In recent years the dramatic shifts in the enterprise communications market have caused major disruption for the vendor and service provider community. As expected, the biggest ships are the hardest to turn to in a storm. Avaya is a pretty big ship, and they are now filing for chapter 11 bankruptcy in an attempt to manage a massive $6.3 billion debt load. While this certainly will cause some concern and eyebrow raising, I should note right off the bat that Avaya assures that this will cause no disruption or inconvenience to their customers.
While details are still shaking out, it doesn’t appear that Avaya is going away. They are just coming to terms with the fact that it is hard to be profitable when you have to pay over $400 million a year in interest payments on your debt. To address this, they are using chapter 11 to “restructure”. CEO Kevin Kennedy’s statement says that, “Reducing the Company’s current debt through the chapter 11 process will best position all of Avaya’s businesses for future success.” One option to climb out of the hole was to sell their contact center business. However, negotiations to do so fell through last year and the idea is no longer on the table. The sale of other assets remains a likely possibility.
This episode caused me to rethink some of the questionable decisions and strategies Avaya has made over the years. Of course, any company of this size is going to have its share of wins and losses, and it is easy for a monday morning quarterback to point out mistakes, but a few items are glaring in my opinion. The first, is the apparent mismanagement of the Radvision acquisition.
Radvision’s Scopia platform was highly competitive with its counterparts at the time of Avaya’s acquisition in 2012. In fact, in my opinion as someone who performed hands on, intense testing on the platform, it was absolutely on par with the market leaders. More so, it even offered a few unique and compelling features and capabilities. However, when Avaya acquired the platform, they did not retain the developers of the platform. With the pace of today’s technology advancement, development teams are what you want to acquire. The platforms themselves are secondary as they will soon be outdated. While some new additions have been added to Scopia, it is no longer seen as competitive with today’s generation of cloud video platforms, and Avaya does not appear to have the video talent needed to create the next generation of Scopia. It may sound harsh, but Scopia was a diamond that they turned into a lump of coal.
The other item that concerns me is their confusing messaging for their latest round of cloud offerings. I am known for primarily positive coverage. If I don’t like something, I don’t bother writing about it. However, last year at Enterprise Connect, Avaya gave a keynote address which I felt compelled to cover. Here is what I wrote at the time.
Avaya has clearly been busy, but their keynote message left many of us a bit confused. They have new “things” called Zang and Breeze. While I was happy to get a Zang t-shirt, I’m not sure that I get the Zang concept. Is it a communications platform or a developer tool or a little bit of both? It appears that Zang is actually a company, living as a subsidiary under the Avaya umbrella. However, I need a little help here. Can I make a Zang call? Do I work with Zang to leverage Breeze to create an app that allows me to make a call? Was this a keynote for enterprise collaborators or for collaboration developers?… …I need a little help pulling together Avaya’s vision for enterprise collaboration. Do they intend to create a cohesive suite like Cisco and Microsoft, or do they intend to create a toolkit for partners?
As you can see, I had more questions than answers at the time. Perhaps I just don’t get the Zang concept, but other analysts who have been following Zang much closer are having similar problems. Zeus Kerravala wrote an article last week titled “The Curious Case of Zang Office“. From the title alone, you can see that Zeus has some concerns and confusion about Avaya’s messaging. The article has an entire section under the header of “Lingering Questions”. In the article Zeus states…
“Clearly, there is inconsistency in the messaging on the corporate website vs. what is being explained, which must be clarified.”
If your company’s future depends on a successful transition from hardware to cloud, your messaging around your cloud strategy must be clear. If one of the best analysts in the space (I’m talking about Zeus, not myself) is struggling to obtain clarification on that strategy, you need to sound off the alarms. While rumors of Avaya’s death appear to be premature, they do a have a lot of work ahead of them before their ship can find some clear waters. Clearing out this massive debt is a necessary first step, but unless they can formulate a clear cloud strategy with understandable messaging they will continue to struggle through rough seas in the years ahead.