Avaya's transition from hardware to a SaaS provider

Soumik Ghosh December 12, 2016
Avaya's transition from hardware to a SaaS provider

Avaya's Channel Head explains the rationale behind the company's foray into the software and services segment.

Avaya, has sworn by the strategy that one-size-never fits all, and has made the strategic decision to transition to a software-and-services led company providing solutions and platforms. The raison d'être: It puts the customer at the heart of its business.

Chiradeep Rao, channel head, India and SAARC, Avaya, in a dialogue with ChannelWorld shares the company’s vision for 2017.

Avaya is transitioning from a hardware vendor to a software and services company now. Could you explain the motive behind this transition?

10 years ago, you had customers building up their own large enterprise infrastructures. Therefore, they were looking for complete solution build-outs within their own enterprise.

But what that meant for a company like Avaya was providing a server for every distinct feature capability that the customer needed. So, if a large customer wanted a complete customer engagement center platform to be built, Avaya provided between 10 and 15 servers to make that solution run.

As time progressed, customers started virtualizing, and VMware became more prevalent. A lot of customers started seeing the benefits of having virtualized environments where they could make use of fragmented resources across the enterprise. 

So, among the 15 servers, it required the compute horsepower of only six or seven. 

Given the fact that we power virtualization--be it VMware or Hyper V, depending on the customer implementation--I suddenly have the ability to tell the customer that if you've got a virtualized environment, you don't have to buy a server from us. Instead, you can use my software on your virtualized environment. 

This helps Avaya as well as the customer. The customer has to buy fewer servers, he has a consolidated environment, and management or maintenance issues disappear to a large level.

Sounds swell, from a customer point of view, but isn't Avaya losing out on the hardware revenue?

Actually, if you look at it from Avaya's point of view, the hardware business was a distraction. Because if the hardware goes down, I become a point of failure. I've got to stock hardware in terms of disaster recovery, or downtime. 

So, the cost benefit analysis works for me in terms of being able to have higher uptimes with the customer, as the hardware is no longer my responsibility. Therefore - no longer a distraction. I can focus on what I do best, which is other platform and the features that I give along with the platform.

Given the fact that we power virtualization--be it VMware or Hyper V, depending on the customer implementation--I suddenly have the ability to tell the customer that if you've got a virtualized environment, you don't have to buy a server from us. Instead, you can use my software on your virtualized environment. 

This turned out to be a win-win for both the customer and for us. The customer now has a neater environment, better utilization of resources. It allows me to focus more on the software platform and the features that help address a customer need.

Now, where Avaya was proactive was in ensuring that before the customer had a virtualized environment, we had a virtualized and scalable capacity on our platforms. 

Now with SMAC storming the enterprise, what does it mean for Avaya's desk phone business?

Now, the part that takes the phone out is mobile. With more customers adopting mobility solutions in their enterprise, the more you want the application on the device you're carrying.

So, in more evolved organizations, the concept of hard phones becomes redundant, and possibly, not necessary.

However, a larger majority still have hard phones at their offices, but the trend is catching on. The biggest driver here is the virtualized platform. 

Also, another trend we've been observing is that the ultra-big guys asking for business models that are not Capex. Instead, they're asking me how many interactions I'm going to have by voice, on chat, or messaging. And they want a business model that pays per interaction. 

How is Avaya targeting the smaller businesses for its IP Office? What's the roadmap for 2017?

If you go five years back, Avaya was predominantly a solutions provider aimed at the enterprise. So the minimum edition roll-out for an enterprise would be around $200,000 to $300,000. 

But an SMB cannot afford this kind of a solution because they're looking for easy to roll out, and relatively low features. 

So, three years ago, we came out with Avaya IP Office. This had relatively less features, but at the same time did more than what was required of the job. And this is all IT-based.

The problem we're facing is that we're so uniquely positioned in this space, that we need more partners just to cater to the demands. So, from a relatively low base, we've been growing over 100 percent for the last three years.

Now this has proven to be the most competent, feature-rich, yet economical platform on IP for the mid-market or SMB today.

In fact, the problem we're facing is that we're so uniquely positioned in this space, that we need more partners just to cater to the demands. So, from a relatively low base, we've been growing over 100 percent for the last three years, year on year.

Now, we're also targeting the tier 2 and tier 3 cities like Nashik, Nagpur, or Bhopal. So, we've got another 20 cities in which we'd be developing the partner ecosystems.

Is Avaya looking at venturing into newer verticals/LOBs in 2017?

Yes, we've looked at the BPO sector. The need of these BPOs from us, for voice-call support has come down. Also, they have moved up the value chain in terms of analytics.

What we've done with one of our customers is implement a voice-based caller authentication that eliminates the need for multiple security questions. This increases customer satisfaction and gives the company a foolproof way to enforce security.

In addition to this, we're focusing a lot on government sectors; we're looking to increase our relevance in the BFSI segment; healthcare is another segment we'll be driving at in 2017; and IT/ITeS will continue to be one of our prime focus areas.


  • Edited by : Vaishnavi J Desai