Avaya Partners Relieved by Chapter 11 Filing, Decision Not to Sell Call-Center Business

Avaya’s partners weren’t caught off guard by its chapter 11 bankruptcy protection filing two weeks ago and believe the company will emerge as an even stronger software and services provider.

Channel Partners spoke with a number of Avaya’s partners to gauge their reactions to the chapter 11 filing, as well as the company’s decision not to sell its call-center business.

Avaya has been transitioning from a legacy hardware business to a software and services company, and has been looking for ways to decrease its debt load of about $6.3 billion.

Randy Koerber, CEO of Data Voice Exchange, said he was happy to hear Avaya isn’t selling its call-center business because it “would have been a nightmare, because [of] too many parties involved.”

“That’s Avaya’s flagship; if all of a sudden you have to go to two places for support, that makes it ugly,” he said.

Koerber said his customers mostly are in the midmarket, so there hasn’t been any pushback.

“In the midmarket space, they’re pretty confident that this happens, and a lot of companies go through it and come back out,” he said. “They have some IT infrastructure and support, but also rely heavily on our expertise and what we can bring to the table, and as long as we’re comfortable, they’re comfortable. I’ve been dealing with Avaya since they were [part of] AT&T – since 1984 – and I know they’re not going anywhere.”{ad}

Kenneth Heitner, president and CEO of Consolidated Technologies, said, “As ironic as is sounds, the news of the chapter 11 reorganization was almost a positive — because the prior uncertainty was worse than the action of addressing the debt.”

“It is better that Avaya didn’t sell off [its] contact-center business; it has tremendous value,” he said. “If they can renegotiate and reduce the debt without sacrificing their leading position in that market, it’s a good thing. I am approaching this with the view that addressing the debt is somewhat separate from the ongoing operating of the business. We have many customers with whom we work every day and are providing them with the same quality service and products. If Avaya can act the same way, while working through the debt, it’s good for everyone.”

Heitner said reaction from customers has run the gamut, from understanding “the way private equity management works,” to those simply “not willing to take any risk and are either pausing on their purchases or are beginning to investigate alternative solutions.”

“I think it’s still very early and I am hopeful that this can be addressed and closed out quickly so those customers will have the peace of mind that Avaya, with whatever changes are made, will still be the right solution,” he said. “Our job is educating our customers of that reality because it is very easy to make a decision based upon the moment.

Heitner said he doesn’t think it’s going to be “an easy six months and partners’ businesses will feel …

{vpipagebreak}

… pain through this period.”

“Avaya has been good in supporting the partner community through the process so far, so we need to continue to work closely with them,” he added.

Steve Leidholdt, president and CEO of STL Communications, said he’s happy that Avaya kept the company intact because one of its strengths is its complete product portfolio “that many of their competitors don’t have.”

“It’s fair to say with all the press, we’ve gotten questions from customers and we have been able to reassure them that it’s not unlike the American Airlines restructuring a few years ago,” he said. “A day after that was filed, all the planes and passengers traveled like normal and [there was] no impact on passengers. For Avaya customers, it’s much the same — not a product portfolio change, not a change in direction. It’s a financial restructuring that is, for the most part, in the background.”{ad}

This decision by Avaya completes its “move to become a software and services company, and be out of the legacy hardware business, and to emerge as a much stronger, long-term player in the software and services business, so we’re happy about that,” Leidholdt said.

Chandler Legarreta, Advantel Networks’ chief revenue officer, said Avaya had been positioning itself to file chapter 11 for some time, and keeping the call-center business is smart, with it being the “jewel of the portfolio.” The bankruptcy allows the company to keep that “very profitable” part of the business while affording it an opportunity to restructure debt, he said.

“The general feedback from our customer base has been very calm, very calculated, and there wasn’t a big surprise,” he said. “Most of our customers, the feedback is, ‘We’ll stay the course, because of their intellectual property and global market share, (Avaya) will survive this and be healthy as a result.'”