Avaya, a clear leader in the large enterprise contact center infrastructure market, has claimed to be getting serious about the mid-market for the last few years. However, every year the company's attempts to enter this untapped market, in which it has limited penetration, have fizzled out, leaving the company with an ever weakening message to the vast small and medium-sized enterprise (SME) world.
At Avaya's analyst conference, held in Boston during the week of October 20, the company yet again claimed to be targeting the mid-market space (companies with between approximately 20 and 250 agents) with renewed vigor. This time, however, there were numerous differences in both approach and tone that seemed to make Avaya's latest attempt to enter the SME contact center space more serious.
In the past four months, Avaya has seen substantial changes in its marquee leadership which point the way toward a new Avaya. Interim CEO Charlie Giancarlo seems to have brought this channel-centric outlook to Avaya, as well as seemingly half of the vice presidents of his previous employer Cisco, and the changes that these new faces are bringing look to be striking. During the analyst conference, Avaya persuasively laid out three different ways in which it has changed its approach to selling contact center technology to mid-market customers: channel, sales and product portfolio.
Todd Abbott, appointed senior vice president of sales at Avaya about four months ago, was previously instrumental in implementing transformations to a channel-centric approach at Symbol Technologies and Cisco, and plans to help bring some of that magic to his new employer. Avaya, which has never been seen as a channel-friendly company, still managed to sell about 55% of its products globally through channel partners last year. In fairly short order, Abbott plans to raise that figure to a Cisco-like 80% to 85%.
While channel sales this high obviously signify that changes are in store for large enterprise customers, the impact will mainly be felt in the mid-market, where regional value-added resellers, consultants and integrators hold significantly greater sway. As evidenced by Avaya's ability to maintain a reseller base even while admitting to treating them shabbily, the company still has some goodwill in the channel, but recognizes that the changes need to happen soon if any of that goodwill is to remain.
To achieve this transformation, Mr Abbott said that Avaya will increase its focus on distribution partners. Additionally, the company has been working with Salesforce.com to help build a partner relationship management system to increase communication with the channel, improve lead generation and co-marketing activities and help alleviate any issues of channel conflict. All of Avaya's partners should be live on the new partner relationship management system by the end of the first calendar quarter in 2009.
However, simply trying to push more delivery of product through the channel will not achieve much, so Avaya has also been making changes large and small to its sales processes in order to ensure its new strategy of, 'high touch, channel-centric' sales has a chance at succeeding. In order to avoid repeats of the numerous instances where Avaya found itself competing with its resellers and partners for the same account, the company has begun to refashion its sales compensation structure, aligning it with a channel-centric approach.
The practical implication of this strategy is that Avaya's salesforce will operate with at least a channel-neutral compensation plan, and in many cases the compensation plan will actually favor the channel. This will give salespeople a financial incentive to identify the appropriate partner and to work with them to satisfy the customer's needs.
At present, Avaya produces and markets two mid-market contact center suites, seemingly in direct competition with each other and without any true differentiation in messaging. However, this will change. Although details are still sketchy, the company plans to merge its Contact Center Express (CCE) suite and the Customer Interaction Express (CIE) suite, based on technology which the company acquired along with Tenovis a few years ago. Each product will see one further release, and each of those iterations will bring the products closer together. Then, within the next year or so, the two products will be merged. Datamonitor expects the resulting merged solution to include much of the underlying pieces of CCE which, like most other Avaya solutions, runs on Avaya's core infrastructure such as Avaya Communication Manager, as well as many of the advanced content from CIE, such as topic routing and strong outbound dialing functions.
While changes in any of those three key areas might have helped Avaya's cause in the mid-market, Datamonitor believes that it is only the successful execution of changes in all three areas which will give Avaya a fighting chance to capture significant market share in the space. Due to its sensible three-pronged approach and a channel-focused crew steering the ship, for the first time in a long while, Datamonitor is optimistic about Avaya's chances of succeeding.