CRN Interview: Avaya Channel Leader On Breaking Down Barriers To Growth After Bankruptcy

Now that the Avaya has emerged from bankruptcy, U.S. channels executive Gary Levy says he's ready to kick partner recruitment and cloud-based business models into high gear.

Re-Energizing Partnerships

Gary Levy says Avaya's channel operation barely skipped a beat during the better part of a year that the company was in Chapter 11 bankruptcy. Now that the unified communications company has emerged from that situation, Levy, vice president of U.S. channels, says he's ready to kick partner recruitment and cloud-based business models into high gear.

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"We have made significant improvements in our business model," Levy told CRN in a recent interview. "We're re-energizing our partnerships and continuing to recruit cloud integrators, agents, affiliates. We have relationships with many more different types of partners than we have in past years."

Burdened by nearly $6 billion in debt and an under-funded pension plan, the Santa Clara, Calif., company filed for bankruptcy last January. The company reached an agreement in May to sell its networking business to Extreme Networks, and it officially emerged from bankruptcy last month with a new board of directors and CEO, Jim Chirico.

Avaya's debt load has been halved, and Levy said the company now has access to $350 million in cash on its balance sheet he said will be used, in part, to fund research and development.

Levy said the company's channel operation didn't suffer under bankruptcy, but is now poised to make decisions and act faster, especially in hybrid cloud, where the company is asking partners to focus considerable energy.

How has spending a year in Chapter 11 bankruptcy impacted partners, and what can they expect now?

We say it's the beginning of a new chapter for Avaya as we strengthen our balance sheet and improve our cash flow. For our partners, I think it's continuing growth. We have a very strong partner base with a very strong legacy base of customers and our partners really have stayed true and loyal to us throughout the process. We have many partners who have grown over the course over the last year and many partners who have invested with Avaya, as well. We're really looking forward to building on what was a challenging year.

How many partners do you want to recruit this year, and where do you see them coming from?

Since filing for Chapter 11 on Jan. 19, 2017, we have recruited over 1,000 net new partners globally. I would say we'd want to do more than that, and more importantly oftentimes is the quality, and the ability to bring them to market. Even if we did less, but did a better job of bringing the right partners into the ecosystem, that to me would be success.

Are those partners adding vendors to their roster, are they defecting from competitors, are they new to the space?

I would actually say it's folks who are new to the space. It's folks who have in the past sold on a recurring revenue-type model, or partners who have adjoining or adjacent-type technologies. There are many other cloud solutions out there that are not related to our business. When a vendor or an aggregator or an agent is selling cloud solutions, why not add on a collaboration solution? Why not add on a contact center solution, or a UC-centric solution. We've been looking toward those types of partners, whether they are systems integrators, or service providers, or it can be a business that is selling something in a cloud model but wants to attach a best-in-class communications solution to that. Cloud is about stickiness, and if they're selling something else, but haven't been into our space, we're going to get them into our space. We're going to make it easy for them with our business development team and our strong distribution network.

What should partners know about Avaya's financial condition today and how the company might position itself going forward?

We'll emerge with about $350 million in cash on our balance sheet and our debt load is reduced by about $3 million. What's important for our partners around that is we can certainly do more. When we talk about the emergence of cloud and customer-centric applications, we're investing in R&D, and also in our partners and our partner program. We announced the Avaya Edge program, which is a continuation of our program we launched last year. It's very cloud-centric, and it's really great around enablement and recruitment of new cloud relationships. The strongest opportunity we have aswe emerged is that we have a really great program and we are already rewarding partners better than ever. If you were ever going to sell cloud, this is the year. The opportunities are lucrative, especially around the co-investments that we have with our partners around the cloud ecosystem. We've closed more than 4,000 customer contracts over the last year. We're moving forward.

What aspects of the cloud are Avaya partners most successful with?

We provide hybrid cloud offers to our customers, so we have public, we have private. What the strength has been for partners over the last year is the hybrid model. Not every customer wants to move quickly, and the hybrid option has been a strength for the partners. I see in 2018, with our Equinox line of collaboration tools, partners growing not only in the traditional unified communications space, but in collaboration platforms.

Do you have adjustments or enhancements planned for the channel program once you officially emerge from bankruptcy?

I don't think so. We built such a lucrative program, and our partners help shape the program. I think the partners know the program, and we're in our first quarter, so the program is in full force. What our partners will see is that our ability to transform the business model and removing some of the barriers we've had over the past year, they'll see that as a key to our growth. We've really been able to break down significant barriers that have stalled or have been a complex ecosystem for our partner community.

Can you give an example of what breaking down barriers looks like for you and your partners?

In the process of even just procuring cloud seats, or procuring other pieces of Avaya software, in the past, there had been a process in which you would first need to go through special pricing, through our deals desk. It took longer than we wanted it to. It was at a pace where it was days rather than hours. We reduced cycle time from days to hours.

How will coming out of bankruptcy improve Avaya's competitive position in the market?

Having additional free cash flow in the balance sheet is important. Being able to make additional R&D investments is going to be important. Being able to focus on the future and the speed of innovation, the delivery of next-gen solutions and the partnerships we're forming with the AI community and others will allow us to be more competitive. Having a new board, a board of folks who are technologists and industry leaders who are positioning us to execute for the future, as well has a new management team really is eye-opening. That's true for our partners, as well. Over the last six months, our leadership teams have really embraced the partners, and the partners feel like they're part of what Avaya does. They're really contributing to how we go to market. The partners, more than anybody, want Avaya to be successful moving forward.

What competitors do you see most in the market, and what's the Avaya value proposition when you're up against them?

I wouldn't say there are any competitors we don't see. It's Cisco and Mitel and others. That's a normal competitive market. I wouldn't say we see one more than the others. Our value proposition is that customers have relied on Avaya for so many years for reliability and innovation. We've innovated more over the past few years than we probably have in the last 10. Unfortunately, the cloud of restructuring thwarted our efforts to get that out to the marketplace. We've been more quiet than we wanted to be with some of our announcements and innovations. The value proposition is that when it comes to the customer experience, customers have relied upon us, and the way our partners complement us, we're been really able to focus on how our technology enables people to do business. We enable 911 systems, school systems, emergency alert systems. The impact we have, and the reliability of our technology, has always been a competitive advantage.

How much growth did you see in the channel while the company was in bankruptcy?

We saw growth in different markets. I categorize that as growth in midmarket cloud, for example. We went through a year where we on-boarded many partners onto our IP Office solution and partners were on-boarding and starting to sell day-to-day. We saw tremendous growth in different pockets of partners. Partners who we thought might just be traditionalists and not move to cloud really embraced the cloud solution and the cloud sale. We invested as a company in a dedicated cloud business unit and a dedicated cloud business development team for the channel. The partners really saw the efforts we made to grow the cloud business and really launch it in a way that we hadn't in prior years.

How important is it for partners to break out of being traditional partners and become cloud-savvy providers?

It's important, but we talk about cloud your way. Partners need to understand not only how to sell cloud, but we've done a great job throughout the year of educating our partners on what that means to their financials and what they will go through in a cloud model. It's imperative that partners understand that the offers are there, and that they're educated and that their compensation plans are structured such that they can grow in the cloud. It's important that they understand their own financial model, and Avaya's financial model because the Avaya Edge program will assist them in getting through the move toward cloud. Every proposal that's out in the street is a cloud and on-premises proposal. Interestingly enough, if you look at customers, customers want to see the option. Knowing they have a choice with Avaya is really important to our customers, and our partners provide that.

What are some key Avaya products that partners need to pay attention to?

First and foremost, the Equinox product, which is our collaboration solution, as well as the IP Office [UC] solution. We have our enterprise cloud solution, which is based on our Aura solution. Those three, and with the two communication solutions – IP Office and Aura – we've really been finding that even the smallest customers are setting up contact centers. Customer experience centers are so critical to businesses' success. It's how they differentiate themselves from competitors. Folks have really learned to appreciate that a call into a customer experience center is at times the last effort of the consumer. That voice collaboration is key to customer satisfaction.

What do you need from partners that you might not be getting today?

Just that continued focus on the new technologies. Continue to learn with us. Go with us on the journey to AI and Blockchain and machine learning. As technologies around us are changing, continue to adapt with us and adopt those new technologies, and if nothing else, continue to be educated on those technologies and how they fit into your customers' ecosystem.

What's your message to partners as you come out of bankruptcy?

Many of our partners have heard it before. I just want to thank our partners for their trust and support. It was vital to us through the debt restructuring process. We grew in certain markets over that time because our partners really believed in our ecosystem, and really believed in our message and our products and our people. They trusted us, and they kept with us. They didn't start looking for exit strategies. They worked hard and knuckled down to make this successful. We're here, and the opportunity for growth is both of ours, not just Avaya's.