News of Avaya’s second bankruptcy since 2017 has gained significant traction, with its legacy base jam-packed with 90 Fortune 100 companies.
Since 2017, much of this base has remained somewhat surprisingly loyal, given the constant furor surrounding its finances.
Yet, some speculate that the news could be the last straw for many of its clients, pushing them toward rival vendors.
On this note, analysts have pressed competitor CEOs to share their thoughts during recent earnings calls. These included:
- Barak Eilam, CEO of NICE
- Mike Burkland, CEO of Five9
- Vlad Shmunis, CEO of RingCentral
Read on to find out their perspectives on Avaya’s future, migrations from its legacy base, and the financial troubles of another mystery contact center vendor.
Barak Eilam: Avaya Is Not Alone In Its Financial Troubles
NICE has had much success in winning customers from the Avaya base, and in the previous months, it has launched campaigns to lure in these prospective customers.
One email blast urged them to: “Choose innovation over uncertainty and gain peace of mind with a solution that will support your organization well into the future.”
With Avaya entering bankruptcy, some may have expected NICE to push such a narrative further. Yet, Eilam chose not to rub salt in Avaya’s wounds.
Instead, Eilam highlighted that financial troubles in the customer experience technology market expand beyond Avaya – noting one other legacy vendor enduring similar struggles. He stated:
Avaya and another large player out there that are really struggling to basically service debt. And we know for a fact that the management team is spending the majority of their time focusing on cash flow and how to service debt with a very, very high-interest rate.
“As a result of that, they need to take tough decisions that will impact both the short term but also the long term as they are limiting the investment that they can do in innovation.”
The second company that Eilam alludes to seems likely to be Genesys. Alongside Avaya and Cisco, it is one of the three stalwart legacy providers – and it is unlikely to be Cisco. Indeed, it just posted positive Q4 earnings results, with contact center growth.
However, the revelation that the vendor in question is likely Genesys may surprise some. After all, most analyst reports consider Genesys a market leader – including the Gartner Magic Quadrant – in which it has tussled with NICE for years at the top-right of the quadrant.
Yet, the decision to ditch its Multicloud CX platform is perhaps an inditement of these troubles.
Nonetheless, such murmurings offer NICE a critical differentiator in its financial stability.
“It provides a great opportunity for us,” concludes Eilam. “We see it already that customers and partners are starting to move away from selecting these platforms.”
Mike Burkland: Almost Everyone Saw This Coming
All three of Five9’s biggest customer wins last quarter came from Avaya’s deep legacy base. Yet, Burkland believes that it is simply “a coincidence.”
According to the CEO, the financial speculation swirling Avaya since its first bankruptcy in 2017 meant that its return to the courts did not result in a tectonic shift from the legacy stalwart. Instead, it is merely the continuation of a longer-term trend.
Going deeper, Burkland stated:
They’ve had their financial struggles on and off for a better part of a decade, so I don’t think we’ve seen a dramatic shift where everyone is jumping into the fray and putting down RFPs (requests for proposals). Most folks saw that coming for several years.
More interestingly, however, Burkland reported an uptick in migrations from Genesys, mirroring Eilam’s analysis.
When discussing the on-premise providers Five9 displaces most, he stated:
It was two…. [then] we were seeing more Genesys become part of those three. One and two being Avaya and Cisco, with Genesys a distant third. Those are becoming neck and neck now between all three.
The trend suggests that Genesys has significant work to re-engage its legacy customer base – after promising to focus all its “innovation, investment, and resources” on Genesys Cloud CX.
Following this announcement – while culling its Multicloud CX solution – it may have disillusioned many of its on-premises customer base.
If it fails to re-engage them, murmurs of its financial troubles will likely grow stronger.
Vlad Shmunis: Avaya Will Emerge “Substantially Stronger”
Unlike NICE and Five9, RingCentral is more of a partner than a competitor of Avaya. Indeed, that is perhaps an understatement, with RingCentral supporting the pre-packaged bankruptcy.
As such, it’s unsurprising that its CEO offered a brighter outlook.
“No one wanted Avaya to go bankrupt again,” stated Shmunis. “But we are firmly of the opinion, and I think Avaya concurs, we remain the absolute best cloud destination or destination for their world’s largest customer base migrating to [the] cloud.”
We have the integrations. We have endpoint support. We have channel relationships, and we have the sales process well-oiled.
Under its original agreement, Avaya acted as an agent to pave the way for legacy customers to migrate to RingCentral. In doing so, the vendors moved hundreds of thousands of seats.
Now, they have expanded the agreement to combine the migration with Avaya Cloud Office and its endpoints in an attempt to win more business.
As such, the vendors may increase contract value while Avaya becomes a wholesale distributor, taking charge of customer relationships and taking a share of each contract’s lifetime value.
However, will customers want to deal with a bankrupt provider? Shmunis acknowledges this as a concern, but argues: “No one is expecting this bankruptcy to last too long. This is why there is a pre-pack. We’re part of that pre-pack.
General expectations are that this is going to be a relatively short and relatively painless process and that the company will reemerge as a substantially stronger entity with a stronger balance sheet, much better debt coverage, etc.
“You might as well go to the cloud,” he concludes. “Why not go to the absolute cloud UCaaS leader, which is RingCentral and which has all of these differentiated integrations and assets with Avaya?”
What Do Market Analysts Think?
Every month, we sit down with a cluster of the customer experience industry’s most prominent analysts to discuss the biggest news stories from across the space.
This month, Avaya was top of the agenda, with guests including:
- Liz Miller, VP & Principal Analyst at Constellation Research
- Dave Michels, Prinipal Analyst at Talking Pointz
- Patrick Watson, Head of Research at Cavell Group
- Martin Schneider, Head of Research at Annuitas Research
Listen to their expert analysis on the bankruptcy – alongside the latest news from Salesforce, AWS, and Zoho – by checking out the following video: The Latest BIG News