Recent reports have painted a bleak picture of the current status quo at Avaya.
The most recent comes from the Wall Street Journal, which suggests it’s reaching a chapter 11 bankruptcy filing.
Such a filing would be its second within six years.
However, before buying into all the doomsday prophecies, remember: chapter 11 (restructuring) is not chapter 7 (liquidation).
Businesses turn to chapter 11 to help them reorganize their debts and repay creditors while continuing their operations.
Yet, the situation is troubling, especially with Avaya forecasting its Q4 revenues to have dropped to somewhere between $460m and $480m. That is significantly down from the $760m it recorded in the same quarter last year.
Avaya will offset much of this loss with a cost-cutting program that is set to achieve run rate savings of $524m by Q1 2024.
However, it now seems clear that Avaya must do much more, with revenues expected to decline further in 2023 and 2024, before it projects a return to growth in 2025.
As such, CX Today caught up with Steve Forcum, Head of Solution Marketing & Chief Evangelist at Avaya, to uncover how it plans to streamline its portfolio and retain a significant chunk of its customer base.
Avaya Will Narrow Its Focus
Part of Avaya’s restructure will include cuts to its portfolio, with many of its solutions likely to be sold off.
Avaya shared the following chart, which hints at this. Within it, there are 34 blurred-out bullet points under the category “exit”.
Unfortunately, Forcum could not disclose these details of these. Yet, it seems that the cuts chiefly aim to reduce overlapping solutions and product initiatives that distract from its new narrow focus.
The focus will fixate on three go-to-market initiatives. These are: Premises-based (includes Aura and Elite), Cloud (includes ACO and Experience Platform), and Hybrid.
With the latter particularly, Avaya seems to spot an opportunity to meet a market desire to deliver specific cloud services to its single-tenant clients.
By doing so, Avaya aims to support businesses that want an incremental journey to the cloud.
“Evolution, not revolution,” as Forcum puts it.
Indeed, many of its competitors – including market leaders like NICE, Five9, and Genesys – offer a platform change to a single, public cloud solution.
As such, Forcum believes that the “innovation without disruption” approach gives Avaya a “secret sauce” that will help retain many of its customers and possibly even secure new business.
Indeed, he notes how Avaya has engaged with many of its shared Genesys customers, rethinking their migration strategies after Genesys culled its hybrid and single-tenant CCaaS solutions this year.
“Most Genesys customers are shared with Avaya. We provide the voice underlay for a lot of those Genesys customers,” says Forcum.
So, we are preparing our customers for their leave of Genesys, who want a more sustainable path… Creating a bridge that takes cloud and connects it to their existing on-premise environment is what is resonating with those customers.
The massive benefit Genesys gain from their decision, however, is that they can focus all their R&D spend on one platform.
Meanwhile, Avaya will continue its investment in each of its three go-to-market initiatives – dedicating $204M to further innovation in 2023.
Can Avaya Achieve Its Aims?
Avaya was late to the cloud game, which put a massive dent in its side.
However, it now has a cloud-native solution, which is quickly evolving. Indeed, it added 50 new CCaaS features last month.
Such innovation catches the eye, and the go-forward plan may attract brands that prefer an incremental cloud migration.
Yet, the constant speculation around its finances will put a thorn in its other side, especially with its competitors, including NICE, fanning the flames.
These flames will continue to burn as Avaya’s revenues fall and stories about its debt restructure keep coming to light.
Despite these blows, insiders seem confident that Avaya will resolve its balance sheet – whether courts are involved or not.
Yet, its deep customer base – which includes approximately 90 percent of Fortune 100 companies – will have many questions about its future dependability.
Moreover, confidence from its partners is likely extremely low, especially from those experiencing a sense of déjà vu after the events of 2017/2018.
That time, Avaya got itself out of the sticky situation and may do so again. Yet, a third strike and…