The New Avaya - Insights into the Avaya-Nortel Product Roadmap

The year 2009 ended with the completion of a significant acquisition in the enterprise communications industry - The acquisition of Nortel Enterprise Solutions by Avaya. Nortel and Avaya have a large installed base in the industry for telephony systems (for both TDM and IP). The combined entity becomes a clear market leader in the telephony market, both globally as well as in the Asia Pacific region, with the largest installed base in the market for any single vendor and revenues in the vicinity of $5.5 Billion. The acquisition brings together two sales teams, a large channel infrastructure and popular industry products. While there was some loss of market share for Nortel over the last 12 months and Avaya's UC story in the past had not been strong, one cannot rule out the potential opportunity that the new Avaya can create with this acquisition.

Avaya's announcement of its combined product roadmap within 30 days of the completion of the acquisition is highly commendable. What stands out when you look at the roadmap & announcements made last week is that (a) the roadmap is largely non-disruptive for customers (both existing Avaya & Nortel customers), (b) it offers a evolutionary roadmap to a single platform viz. Avaya Aura, and (c) It incorporates Nortel’s data portfolio to strengthen Avaya’s branch and SME solutions

This blog is based on Avaya announcements and discussions with Avaya executives at an Avaya Business Partner conference in Beijing in end of January. The insights are more relevant to the Asia Pacific region, unless stated otherwise.

Key highlights from the Avaya roadmap announcement:-

- Avaya Aura is central to the entire future roadmap of Avaya. All products from both Nortel & Avaya, and from both sectors UC and CC, would merge into the Avaya Aura's SIP based architecture. Avaya CM and the Nortel CS1k telephony platforms would evolve into the Avaya Aura platform in the future. This does not come as a surprise. Due to its SIP-based architecture, Avaya Aura can connect and integrate with Nortel CS1k and offer an evolutionary and migratory path to customers, rather than a rip & replace option.

- Large enterprise customers of Nortel do not have to make quick & hasty decisions on their existing telephony infrastructure (Nortel CS1k). Avaya will continue to invest in the CS1k platform with new versions and releases expected in 2010. While Avaya wants to eventually migrate all these customers to the Avaya Aura platform, by continuing to invest in & support the Nortel CS1k platform it has given itself the opportunity to retain the Nortel large enterprise customer base, tap onto the latent demand in the Nortel base that has not taken any upgrade/migrate decisions over the last 12 months, and resist competitive scenarios if Avaya can execute well on their channel strategy.

- Avaya has picked IP Office as the SME platform of choice for the future that will incorporate elements from the BCM solution and will interoperate with select Nortel phones. However, like the CS1k, Avaya will continue to sell the BCM solution. Avaya has committed to no end of sale announcements for the SME Nortel products for the remainder of the 2010 fiscal year. In addition, Avaya commits to a minimum of nine months notice before any effective end of sale date. Avaya has committed to an additional release of BCM later this year and plans to add features from BCM into IP Office. Also they have promised 3 years service and an additional 3 year hardware support period for end-of-life announcements which should give comfort to those customers. Taking a single server approach, the sweet spot for the IP office solution would be the less than 250 user segment.

- In the Contact Center portfolio, , the Nortel CC 7.0 solution will now be re-positioned as a mid-market solution, and the Avaya CC Elite would be the large enterprise solution. The declaration of the Nortel CC 7.0 solution as a mid-market solution was definitely a surprise, not because it cannot service that segment, but because it was meant to be a large enterprise solution when it was part of the Nortel portfolio. Avaya talks about the Next Generation Contact Center (placeholder name) which will be based on components of Nortel’s products as well as components of Avaya CC solutions. This will accelerate customers to the next generation CC platform, enabling both Nortel and Avaya customers to simply upgrade to get themselves there. The NGCC will inherently be multi-modal, multi-channel and conferencing-oriented.

- Nortel's ACE (Agile Communication Environment) will become an integral of application enablement helping in integrating different business applications (such as Sales force automation, ERP, etc.) and delivering what Avaya calls a "communications-enabled business system"

- The Data Solutions portfolio of Nortel is also now part of Avaya's product portfolio. Avaya's focus here will be to complement and create more competitive, compelling and complete UC & CC solutions with the help of the Data portfolio. This would come in handy especially in branch solutions where single box solutions with integrated data and voice functionality can be offered.

- Based on Avaya’s roadmap announcements and product roadmap, there is a recognition of the growing importance of video as part of the Unified Communications & Collaboration play. In a bid to capitalize on this growing trend, Avaya is expected to make announcements around its video capabilities and offerings that tie back to Unified Communications and deliver improved user productivity.

- Avaya also acknowledged the need for a software client that can deliver the complete Unified Communications experience to drive user acceptance and meet user communication needs through a single client.


With the acquisition of NES, there are a few things that are working in favor of Avaya:-

- There is a limited overlap between Avaya & Nortel top customers, hence adding marquee customers to its installed base

- There is limited overlap between Avaya & Nortel channels, hence adding much more coverage in the market. This is especially pronounced in the Asia Pacific region.

- Expertise in verticals that were strengths of Nortel especially Government, and Manufacturing sectors

Based on our discussions with the Avaya executives, it was clear that with their roadmap in place, the focus is going to be on execution. Avaya's growth will be driven through upgrades & migration of its large installed base, increased focus on SMB, Government & other specific verticals.
 
Challenges that still will continue to bother Avaya:-

1) The Collaboration story remains weak and disjointed. Avaya Aura will become the platform for collaboration centric, multi-modal, multi-channel communications and feature set from the MCS5100 will also get incorporated in the future. However, the current portfolio still lacks a solid collaboration play. Hence, future announcements from Avaya on the Collaboration front will be critical in tying together a solid Collaboration story, and create more buzz in the UC market.

2) While Avaya Aura is the next telephony platform for both existing Avaya & Nortel customers, it is critical for Avaya to tread this path carefully. Competitors such as Cisco, Siemens, Alcatel-Lucent, Mitel, Shoretel, Microsoft will be aggressive on their Nortel base acquisition strategy. The roadmap does offer an evolutionary path for customers, but Avaya and its channels need to position that correctly, without trying to disrupt the pace or scale of migration. For example, the ability to reuse the telephony end-points for customers migrating from a Nortel Meridian solution might be key, and if the focus is on positioning Avaya Aura that might jeopardize the ability to reuse existing end-points that might open the doors for competition. While the roadmap discusses plans for Avaya Aura to interoperate with Nortel end-points, adding phone shipments adds sizeable top-line revenue for the channels/system integrators that are selling to the customer.

3) Managing the new larger Channel base is the cornerstone of Avaya's execution strategy. Avaya's go-to-market strategy of "High Touch Channel Centric" is principally correct. One has to note that Nortel had a challenging year in 2009, and hence the Nortel partners also suffered. The ability of Avaya to retain, support and train the Nortel channels on the Avaya solutions and the new roadmap will determine their success. Avaya has launched their new channel program called "Avaya Connect" in February with focus on making it simpler & easier to do business with Avaya, determine pricing, and increase channel competency.

4) Communication with their installed base with the new roadmap and story is also important for Avaya to remove any FUD (Fear, Uncertainty and Doubt) in the market about its roadmap, product support and future. This is something that Avaya would need to do on a war-footing to retain its newly acquired & existing installed base. Avaya has done a good job of reaching out to its partners in a short time frame after the acquisition with a new roadmap, and it needs to continue that momentum as the message is brought to the customers.

In summary, Avaya has delivered a good roadmap, given the time, the economic environment and its position in the market. It still lacks some steam on the Collaboration front, for which steps seem to be taken and announcements are to be expected in the coming months. Avaya seems focused on their channel-driven execution strategy, with the launch of their new channel program and investments in a partner relationship management (PRM) solution. The presence of more than 400 channel partners at the recent Asia Pacific Business Partner conference in Beijing in the last week of January indicates that Avaya is beginning to build good momentum. The next step is taking this strategy and momentum to their customers.

Like A.G. Lafley (ex-Chairman & CEO of Proctor & Gamble) said - "Execution is the only strategy that the customer sees"

EnterpriseBook - Facebook for the Enterprise?

Imagine that a Sales Manager gets a notification that says "Opportunity X has moved to the next level. $250K". The Sales Manager "comments" on that update asking for some details. The "comment" gets sent to the sales person who entered that opportunity X, and can then address those questions. Based on the responses, the sales manager also "recommends" a "group" that focuses on such specific deals. The Country Manager "likes" the update to keep the sales person motivated and also subtly informing him that he is aware and can make himself available if the need arises. The Country Manager can also "follow" this opportunity so that he gets any updates to this particular deal.

You get the idea. Taking Facebook & Twitter and creating an Enterprise focused social networking solution. There are many questions that come to mind when you think of such a solution -
does it replace email, instant messaging or team workspaces or is it a new medium altogether?,
will it improve productivity or reduce it?,
with so many emails to respond to already does this application require me to update-on/respond to/take-note-of all "updates" and activities?,
would this only be restricted to the enterprise, or can partner companies also join the network?,
what impact does it have on storage needs, security needs, content management, etc?

Instead of trying to address all these questions, lets evaluate the potential benefits of such an application. In order to do that, let's analyze what happened in the consumer world with Facebook & Twitter. What benefits did Facebook bring to consumers, what existing communication channels did it replace? I don't think Facebook replaced Email but yes, it definitely would have replaced the number of emails that people sent to their friends & family. I don't think Facebook replaced Instant Messaging, but Facebook realized that it is a complimentary communication channel and it has added that capability to its website. Facebook did definitely challenge a Flickr, as many people just upload their photos to Facebook now instead of doing it separately to Picassa or Flickr. Facebook improved our ability to "connect" with our friends, even though we could not meet often in the real world. Facebook gave users the ability to know what was happening in their friends life, and they could just share their life-happenings on Facebook knowing that their family & friends would get to see/read about it (maybe reducing some IDD phone calls here). Facebook didn't replace blogs, but made it a feature for users to be able to share "notes". In a nutshell, Facebook did a bit of everything and provided a single platform that was social in nature, and could be viewed by friends & family.

If we take this to the Enterprise, a Facebook-like application or what we might call an Enterprise Social Networking solution would not necessarily replace Email, Instant Messaging or Workspace. But it could become either a platform through which all these can either be accessed and complimented by the features such as status updates, rating/tagging, etc. or a platform that can be used to offer a Email-like, IM-like, Workspace-like environment. The important thing in both scenarios will be that this platform will be a "social" platform.

The obvious benefits of such a solution would be better information sharing across teams in the enterprise, better knowledge of what's happening in the enterprise, better connect with employees (especially in geographically dispersed teams) improving collaboration amongst teams, and providing a communications platform that is social, increasingly popular and partly informal.

An Enterprise Social Networking (ESN) solution could possibly be an addition to the existing communication channels that exist within an enterprise. What I believe will become important for ESN is that it could become an integration portal or access portal for other communication channels, a bit like IM on Facebook, Messages (Email) on Facebook, etc. It doesn't take a rocket scientist to figure that you could add voice capability & web conferencing as an application to ESN as well. What could start as a new communication channel, eventually has the potential to be a communication platform that can truly connect the other communication channels and deliver a quasi-UC (Unified Communications) experience.

Whether or not ESN will become popular in the enterprise can only be decided once the solutions from players such as Cisco, Salesforce.com, IBM, etc. get into the market, and how enterprise CIOs react to these. There is a bit of a precedence for ESN in the way Instant Messaging is becoming popular in the enterprise now. Starting as a consumer communication channel, IM has now become an enterprise solution, and it took a good 3-5 years after IM was already in the consumer world, that it reached the enterprise, and another 3-4 years before it became mainstream. Even if you improve that rate of adoption, one should not expect ESN to become popular before 2012.

My biggest worry is what will happen when my boss "pokes" me about some deliverables? Is "Super Poke" the new micro-managing tool?

Collaboration = UC

The Unified Communications (UC) market has now been around for 4 years, since the term became popular in 2006. I can safely say that the UC market has not lived upto its promise of delivering a seamless communications experience through the unification of different communication media and devices. The promise of that seamless experience improving user productivity, which would improve the ability to respond quicker, and ultimately embedding that communication capability into key business processes to make the enterprise more agile.

The problem never was the technology, but the deployment of the technology. The biggest competitor for the UC market was the existing communications market. Heterogeneity is many a times underestimated by our industry. Heterogeneous environments created significant barrier for the adoption of UC. To create that seamless communications experience enterprises needed to change/upgrade/migrate their existing investments into a UC-ready environment, and do that for all communication devices at the same time. That clearly did not happen.

We are in 2010, and we still see adoption of UC as a silo-ed & phased approach towards building a UC infrastructure. Enterprises chose to change/upgrade/migrate in phases, starting either with their telephony infrastructure or Email infrastructure, then adding applications that can integrate with these systems. So in effect, today, UC is no longer "a thing" enterprises are buying and deploying, but it is a "journey" that IT teams are embarking on, checking milestones one after one.

From that promise of UC in 2006, where click-to-call was the big buzz application, enterprises and vendors have come to realize the importance of the larger underlying market need of Collaboration. The promise of UC is beginning to take shape in the form a real market need of Collaboration. As enterprises embark on their UC "journey", and they already have Telephony systems and Email infrastructure. The next application that majority of enterprises are interested in is Conferencing & Collaboration.

Based on a survey of CIOs in Asia conducted by Frost & Sullivan, Collaboration ranked as the top application enterprises are looking to invest in as part of their UC deployments in the next 12-24 months. This is a significant insight. The insight is that for enterprises who already have telephony & email (which is a vast majority), the next step towards UC for them is Collaboration; which means that for these set of enterprises, moving to UC is equivalent to deploying Collaboration technologies i.e. Collaboration = UC.

Please note that I am not saying that UC = Collaboration. There is a slight difference. UC = Collaboration would mean that UC is only about Collaboration, but that is not true. UC has an even higher purpose, of collaboration, of mobility, of communication-enabling the business.

But from the enterprise-view, if Collaboration = UC is true, it means that vendors need to direct their efforts accordingly. We already see Cisco doing that in a big way. Cisco's acquisition over the last 2-3 years have demonstrated their seriousness about this market, their focus on completing a true UC portfolio, and their understanding of the larger Collaboration opportunity.
IBM has always talked about UC as UC squared i.e. UC & Collaboration. Microsoft also had a Collaboration-centric message. But other vendors such as Avaya, Siemens, Mitel, NEC, Aastra need to get their messages and importantly their solutions aligned as well.

Collaboration = UC would be the mega trend in the communications industry for atleast the next 24-36 months. Now, that's not a promise.

About Da (The) Pitch Report

This blog is about quick analysis & commentary on the ICT market. I track the ICT market for a leading consulting firm, and the analysis I post here need NOT be the opinion that the firm shares.

The objective of the blog is to provide an insight into some of the activities in the ICT market, trends & predictions, what players are upto, how things would impact the customer, the vendor and the channel, etc...

Happy Reading!