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TBI: The Avaya Bankruptcy's Channel Implications

February 24, 2017 - Article

Adam DawsonBy Adam Dawson

A few weeks ago, the tech world was flipped on its head when Avaya filed for Chapter 11 bankruptcy. Since the turn of the Millennium, the multinational technology company dominated the market with its contact center, internet telephony, wireless data communications, and CRM software offerings. However, despite making 75 percent of its revenue off software and services in 2016, its tardiness to enter the cloud space has ultimately led to the dire straits it finds itself in today.

But this bankruptcy filing isn’t an omen of Avaya’s end. In fact, it can be seen as a new beginning. Avaya will now be able to restructure its debt so it can finally make the full shift from a hardware company to a software and services company — an extremely strategic and tactical move. With this filing, it will seek to reduce its debt load of $6.3 billion, according to Fortune, and free up more cash so it can run its business with greater flexibility.

This will allow it to reinvest more into the areas of its business that matter most, like its contact-center solution. Despite the fact that we’re seeing many businesses move to cloud-based environments, there is still a place for on-premises systems. Long-tail customers with large, complex contact-center environments, like American Express and J.P. Morgan Chase, fall into this category. Avaya understands this, which is why it has publically announced that it won’t sell its contact-center business.

However, while there is far less uncertainty around Avaya’s immediate future, it is still unknown how long this restructuring will take and how it will affect the company as a whole upon completion. As Avaya marches though Chapter 11 bankruptcy, there will be questions on what will be sold, how its overall business will be affected, and when the process will be completed.

Taking this into consideration, partners should focus on selling contact center as a service (CCaaS) during this time period. Although Avaya will continue to operate and provide long-term value, its bankruptcy filing will incline both existing and prospective customers to switch their contact center over to a well-established CCaaS provider. Companies nearing the end-of-service contracts on heavily depreciated equipment will make up the majority of this group.

For these businesses, uncertainty will be the main driving force. They likely have cloud in mind for their future, so the uncertainty surrounding Avaya’s bankruptcy can enable partners to push them to make the move earlier than expected. Instead of renewing their contracts and purchasing new equipment, customers will be more inclined to choose the more cost-effective and future-proof option of CCaaS. With no hardware requirements, no cost or responsibility for testing, the ability to scale seats on demand, and automatically implemented upgrades, CCaaS will allow them to save money by shifting from a capex to an OpEx investment.

Leading CCaaS platforms also offer these businesses critical features they need now to interact with customers, like cross-channel integration of chat, video, and social media. According to Harris Interactive, 86 percent of customers will stop buying from ...

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