Kathy Gibson reports from Gitex – Avaya has successfully emerged from bankruptcy to challenge for supremacy in the burgeoning customer experience (CX) market.
There’s a new spirit of optimism and passion at the company, with CEO Alan Masarek leading the charge.
“There is this tremendous trend towards customer experience,” he says. “And communications companies have to be driving it.”
Masarek believes Avaya is in pole position to do just this: “The company has a great asset base. It is already a leader in the contact centre and unified communications market, with some huge customers.
“In addition, it is an iconic brand – and it has global distribution.”
To seize the opportunity presented by the growing CX segment, Masarek says Avaya needed to complement its market leadership position with financial and business restructuring.
The company entered Chapter 11 of the US bankruptcy code in February this year, and emerged less than three months later, in May, with a very positive financial story to tell.
The $3,9-billion in debt has been written down to $800-million, with $650-million of that available as cash.
That achievement was possible because creditors bought into Avaya’s strategy and it’s vision for CX, Masarek says, and they believe that their returns will be greater on the equity than the debt.
Avaya has also delisted, so it’s been able to do its cost restructuring and operational changes as a private company.
This doesn’t mean its movements are shrouded in secrecy, though. “I like the transparency of being public,” Masarek says. “But our constituent is not Wall Street; it is our customers. So we do an annual report for our customers that brings the new company to life and lets us communicate with a level of transparency.”
This interactive report is live on the Avaya site.
In restructuring the business, the company has identified the directions its product development needs to take, and rationalised a number of older product lines, including some that harked back to the Nortel days.
“When you set an unambiguous product strategy on the one hand, and rationalise the product set on the other, the engineering group can focus and deliver on the roadmap quickly,” Masarek says.
“We have also become transparent about our plans and published our roadmap to demonstrate our reliability. We needed to do this to reclaim the confidence of our customers.”
Concurrently with that restructuring, Avaya has right-sized the cost structures and made several operational changes, with the result that the company’s profitability has been restored.
This is key, says Masarek: Avaya has traditionally reported good revenues, but profitability was lacking. Now, not only has it restored free cash flow but turns in a positive performance.
At the same time as the financials and product sets were being brought into line, the organisation was being restructured to support the strategy, and work is underway to revitalise the company culture.
“First we reset the go-to-market strategy in a way that we think is unique among our competitors,” Masarek says. “And this is to build it around our customers.”
Avaya counts some of the world’s largest organisations as its customers, with many of them on the books for as much as two decades, when the company was variously AT&T, Lucent and Nortel.
“These are large deployments,” Masarek points out. “And that customer set is modernising operations and moving to the cloud – but not like the SME world is. Theirs’ is much more of a gradual migration. So our go-to-market strategy of innovation without disruption is key.”
Avaya’s traditional solution set is in on-premise kit; its more recent offerings in the cloud are desirable but it’s simply not possible for large enterprises with massive investments in legacy equipment to do a rip-and-replace.
Avaya’s hybrid cloud options let customers move at their pace. They can layer their on-premise installations with innovations from the Avaya Experience Platform, allowing customers to connect how they want and giving employees the tools to meet customers’ needs.
When moving to the cloud, customers can first transition their current on-premises platform to Avaya Enterprise Cloud, keeping their familiar Avaya solution such as Avaya Aura Platform and Avaya Call Centre Elite in a dedicated instance on Microsoft Azure. That way there’s no disruption for customers and no training needed for employees. From there, they can easily modernise the customer experience by adding Avaya Experience Platform capabilities.
The Avaya Experience Platform helps organisations to maximise contact centre performance and connect to customers with seamless experiences across channels including voice, video, chat, messaging, and more.
Avaya Enterprise Cloud is essentially the legacy Avaya platform, running in a secure, flexible and personal cloud. Customers can expand their contact centre and unified communications as needed to extend their capabilities and communication channels.
“Customer service is how our enterprise customers compete,” Masaryk stresses, pointing out that CX needs to permeate the whole company.
“Where the industry is going, and where we are driving, is for CX to happen throughout the organisation in an omni-channel way. You can no longer think of solutions as just UC for the knowledge workers and contact centre solutions for the agents. We are not building yesteryear’s solutions, but permeating CX throughout the organisation.”
With very little competition in the on-premise space, Masarek believes Avaya has a good story to tell in helping the large, complex and sensitive industries customer set to transition to hybrid and full cloud when they are ready to do so.
“In almost any enterprise software category, large companies do not do a hot cut-over for anything,” Masarek says. “They don’t want to forklift their installation, but they do want to modernise. Whether they want to stay on-premise of jump all the way to multi-tenanted cloud – or any of the baby steps inbetween – we can do that with them.
“It’s about letting them choose their own journey, moving at their own pace.”
In this, Masarek believes Avaya has found its position in the market, with very little competition. “And this has resonated well with customers and partners.”
The final step in the company’s rebirth has been to revitalise the culture. Masarek has made a start in this direction by adding new executives in key functions and focusing on the recruitment and retention of talent throughout the organisation.
He is well aware of how difficult this turnaround can be, but tells believes culture is hugely important and so has set in place a strategy to achieve the change.
“First, we want to turn the company into a destination place to work, which is all about having a culture that attracts and retains the best talent. We will do this through rewards and recognition, through the corporate culture itself and through growth and development.”
Culture means a variety of things, he adds, from sustainability, inclusivity, the workspace themselves, staff wellbeing and inviting mutual respect.
“Being a destination place to work is fundamentally a personal thing and means different things to different people,” he adds, “However, it reflects itself in quantitative measures that we can track and ensure they improve over time.
“But changing the culture only works if you walk the walk, and go after the opportunities that people believe in. People want to win, so they will get behind the strategy.”
Avaya has given itself eight quarters to reinvent itself and, five quarters in, Masarek is confident the company is making good progress.
“There is a sense of optimism – and the company feels different to me; people believe in it.”
Who is Alan Masarek?
Alan Masarek came out of retirement 14 months ago to lead the restructuring of Avaya.
His most recent position before that was a CEO and director of Vonage Holdings, from 2014 to June 2020. He led Vonage through its transformation from a VoIP-based residential phone provider into a global enterprise cloud communications company.
Before that, he was a director at Google from 2012, following Google’s acquisition of Quickoffice, where Masarek was the co-founder and CEO. Having set up the company in 2007, Quickoffice had 26-million registered users by the time Google took it over.