With turnaround complete, Avaya’s future is bright

What a difference 15 months can make. When Alan Masarek was appointed as the president and CEO of Avaya Holdings Corp. on July 28, 2022, the company’s financial state was so dire it really could not get any worse.

It was bad, very bad, and in December of that year, the inevitable happened, with the Wall Street Journal reporting that the “company is nearing a Chapter 11 bankruptcy filing to restructure its balance sheet, in a bid to turn around its business and move past accounting problems.” This was not the first time the company had filed for Chapter 11, but the second.

By early the next month, and with its shares transformed to penny stock, veteran communications and telecom analyst Jon Arnold was likening Avaya, which has strong ties to Canada, going the way of Nortel Networks in 2009.

The organization, said Arnold, is heading in a direction that is “very similar to how Nortel ended up – it’s really uncanny. It is not quite as negligent financially, but they certainly have big problems that are going to put them behind the eight ball.”

Avaya, he said, had a short runway – likely a maximum of two quarters – to turn their fortunes around, keep investors on board, and maintain their trust and “obviously the trust of customers and channel partners.”

Should that not happen, he said, Avaya, a company that was formed in 2000 when Lucent Technologies sold off its division that manufactured business telephone systems, would, like Nortel, probably be “broken up into parts and sold off.”

Fast forward to the end of June of this year, and Arnold wrote the following after attending the company’s partner and end-user conference, Avaya Engage 2023, in Orlando, where Masarek proclaimed that Avaya is back during a keynote speech: “In short order, he’s put a lot of the baggage that has weighed the company down in the past, and what remains is a strong culture, a rich pedigree, solid financials, and an unrivalled customer base.

“No company in our space has had more drama than Avaya, since, well, Nortel. At times, that comparison seemed apt, but they diverge when strong leadership and sound strategy enter the picture. There’s a big difference between where Avaya is today and their second encounter with Chapter 11.”

In an interview earlier this month with Canadian media, Masarek discussed how the company has been able to transform itself from “weakness prior to the restructuring to genuine strength.”

First, he said, original lenders and investors from the second Chapter 11 filing did not flee, and in fact, “we have currently raised US$650 million from (them), leaving us in a position of genuine financial strength.

“A year ago, we had almost US$4 billion in debt and very little cash, and we were not generating cash. We have completely reversed that situation.”

A key product move involved Masarek and his executive team focusing on its Contact-Centre-as-a-Service (CCaaS) offering – Avaya Experience Platform – and Unified-Communications-as-a- Service (UCaaS).

A company blog describes CCaaS as a cloud-based customer service application that manages and tracks customer journeys, employee interactions with clients, and many other inbound or outbound customer communications.

“CCaaS allows companies to purchase only the technology they need, and is usually operated by a vendor, helping to reduce IT and administrative costs.”

Gartner defines UCaaS as a cloud-delivered unified communications model that supports six communications functions: Enterprise telephony, Meetings (audio/video/web conferencing), Unified messaging, Instant messaging and presence (personal and team), Mobility, and Communications-enabled business processes.

The combination of the two under the overall customer experience (CX) umbrella, said Masarek, “really put us we think, kind of at the tip of the spear as to where things are going.”

Asked by IT World Canada how his overall level of confidence has risen since taking over the company, he replied it has increased, largely the result of a “customer base that is 90,000 strong across the globe.

“Like most companies, the top several thousand drive the ship. I mean, literally, we do 90 of the Fortune 100, we do 10 out of 10 of the top aviation companies, healthcare institutions and banks, globally. The fact that pre and post the restructuring, our retention rate was something close to 97 per cent gives me a tremendous amount of confidence.”

A key market is Canada, and according to David Robertson, president of sales and managing director for Avaya’s Canadian business unit, the company has the luxury here of having a “massive installed base with a Nortel heritage.

“We’ve got these decades long relationships in our industry and our verticals, our geographies or segments in Canada,” he said. “I don’t know if we formally disclose where Canada sits, but we are in the top echelon of revenue contributors. If I look at the market, it’s banks, insurance companies, hospitals, large, federal, provincial, municipal government entities.”

As for the company’s artificial intelligence strategy, earlier this month at GITEX Global in Dubai, Avaya launched what it described as a concept that “highlights how AI can sit at the core of customer experience transformation, touching everything from agent experience to customer satisfaction to operations.”

Known as Generative CX, once available it will integrate GenAI capabilities into the Avaya Experience Platform, which the company said helps “CX leaders to implement workflows and glean precise, actionable insights with the stroke of a keyboard.”

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