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Post-Chapter 11, Avaya Hires Cloud Veteran to Drive UCaaS Channel Revenue

Avaya came out of bankruptcy late last year with vague promises of aggressive cloud growth. With the recent hire of Mercer Rowe, its vision is getting a lot clearer.

Avaya has come out of Chapter 11 swinging hard at doubters of its cloud ambitions.

The telco giant’s decade-long battle with a crippling $6 billion debt load acquired after an $8.2 billion ill-timed leveraged buyout in 2007 finally came to an end last month when it emerged from bankruptcy ready to dive headfirst into the UCaaS market as a public company. Some in the industry have expressed doubt about Avaya’s ability to play catch-up in investments in cloud technology, and the language it was using late last year to describe its path forward into cloud solutions was pretty muddy.

But its vision is beginning to clear. The company this week announced the appointment of Mercer Rowe, lately of IBM’s cloud and Watson divisions, as senior vice president and general manager of Avaya Cloud, a brand new organization specifically formed with the singular goal of driving cloud products and services.

Rowe is no newbie to the cloud space. He is the founder and former CEO of VMware vCloud Service, a joint-venture with SoftBank to deliver cloud services in Japan. He incubated VMware’s cloud service business, according to an Avaya release, and spent a decade building sales, channel, and services organizations with cloud startups in the enterprise software and service provider spaces.

If this appointment is any indication, Avaya isn’t playing around with its uphill scramble to secure a competitive foothold in the UCaaS market.

Throughout 2016, Avaya tried one move after another to get out from under its debt load. Rumors were rampant, ranging from the company coming up for sale to speculation it would off-load its lucrative call-center business. The company finally folded early last year, declaring Chapter 11 and gaining a bit of breathing room to restructure its balance sheet.

As part of those efforts, the company sold its networking business to Extreme Networks for $100 million last summer. In December it announced its emergence from Chapter 11 and its plan to dive into 2018 as a publicly traded company and aggressively grow its cloud business to once again be able to compete with longtime rivals like Cisco, as well as the new, agile born-in-the-cloud collaboration solution providers popping up everywhere.

It’s certainly got the cash to do so now, if it’s careful with its R&D investments. Avaya today has over $300 million in cash and a debt load that’s about $3 billion lower than it was going into Chapter 11.

While the company is still a few steps behind these competitors in terms of its business focus and channel programs, Rowe’s appointment is a strong signal of its commitment to catching up. Avaya may have only created a cloud specialization for partners last year, but all signs point to a determination to leverage its channel ecosystem as a primary driver of revenue and market share growth.

“Mercer brings a wealth of knowledge that will help us expand our business in the cloud, which is critical to our growth,” said Jim Chirico, president and chief executive officer of Avaya, in a statement. “By creating a business solely focused on cloud products and services, and with Mercer’s leadership, we will accelerate the delivery of cloud solutions that meet the growing needs of our customers and partners.” 

Rowe’s responsibilities will span public, private and hybrid cloud offers, including cloud R&D, application development and services as well as sales for the newly organized business unit.     

“Avaya is a global leader in contact center (CC) and unified communications & collaboration (UC) software solutions with over 130,000 customers worldwide and an installed base of over 100 million users,” Rowe said. “The transformation of UC and CC to cloud delivery is still in the early innings and the growth opportunity for Avaya is one of the biggest cloud opportunities in the market today.”

There’s no arguing with Rowe’s estimation of the size of the cloud opportunity. Now we just have to see what he does with it.

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