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UC Musings from the Avaya Partner Conference

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UC Musings from the Avaya Partner Conference

By: -
5 Feb 2016

Sunny San Diego happened to be cold, rainy and windy during much of this year's Avaya Partner Conference. My usual morning run along the waterfront revealed a scene more akin to a naval battle than a hipster boardwalk - news crews scrambling about, sailboats grounded and sporting new gaping holes, flotsam and jetsam strewn hitherto ... The question on this UC Analyst's mind: would this disastrous cacophony extend into the partner conference? After all, Avaya's core UC product portfolio has fallen prey to the same shift in market dynamics that have pushed IP Telephony shipment reports down by a -3% CAGR since 2011. Worse, when you ask any given telephony-oriented UC vendor who they consistently win against, fingers often point to Avaya.

From a revenue standpoint, Avaya's YoY numbers reflect the shifting telephony market: Q4 15 revenues came in at $4B USD, down 23% from Q4 14's $5.2B. Of course, topline revenue reveals only part of this story, and CEO Keven Kennedy was quick to point to increasing margins (65% from 52% YoY), revenue per employee ($342K from $270K), an increase in software-based revenues (now 72% of total revenues), and a material increase in overall volumes in contrast with this decline in revenues. The cause behind the current revenue trajectory is now a familiar story - "the market is in transition from capex to opex communications purchases, and this new subscription-based model is causing a 'short-term' slowdown in revenues - which are expected to reverse over time." Avaya is not the only vendor with this challenge - it is, indeed, shared across all vendors in the process of evolving from hardware-based UC platforms.

In terms of the Avaya-powered cloud, we're still firmly in the "early-days" category from my perspective. Talking to several partners, I sense there still exists some level of what I call cloud trepidation - concerns include a perceived lack of control over hosted services, increased architectural complexity, and a lack of customization options.  Pierre Allard, Avaya EVP of Sales, notes that increasing the number of channel partners with a cloud competency is of high importance. Still, Avaya's current cloud presence and strategy is years behind the likes of Cisco and Microsoft. When asked 'why', Avaya's honest response is that their current target market is focused primarily on more traditional, premises-based telephony and contact centers - both areas of strength for Avaya.

All this said, Avaya is making progress towards the cloud. The Powered by Avaya partner-hosted solution includes the 'full stack' - Avaya Aura, Elite, Scopia, IP Office - a full-featured, hosted UC and Contact Center experience. Launched in 2014, Avaya has 12 global providers on board and a funnel of 100 partners on deck. Compare this to Cisco's HCS platform, launched in 2010, and with over 100 global partners currently hosting the solution.

In addition, Avaya partners with Google to provide the Customer Engagement OnAvaya - Google Cloud Platform. This platform was launched in Q1 2015 as a hosted contact center solution, and Avaya plans to add a full UC experience in 2016.

Avaya's executive team spent considerable briefing time highlighting their plans to evolve and expand its Engagement Development Platform (EDP) - positioned as the most full-featured UC development platform around. EDP currently provides API access to Avaya's UC workloads, SDK resources, a library of snap-in modules of code, and a designer tool that allows non-developers to create applications using a drag and drop interface. As a success proof-point, Gary Barnett, EVP of Engagement Solutions, noted they are now closing million dollar deals specific to the EDP platform. Moving forward, Avaya is planning to deliver a Snap Store in 2016, providing a platform for partners to publish and monetize custom Avaya UC apps.

As a UC nerd, however, my primary interest is in Avaya's evolution in the application department. Having acquired Esna last May, Avaya has been leveraging both technology and talent to improve its UC experience. Mo Nezarati, Esna's CEO, is now Avaya's VP of UC Applications. Mo delivered a clear line-of-sight to a single UC client in 2016 - the team already folded Avaya Flare and One-X Mobile clients into Avaya Communicator, and will pull One-X Communicator (desktop) and Scopia clients into the fold in 2016. Likewise, the team expects to combine Scopia and Avaya Aura Conferencing into a single platform in 2016, dubbed Avaya Conferencing 9.0. While Avaya has been talking about this convergence for some time, Mo's team appears to be delivering on the promise of a unified experience.

I think Avaya continues to duck more than their fair share of stones, thrown by competitors, enterprises, and analysts alike. While some of these stones are justified - the company is behind the competition in terms of cloud implementation, if nothing else - many are not. The transition from Capex to Opex-based purchasing is wreaking havoc on the majority of telephony-based vendors. The late state of Avaya's cloud can be attributed to a perceived lack of demand in its current customer base and a more traditional skill set within its channel. Avaya understands this and intends to augment its channel accordingly.

Avaya's focus on its EDP platform is spot-on, and appears to have the most mature, generally available UC development platform in the market today. While the competition will point to an emerging host of APIs and SDK material, Avaya is promoting an in-place platform capable of enabling both developers and business users to design, build, and test new solutions and communications-enabled workflows. The introduction of the Snap Store would represent a similar first-mover advantage in terms of UC-focused enterprise app distribution and management.

I'm also seriously impressed with the direction in which Mr. Nezarati has Avaya's development team heading. A careful, cautious, measured software lifecycle has been standard-operating-procedure for most enterprise vendors - but this approach is both outdated and illogical in today's software-based UC market. The name of today's game is agility, and both software and product development teams need to be in lock-step to succeed in this new world. Mo's messaging is on point in this regard - he is working to shift the battleship into the new world of continuous development, focused requirement gathering, and iterative release cycles. I believe we're seeing results already, with applications and platforms officially converging, and new prototype solutions on deck. And while we are under NDA regarding any new prototypes, we can say confidently that Avaya is doing more than just thinking about what's next.