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Avaya, bankruptcy and the state of the changing communications market

Derrick Monahan, practice lead for unified communications, comments on Avaya and the changing landscape of the UC market.

Posted by CIO Dive on May 23, 2017:

When business communications and collaboration company Avaya filed for Chapter 11 restructuring in January, despite having "strong financial results," according to John Sullivan, CFA, VP and Corporate Treasurer for Avaya, it sent ripples through the technology community.

Avaya, which offers internet telephony, wireless data communications and customer relationship software, was born in more hardware-dependent days. But as businesses moved from hardware-based computing to cloud-based computing, Avaya fell behind.

Avaya’s bankruptcy is evidence that no matter the size, all companies are subject to changes in the market and strong, steady competition.

Now, as Avaya works to restructure, it serves as an example of how the corporate communications/collaboration space has evolved over the years and how companies that provide those services have had to react quickly or risk an uncertain future.

Today’s collaboration market

The business communications and collaboration market includes a variety of business tools, such as enterprise voice, UC applications, telepresence, email software, enterprise content management, enterprise social networks and hosted/cloud communications and applications, according to Synergy Research Group.

Despite many changes in the market over the last few years, the business communications and collaboration market remains lucrative. Total revenues from collaboration surpassed $9 billion in 2016, and Cisco grew its market share by 15% in Q4 alone, according to data from Synergy Research Group. Microsoft came in just behind Cisco, with Avaya and IBM in a virtual tie for third. Other major players in the market include AT&T, Verizon, Citrix, Polycom, Mitel, UNIFY and ALE.

So why is Avaya struggling while Cisco is thriving? Some of it has to do with the speed at which Cisco moved from on-prem collaboration solutions to cloud-based solutions. As customer demand for cloud solutions grew, some vendors responded and others didn’t.

"There [has been] a definite shift in end user costs," said Terrel Bird, CEO and co-founder of TCN, Inc. "Organizations of all sizes are looking for the flexibility and cost savings that cloud platforms provide."

But while Cisco embraced the cloud, Avaya placed big bets in other areas, according to Derrick Monahan, Practice Lead, Unified Communications at World Wide Technology, a company that now finds itself at times helping Avaya customers migrate to Cisco. "Instead of partnering out and looking at different areas where the growth was, Avaya built their solutions internally from the ground up."

Meanwhile, businesses adopted a more agile, cloud-based, collaborative work environment and moved away from working in the types of larger, slower-moving teams Avaya built its products around.

"Avaya didn’t have the breadth and scope that some of the other vendors had, whether that was unified communications, video systems, web conferencing, team collaboration or contact center," said Monahan. "Avaya was also late on the cloud solution. They are working on this now but Cisco has been the long-term leader and innovator in that space, which has made companies rethink where they plan to invest in the next 5 to 7 years."

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