Avaya takes aim at Cisco with acquisition
Following its exit from Chapter 11 in December and just one week after going public on the NYSE, Avaya is doubling down on cloud computing and artificial intelligence with a new acquisition and taking aim at Cisco's leadership in unified communications.
The contact center and UC solutions provider also promises a customer-centric solutions development take and wants to increase penetration into new verticals: healthcare, emergency services and public safety, hospitality, and financial services and insurance.
Avaya announced on Monday the purchase of cloud-based contact communications provider Spoken, with whom it has been partnering in the development of solutions for at least the past two years. The acquisition, though, is still pending details to be formally closed.
Spoken provides real-time voice analysis for calls made to call centers and integrates data with Salesforce CRM – which according to Avaya's officials no other company currently offers.
"We are global leaders in contact center and number two in unified communications and with this acquisition we aim to become the leader," CEO Jim Chirico declared at the opening of the Avaya Engage conference in New Orleans.
"Voice is the biggest untapped source of revenues in the cloud market for omnichannel communication," added Mercer Rowe, cloud solutions leader.
Avaya offers a new, lean board of directors (executive VPs have been reduced from 13 to six), a new management team (a cloud-specific unit was created, for example), and a new post-debt restructuring momentum, with US$350mn for R&D and, if that is the case, takeovers.
Investment figures on the acquisition of Spoken, however, were not made public.
CHAPTER 11
The company's debt restructuring process and its tough 2017, on the other hand, were probably the dominant topic at the opening of the conference.
Brenda Emerson, head of the International Avaya Users Group (IAUG), mentioned it right at the beginning of her speech, as well as Chirico himself: "The rumors of Avaya's death have been greatly exaggerated. We are back and stronger than ever," said the CEO, paraphrasing Mark Twain.
According to Chirico, his company increased the operational guidance and goes now four years with stabilizing revenues.
According to preliminary first quarter results of its financial 2017 (ended December), reported last week, Avaya had revenues of US$769-779mn, compared to US$875mn the year before and US$790mn in fiscal Q4.
The total is divided into US$600-604mn for the quarter up to December 15, when bankruptcy protection ended, and US$169-175mn for the remaining of calendar 2017. Avaya plans to report official quarterly results on February 26.
To CFO Pat O'Malley, following the Chapter 11, 2018 should be the year of revenue stabilization and 2019 of revenue growth.
In its transition to software and cloud, over 80% of the company's revenues come now from software and of these more than 60% correspond to services.
Around 15% of product revenues are invested in innovation and R&D. The company also aims to hire more people, early stage and recently graduated this year, compared to 2017.
But standing up to Cisco will be challenging.
Cisco enjoys significant brand awareness across the corporate landscape and larger commercial clout. But to Chirico, Avaya is best positioned for the digital transformation and contrary to its rival offers CC/UC convergence.
"I compete with Cisco aggressively. I personally believe we do not have any technology obstacle. They are obviously very strong in their commercial presence in many countries. But we have better solutions," Laurent Philonenko, senior VP of solutions and technology, said in a press session.
LATIN AMERICA
Latin America and Canada still represent just 10% of Avaya's global revenues, according to Galib Karim, VP of sales for the Americas International region, which includes Canada, but excludes the US.
Speaking to BNamericas and other Latin American journalists, Karim said that Avaya already has contracts in the pipeline for the sale of Spoken's IntelligentWire product in Brazil and Mexico.
Furthermore, companies from 20 Latin American countries now use Avaya's cloud-based solutions.
Avaya sells services to all countries and territories in the region, with local presence in 14 of them and sales via partners in the remainder.
However, traditional contact center operations still represent 25% of the company's revenues in Latin America. Brazil is the second largest contact center market in the world in terms of agent positions.
"We have very strong presence in BPO and contact center in the region. In Latin America there are not many companies investing in cloud in our segment. Telecom service providers occupy the role. We see opportunity there," said Karim.
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