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Avaya Partners 'Cautiously Optimistic' About Cloud Office

Avaya admits it "lost its way a little" on innovation.

Edward Gately

February 4, 2020

6 Min Read
Avaya's Jim Chirico on stage at Avaya Engage 2020 in Phoenix, Feb. 3.

(Pictured above: Avaya’s Jim Chirico on stage at Avaya Engage 2020 in Phoenix, Feb. 3.)

AVAYA ENGAGE — Avaya‘s revenue in the channel has declined for four consecutive years, but Avaya Cloud Office and the Avaya IX Subscription program present big opportunities to turn that around.

That’s what Jim Chirico, Avaya’s president and CEO, said during the partner forum Monday at the Avaya Engage 2020 conference in Phoenix. The theme of the conference is “All In” and it has attracted more than 3,000 partners and other attendees.

On March 31, Avaya and RingCentral will launch Avaya Cloud Office by RingCentral, the unified communications (UC) offering based on the strategic partnership between the two companies announced last October. Avaya Cloud Office combines RingCentral’s UCaaS platform with Avaya phones, services and migration capabilities for businesses of all sizes.

Partners contribute 65% of Avaya’s revenue, Chirico said.

“We’re going to grow this company, and there’s no better opportunity for us to grow together,” he said. “There’s huge opportunity, so I’m excited. We need to figure out how to grow overall channel revenue and your companies. One way is Avaya Cloud Office.”

Partners have said they want to sell Avaya, but they need multitenant UCaaS and new opex models, Chirico said. Avaya Cloud Office and Avaya IX Subscription fill both of those needs, he said. Subscription provides customers with a flexible consumption-based alternative to traditional perpetual pricing models, and also can facilitate their transition to cloud.

Avaya went “all in” in 2019 with 6,000 new customers and more than 500 competitive displacements against Cisco, 8×8, Five9 and Genesys, and plans to continue that momentum in 2020, Chirico said.

“You guys are out there working hard for Avaya … and your commitment and dedication kind of fuel this company,” Chirico told partners. “We have a bright future together. But what we need to do, and in order for us to remain successful, is we have to sell the new. We need to be joined at the hip, and joined at the hip on our product road maps … so we can collectively put together the right account plans, strategies and execution plans to take what is rightfully ours, to be No. 1 in market share.”

Steve Forcum, Avaya technologist, said Avaya Cloud Office “absolutely” could give channel revenue a jump-start. It’s an evolution from one-time capital sales motions “where you’re getting those capital hunts and then it’s just a matter of, ‘All right, so I ate that, now what’s the next next thing to go hunt?’ and you’ve got to constantly be on the lookout,” he said.

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Avaya’s Steve Forcum

“Whereas the revenue from a cloud-based sale, it’s extremely sticky and it’s also very predictable for your business,” he said. “So if you’re a business owner, at the first of the month you have a really good idea about how you’re going to make payroll and how you’re going to cover your bills, and you know what the profits are generally going to be that month. And that cascades down all through the organization, even all the way down to account manager. I have a pretty good idea about what my commission check is going to be, and the name of the game is growing that base, so the annuity-based revenues that come from Avaya Cloud Office, not only will they have potential to help us grow revenues both within the channel, but more broadly as Avaya. But it’s a clean revenue, a much more predictable revenue. That’s why it’s so desired, whether it’s through our Subscription product, through our private cloud product or Avaya Cloud Office, that predictable revenue is extremely valuable.”

Vlad Shmunis, RingCentral‘s founder and CEO, joined Chirico on the stage and said there’s “not another combination like this in the world today.” Cisco has nothing even close, he said.

“If you have a conventional customer base and they want to go cloud, this is the only way to get them there in a world-class effort,” he said. “And for the partner community, this is …

… a unique opportunity to add a very sticky revenue stream and very little churn.”

Zane Long, RingCentral’s senior vice president of global channel sales, also is at Engage and said his company’s price parity program will apply to Avaya Cloud Office, which means when there are two partners in the same opportunity with a single customer, “we always present to that customer parity in pricing from both entities.”

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RingCentral’s Zane Long

“What this does is it allows for each of the partners that are involved to have the same opportunity to use other than pricing to drive that, so we don’t give favored pricing to either of the partners in that scenario,” he said. “It’s a very powerful program that we’ve developed and it creates a situation where the customer’s not confused.”

Long said since Avaya has a broader global reach, “we’ll gain access to [more] countries, and we’ll all benefit from that with their relationships they have in those markets, with partners in those markets and customers in those markets.”

Chirico said Avaya is one of the most profitable companies in business communications. Last year, it achieved a $750 million cash balance, invested more than $300 million in technology and reduced its debt by $250 million. Its debt load now stands at just above $3 billion.  Avaya also is repurchasing $500 million in shares, he said.

Avaya “lost its way a little” on innovation and re-emphasized that last year, Chirico said. It increased spending on R&D, intensified its efforts in the cloud, and expanded its product and solutions portfolio, he said.

In addition, Avaya focused on building out its strategic partnerships with industry leaders like AWS, Verizon, AT&T, Salesforce, Microsoft, Google and IBM Watson.

“We have never been in a better position to empower enterprise,” Chirico said. “This is absolutely a great time to be part of this company.”

Bryan Dancer, president and CEO of Allegiant Networks, said he’s planning to take a “wait and see” approach to Avaya Cloud Office. Allegiant has been an Avaya partner since 2004 and it predominantly covers the SMB segment with the company.

“Being first isn’t always the right way to go,” he said. “We’re going to see how [Avaya Cloud Office] materializes over the next six to eight months.”

Kenneth Heitner, president and CEO of Consolidated Technologies, also an Avaya partner, said Avaya’s goals for 2020 “were all good stuff.” He’s also looking forward to getting more details regarding Avaya Cloud Office and “exactly the timeline and how that’s going to provide integrations we need.”

“I think we’re cautiously optimistic,” he said.

Heitner also is looking forward to learning how Avaya is investing more on technology innovation.

“I think that Avaya has always been viewed as a leader and over the last few years the analyst industry has questioned that, and I think that if these innovations and this investment is what they say it will be, it’s a well-needed shot to bring us back to being the visionaries and the leaders,” he said. “The last few years, there’s been a lot of noise about Avaya’s future, so I think it’s important that they’re investing in it. We didn’t get a lot of the details, but when we see the details, hopefully they’ll live up to the expectations.”

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About the Author(s)

Edward Gately

Senior News Editor, Channel Futures

As news editor, Edward Gately covers cybersecurity, new channel programs and program changes, M&A and other IT channel trends. Prior to Informa, he spent 26 years as a newspaper journalist in Texas, Louisiana and Arizona.

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