Jim Chirico, CEO of Avaya, has had a pretty eventful eighteen months sailing the ship. Not only did he lead the company out of Chapter 11 but he also managed to re-list Avaya on the NYSE in short succession, a feat he wholeheartedly wouldn’t recommend anyone trying again!
After spending eight years in Singapore previously as part of his eleven year tenure with the company Chirico still returns on a yearly basis to address customers and partners in the APAC region. These days, and eighteen months into the CEO role, there is a lot of change which needs to be communicated to Avaya’s community.
On the transition the company is going through Chirico said “The company is still going through a transformation but its going well. If you take a step back, I think we are making progress in a number of areas. Coming off the back of 2018, that was the first year we had revenue stability in the better part of the last six or seven years. Our customers are excited about the new products, the product portfolio and the road maps we have within the company. More importantly though is how we’ve been able to grow and develop the talent we have within the company. It has been an exciting eighteen months.”
Taking Chirico back to the 17th January 2018, the day Avaya re-listed, I asked him how that moment felt for him personally and also for the company.
Chirico commented “That was great, it was one of those bucket list items to be honest. More importantly we had over three hundred customers, partners and employees share that day with us. Ringing the bell was really the creation of what we call the New Avaya, that is an Avaya which is customer led, a company which is investing more, not just in the growth of our company but in the growth of our employees, the growth within our product portfolios and the number of new and emerging technologies that we are offering to the marketplace. At the core we are still the same company, we are known for our technology expertise, known for our innovation and company that has been around for over one hundred years, and one that can be trusted. It was a new beginning, yet built of the core and fabric of the past.”
Avaya has been playing catch up on cloud after arriving late to the party. Former cloud chief Mercer Rowe was shown the door after less than a year and the latest arrival Gaurav Passi stepping in to the chair his remit is clear… accelerated cloud growth.
Chris McGugan, SVP of Solutions and Technology, at Avaya commented on their latest efforts to transition the company to cloud. He said, “I freed up about $50+ million in R&D investment to specifically focus on cloud. Many of those large enterprise customers are really looking at how they can leverage our private cloud and move that technology in a particular direction. This is largely because a lot of large enterprises have data privacy issues, or GDPR specific issues, which limit their ability to move into a public cloud. Especially in a European or Asian theatre, you have data sovereignty issues which really limit your ability to go public compute.”
“We have about 23 data centres across the globe where we can support our customers. We have been building automation technologies and support platforms around our cloud solutions to go and help those guys. We have also been modernising quite a bit of our agent desktop, UC experience and all of those tools to make them cloud friendly and cloud ready so as our customers choose to go on that path we are ready.”
Chirico commented on the three areas (or pillars as Avaya is calling them) where the company is focused. He commented, “Our core business (UC and CC) is very important. It’s important because our customers have made a significant investment and they want us to continue making that investment so that they can move to the cloud if and when they are ready.
The second pillar for us is cloud. We have a real differentiator in the marketplace in the ability to deliver a private cloud service for our customers. If you are a large enterprise you won’t move to a public cloud environment, but to provide the capabilities and their own hosted virtual private instance at Avaya for critical enterprise customers is a compelling proposition. Core is important in both private, public and of course hybrid. We provide scale no matter where you want to move your business.
The third is in services. We have over four thousand services professionals working in maintenance, working in professional services and working in private cloud services. It is that expertise that you (customers) can’t just grow because its takes years and years of experience. Our services business is doing quite well.”
UC and CC markets
We are seeing the some convergence taking place between two of Avaya’s core markets. The unified communications (UC) and Contact Centre (CC) markets are seeing some convergence as non-agent staff start to demand new tools from the CC space.
Zeus Kerravala, Principle Analyst at ZK Research commented, “I was a bit of a sceptic to begin with, do we really need to bring the markets together. What’s happening now, as CC has become easier to deploy, there is a lot of non-contact centre agents using contact centre tools. Anyone that needs to deal with customers like sales people, field service and things are like that are using contact centre. One company I interviewed recently had fifty contact centre agents, and one hundred people who aren’t agents using the tools. That drives a different set of tools, those people need to reach out to people internally through the extended enterprise but also to the customer. I think it is becoming necessary to be able to deliver that from one stack so you create consistent communications between customer and employee channels.”
After some huge movements in the UC space of late, namely the Zoom IPO, Microsoft’s increasing dominance and of course rumours surrounding Avaya themselves I asked what was driving some of this change.
Evan Kirstel, B2B Influencer, commented “We talked about the Zoom IPO and how that is validating that collaboration and meetings are back. That is squarely where Avaya is by bringing people together in remote setting and making meetings effective and efficient and meaningful again whether it is video, audio or messaging. I think that was a great validation of this space and how important it is to our work life to have good meetings.”
The rumours have ben flying thick and fast regarding a possible takeover by PE money this year. Although Chirico’s efforts have steadied the revenue figures over 2018 the speculation may have had an impact on sales. On a recent earnings call, which happened just after the event, Chirico indicated the market speculation may have been the reason the company didn’t perform to expectation in Q2.
Despite this, and looking at the large deal activity, the company still hauled in 78 deals over $1 million, 9 over $5 million, and 2 over $10 million. GAAP revenue was $709 million and their public cloud seats increased by 165% year-on-year.
Still, Chirico confirmed J.P. Morgan has been instructed to “assist in exploring strategic alternatives intended to maximize shareholder value.”
“The board has not set a timetable for the process, nor has it made any decisions related to any strategic alternatives at this time,” he told investors.
Avaya has finally realised they can’t do it all on their own and we are starting to see some pretty interesting alliance partnerships being formed. The latest being their IP Office proposition now available through Google Cloud. I expect to see a lot from the Avaya camp over the coming years as they look to battle the likes of Cisco and Microsoft.
“What’s happening now, as CC has become easier to deploy, there is a lot of non-contact centre agents using contact centre tools.” – Zeus Kerravala, Principle Analyst at ZK Research
“At the core we are still the same company, we are known for our technology expertise, known for our innovation and company that has been around for over one hundred years, and one that can be trusted.” – Jim Chirico, CEO of Avaya
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