messages to you: partner-centric, tied-together UC. What is the threat to Avaya from Microsoft?

They're a big company and we respect them. Any time you compete with a company that big, you have to give them attention. But we're completely different than they are. We're coming at it from a people-first, real-time perspective. They're coming at it from a perspective of software platforms: e-mail centric and "let me add more to my messaging server."

It's a software stack extension in other words.

Yeah. We're really in different spaces. Even though we're in the same big space, they're at a different approach. I haven't seen them really making the progress I think some people would have thought they'd make. And I think they're finding it a little bit more complicated than they imagined two years ago. But I don't want to think for them. We respect them and they're a great company.

NEXT: The Difference From Cisco

Given Cisco's expanding capabilities, how does the way you compete with Cisco need to keep evolving?

We have to play to our strengths. Our strengths are very, very deep, and we continue to focus on where we're best and fit-for-purpose – and not try to be the shopping mall of IT. For us, how we beat Cisco is we know what we do best, we know what customers want, we know that part of the market is growing. We don't want to become a storage or server company, or a consumer company. It's hard for us to keep track of everything anyway.

If you don't want to become all things to all people -- don't want to be a storage player and whatnot -- how do you decide where to expand, then? I mean, a year and a half ago, we didn't consider Avaya a data networking player and we didn't consider Avaya a video player. But the data portfolio came to Avaya from Nortel, and in video we had the Flare Experience and the endpoints. How do you decide where to expand?

Anything that strengthens our ability to get work teams to collaborate between organizations. That was the origin of our company, and how we prioritize our investment in time. As we find technologies that allow us to bring teams of people together faster, and allow them to work together and more authentically. People say to me often, 'I didn't hear anything about feeds and speeds of your data network, Joel, so sounds to me you're not emphasizing that piece.' But what's missing in that discussion is that for the technologies to be working in real-time, what's behind it -- what integrates it -- has to be seamless. That's our screen. That's what you need to drive the opportunity in video, and you don't have to be prisoner to a market leader that drives some outrageous price.

NEXT: Profitability For Avaya Partners

So given these opportunities, how are you going to drive profitability for Avaya partners?

Avaya partner profitability will be driven the same way we drive our profitability. Partnerships are made when you have goal alignment and when the partners win, we win, and vice-versa. The collaboration vision is where we are. The programs we're announcing this week are all designed around how do we simplify our product and our service offerings for partners in ways that allow them to more quickly go to the growth space and make money as they do that.

How much of their value-add is coming from services? How does that piece need to continue growing?

It's essential and critical. To have a healthy services business, you have to have ongoing innovation, and to maintain profitability and grow revenue from a services perspective, you better have increasingly fresh and new technologies that keep you ahead of the pack. But we've never been stronger in services than we are today. To be an Avaya partner, think about what you can do now. We've given you a whole refresh cycle -- a refresh on innovation -- and to make that work for you, you have to have a service strategy that is complementary. We started two years ago saying channel is a critical part of our formula, and that doesn't change. Now, we're taking our services offering and simplifying it. What partners have said to us is, 'We feel like you're helping us but you have some work to do to get more simple.'

Where are the new opportunities there? What's coming next in terms of what you provide partners for services offerings?

I come back to what is tied to our innovation cycles. The video areas we've announced are one; to your point from before, we were not in the video space a year ago, and as of two months ago, we are. What we're offering now, to the best of our partners, is if you want to get in the game, if you want to invest, now's the time. And there's a lot of profit potential to do that. It'll be interesting to see how people -- which percentage -- use this opportunity to accelerate and how many people will sit back and wait until it starts to stick.

NEXT: The Services Mix

For an enterprise-focused Avaya partner, say, with a regional to national presence, what's the ideal services-versus-product mix at this point? What are you trying to inspire in those partners that aren't growing services revenue as fast as they should?

I'd hate to give that number as a blanket number, because taken out of context, people will misunderstand the question. It goes in cycles, and I'll use video as an example to play it out. What we know for a fact is that we're going to customers, and everyone's trying to figure out their video strategy. So that right there is a service opportunity. Partners can see, we have experience with collaboration, so why don't you work with us and we'll map that video out for you. It's a professional services capability there. It's not services in terms of screw-tightening, but it's the type of services our partners want: high-margin, high value-add. If you're a partner of Avaya, that's what you're delivering before you even talk about the box.

The connectivity of collaboration allows a partner who may have had a segment of the market -- voice-related only, maybe -- to start thinking about services around other areas in collaboration. We know that for every $1 spent on video, there are $3 spent on data. So what does that mean? If I'm a partner and I figure out how to sell video, I've expanded my addressable market significantly because I was a voice guy, now I'm a video guy, too, and I can sell services. And oh by the way I can offer from a data product set that I can build services around, too. It's all collaboration. Options are endless for a partner looking to drive innovation with us.

How fast is that data business growing, specifically, and can you talk about the rate of traditional voice or telephony -- well, traditionally non-data Avaya partners -- jumping in there?

We've seen tremendous growth for our data portfolio. We don't share those numbers publicly, but I'll tell you it's exceeding the market growth significantly. The biggest growth through this year from 2009 has come from reactivating the Nortel base. No surprise, they went through a period of questions and we thought this would be more or less how it happened. Once they believed Avaya's in the data business, we'd see a big uplift, and it has been a big uplift. Customers believe it, and they're spending. But yes, part of our growth strategy has been how do we take our data portfolio to our traditional voice customers. You're starting to see some progress there. I wouldn't say there's a lot of traction yet. But globally, we see partners making major investments -- partners who see it as a way to expand their business.

NEXT: Was There Jump-Ball For Nortel Business?

As you attempted to reactivate the Nortel base, as you said, a lot of your competitors tried to paint the situation as jump-ball, or whatever the euphemism might be for taking that business away from you. Did you lose significant business from that base?

You know, I'd never recommend Chapter 11 [bankruptcy] to anyone, but if you have to go through it, the best time to go through it is when the economic recession is the biggest recession of our lifetime. Because what happens is, sure, there was a jump-ball. But you know what? Customers were not making decisions because they were trying to survive, themselves. So when you look at the actual revenue growth of our data business versus others, we didn't miss out on a lot of action. The timing worked perfectly for us because the customers started to say, hey, Avaya is serious about the data business and Nortel. The economic recession means that's not going to grow, but it's not going to go down, either. I do hear those jump-balls. It's a cute little saying and it's somewhat accurate. But the ball stayed in the air for a long time in this case, and when it did come down, we were secure in the business.

Is your public sector business growing? And then on top of that, one of the things we're looking at right now is how partners are orienting themselves I vertical-specific practices like federal and health care. Are you steering partners toward those types of vertical-specific opportunities?

The first answer is yes, strongly. We are growing federal in particular but also at a state and local level. Nortel had a strong presence before, and Avaya had a strong presence before, and that's a growing segment. In the government space, to be successful, you have to have a track record, and it's very tough to penetrate if you don't. We have that, both in defense and in civilian. That's a big strategic focus for us.

The other two I would highlight are first, the financial sector, which obviously went through tremendous turmoil, but we always had a strong presence in the financial vertical and that's growing. There's a move back to innovation there. The second one is health care. Health care, we believe, is an industry that needs aggressive improvement in collaboration. The costs of bureaucracy is big and finding the best doctors in the world to tackle the toughest medical issues is what collaboration can help you do. We've developed a vertically-oriented practice for health care, and that's growing between 45 and 50 percent for us on a big base. What's accelerating that growth is that we're talking applications, we're taking business processes. We're not talking about a phone switch.

NEXT: Small Business And Skype

How about your SMB/SME business? Are you seeing gains in your small business efforts?

The past two quarters we've seen gains, yes.

We never get to look at your breakout numbers, that's why I ask. Especially when there are migrating product sets.

Yeah, and we're actually growing strongly as a company overall and we'll do everything to keep it that way. SME continues to grow. To our large system integrators and our regional VARs, it really is a different cycle and a different customer base. We've been putting a lot of investments around IP Office, and migrating the products between [Nortel] BCM and IP Office to get the feature set aligned. The second area is continued focus around the operational aspects of our SME business. You know well that if you can't order and deliver very fast in SME, you can't grow. So we're putting a lot of money around order processes and our billing processes around SME.

We're barely out of the gate with Avaya's strategic relationship with Skype. What do you want partners to understand? Skype is trying to expand into business enterprise and has a partner program that solution providers are trying to feel out. Avaya, a channel company, comes along and endorses Skype as a business company through this relationship.

Here's how partners can take advantage of it. It's all about strengthening the ecosystem of technology enterprises are looking for. I know Skype thinks of itself as bigger than consumer, but their user base is 90 percent consumer. They're used by employees, so you as a partner of Avaya, can go in and say, I can sell you Avaya solutions that are designed in a way that they interoperate natively. The customer gets that. You've helped me connect my company to m y customers better, and that's one more way the partner can differentiate themselves from a Cisco partner and or another partner trying to sell a different solution. Now, you've got another something in your bag of products that says to a customer, "I know your environment better than anyone else, and I've got a product set to make that interoperability happen, too. So, don't you love me?"