Avaya CEO Discusses Tech Advancements, ‘Doubling Down’ on Partner Growth
“We probably have the most fully featured products out there on the planet,” he said.
June 28, 2023
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CF: Again, what are the financial implications for implementing the technologies you just explained?
AM: I always take a customer-in approach. They’re concerned about whether they have technology that can reduce cost and provide a better experience. Now it may change fundamentally their interaction with their downstream customer, because lots of it might be able be solved through bots and various voice deflection and others can be solved more favorably. There’ll be a cost, but there may actually be fewer agents required, because you can take the more routine questions, answer them machine to machine and the more difficult ones the humans can handle with the assistance of the generative AI solutions.
CF: What differentiates Avaya now versus another company in this field? Differentiators
AM: Take AI summaries for example. These summaries are not particularly differentiating. The reason they are not is because most of the AI functionality out there is third-party platforms, such as ChatGPT. There are hundreds of these platforms out there that provide one element of AI or the other. What’s happening is the AI technologies are becoming table stakes immediately because of the third-party platforms. What differentiates Avaya is what I’d like to call ‘the package’. Do I have the software that drives the appropriate innovation to help modernize the customer? Do I have the support modules that again support the customer, the hardware, and then the professional services? For example, when we think about cloud, the nature of cloud, multi-tenant cloud is one size fits all. I’m consuming a tenant from a multi-tenanted solution. Therefore, everybody can access the same set of features that may work fine in the SMB world, but it does not work in huge enterprise. Services are really important because customization is the order of the day. The point is the services element. It’s all a package. It’s the software, the support, the hardware and the services. And when you apply that to a base customer, an existing customer who’s trying to go on that migration, they want to modernize, and they want to avoid the disruption. That package is what is sort of creates the competitive moat. That’s the package which is differentiated.
And by the way, I’ve been running software companies for a very long time. It has almost never been a single feature that wins the day. We all build software. If you build a really cool feature, guess what? It will be copied. Software is not for the most part proprietary that way. Somebody has some cool feature, somebody else is going to build it. That’s why it’s very hard to differentiate the AI stuff as cool as the AI stuff is. It’s third-party platforms, which means everybody can incorporate it immediately.
CF: So, what you’re saying is what ultimately differentiates Avaya is the ability to offer the software, the hardware, the support modules and professional services, all in one grouping?
AM: It stitches together in a package that somebody else can’t generally provide. And when you apply that package to an existing customer, we’re already the incumbent. We’ve lived together for a long time. We understand how proprietary and bespoke the routing and call flows and call plans are, and we can leave that intact. That’s the whole idea of innovation without disruption. We can leave it intact, but bring new functionality—chat, social, digital, AI—on top of it without disrupting what’s working so well and what’s underneath. That’s super differentiated, because others … you’re going to go to somebody else. It is a rip and replace by its definition. Somebody else is going to try to sell you and say, “Well, here’s my innovation.” But you’re really implicitly promising innovation with disruption, because that’s the nature of a rip and replace. What we’re asking customers and saying, “Look, we want you to stay intra Avaya, because we’re offering the innovation without disruption.” You can stay with us in that migration to the cloud. Whether you’re going to go in baby steps, you’re going to go in big leaps, or you’re perhaps not go at all. We can handle you any which way you want to end up.
CF: With so many companies with a variety of business models that do business with Avaya, how are you able to seamlessly offer everything that you do, from the hardware to the professional services customization, etc., and provide the new offerings you’ve discussed at Engage?
AM: We’ve been in this business for a very long time. We’ve been running those four elements for a very long time: software, support, hardware and services. And at scale. What makes the actual innovation without disruption theme executable for us is that the premise solutions are very mature… bullet proof, battle tested, heavily featured solutions, whether it’s UC or CC. They don’t take a great deal of our development effort because they’re so mature. And we strongly do patches and security fixes and things like that, but they don’t take a great deal of development. The lion’s share of our development is focused on the new platform, AXP. It’s a single platform, just two deployment models. You can deploy in whole or in part. So, it makes the ability to handle the customer prem on one book end and cloud on the other… and a base migration is sort of a third motion whether they want to go a little or a lot. We’re able to do that because it’s our platform they’re sitting on. It’s our platform they want to go to, they can deploy my new platform, in whole or in part, it’s only one platform. It’s just two deployment models.
CF: Avaya currently sells in 190 countries. Are there particular regions where you’d like to expand your brand? You’ve mentioned Latin America. How does that expansion intersect with your growth and particularly in verticals?
AM: I think we clearly have an adequate footprint in terms of the number of countries we sell in. My goodness, we’re across the four corners of the globe. What we want to do is deepen our penetration in those areas. I would say one really strong example is in the United States. I want us to generate higher levels of growth. Hybrid prem and cloud have become much more attractive. And those SaaS companies that had great stock market appreciation, have pulled back and lost a great deal of their value. There is an opportunity for us here to really recapture some of the areas where growth has slowed.
CF: Considering the changes that you outlined technologically, will you be bolstering your tech workforce?
AM: Yes, very much. There’s a very aggressive recruiting effort that is about upskilling the talent. We have great capabilities in the communications market, and we almost invented it. We understand the space, we understand it incredibly well. We probably have the most fully featured products out there on the planet. They’re just more in the on-premise architect and structure. So, it’s bringing evermore engineering talent that understands modern, cloud-based architectures and development. We’re adding very aggressively. The engineering group is in what we call five centers of excellence throughout the world: Texas, Ireland, India, Argentina and Hungary.
CF: What is Avaya’s outlook for partners in the next year to five years?
AM: Partners are incredibly important partners. When I talk about partners, I mean indirect distribution. Whether that’s a distributor, VAR, or some sort of service provider or an agent. Globally, about 70% of our revenue goes through some level of indirect distribution. That is the model we are doubling down on. We’re continuing that push. Our five-year plan is actually public. We went through the restructuring. Everything we’re doing is now reflected in the financial plan. We’ve been very conservative regarding our growth, just because, again, we’ve come through this restructuring period. We think we sort of pulled everything down to the base and now we’re going back up from that base.
CF: Is there anything left to do regarding the restructuring?
AM: Well, I mean, there’s always loose ends, but the balance sheet restructuring is completely done. We emerged from that process March 22 and May 1 formally, and it’s completely done. All the cost, right sizing is essentially done, particularly in North America. In other areas of the world, there’s some statutory waiting periods where you make certain changes. Those are all defined and being implemented. It will continue out over the next several months. From a financial restructuring point of view, both in terms of debt, new cash, and cost structure, we are effectively done.
CF: Is there anything left to do regarding the restructuring?
AM: Well, I mean, there’s always loose ends, but the balance sheet restructuring is completely done. We emerged from that process March 22 and May 1 formally, and it’s completely done. All the cost, right sizing is essentially done, particularly in North America. In other areas of the world, there’s some statutory waiting periods where you make certain changes. Those are all defined and being implemented. It will continue out over the next several months. From a financial restructuring point of view, both in terms of debt, new cash, and cost structure, we are effectively done.
Avaya CEO Alan Masarek is portraying a new vision of innovation and financial redemption after his company came out of bankruptcy this year. At the Avaya Engage conference last week in Orlando, Florida, partners heard of a turnaround story. For example, Avaya has taken 15% of its revenue decliners and turned them back to growth within six months, according to the organization’s channel leader.
J Arnold & Associates’ Jon Arnold
Jon Arnold, principal at J Arnold & Associates, said a large part of that narrative is a recognition that much of the market is still on-premises based.
“There are a lot of cloud native vendors out there who are pushing cloud-only,” Arnold said. “And that works for a certain segment of the market. But where Avaya has always been strong has been in more of these government or traditional, big kind of organizations and campuses where [these firms] are not going to move to the cloud any time soon.”
Arnold added that hybrid cloud is an area where Avaya can make inroads and has the capacity to do so based on its on-premise history.
Avaya’s Alan Masarek
In this interview with Channel Futures, Masarek discusses that history and the tech company’s place in the market. He also talks of new technological innovation happening at Avaya, especially regarding the Avaya Experience Platform. In addition, he argues that advances in artificial intelligence have become a great equalizer within the industry and advantageous for the longevity of his company.
Channel Futures: There are so many technological changes happening at Avaya at the moment. If you had to narrow down the top three most impactful tech changes based on financial implications for Avaya, its partners and its customers, what would they be and why?
Alan Masarek: I think it really follows very consistently with the strategy. As we’ve spoken about, we’ve set our North Star on the Avaya Experience Platform (AXP). We have an aggressive road map in terms of working on that platform, which is again, what some in the past might refer to as CCaaS. But if you think, it’s broader than that, and that’s why we have branded it the Avaya Experience Platform. That road map involves not just building the platform … and we’re years into it. But there are two deployment models. One is that somebody can take the entire platform, which is an omnichannel, integrated solution, voice and all the social and digital channels. Or they can deploy it in part.
Think of it as sort of a la carte where, for instance, you wanted to bring in a WhatsApp channel on top of your existing on-premises voice. How you do that seamlessly is critically important to our customers because they’re on a journey, from on-premises to cloud. They’re not jumping typically all the way to public cloud. They’re taking these gradual steps in between. Doing that seamlessly is critical for the customers. And the bigger and the more complex the customer, the more important it is to do it gradually without the disruption. It’s a group of initiatives.
Then, all the AI technologies that we’ve been using for years, for instance, natural language understanding, NLU. Everyone understands that chat, social, digital. But voice is traditionally analog. So, the ability to take voice and to be able to run sentiment analysis on it. So therefore, you have to understand how to intelligently route them perhaps to a supervisor, or to transcribe that voice channel with the related metadata. So now it becomes digital, it becomes searchable, as opposed to analog voice. That’s critical to our customers now. We’ve been using AI for a long time. Now the next evolution of AI is generative AI.
Generative AI has an incredible opportunity to sort of fundamentally change customer experience. Let’s say that agent had to look it up the old-fashioned way or call the customer back or send them an email. The whole sort of transaction would take far longer, would be far less pleasing to the customer. It would hurt customer experience, and it would have greater handle time for the agent. All of that can get remedied with these new technologies. So, in short, we’re doing a great deal of work incorporating those technologies.
Read the rest of our Q&A with Masarek in the slideshow above.
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