Last week Avaya filed for Chapter 11 bankruptcy for the second time in 6 years. Between the two filings, that’s over 9.5 billion in debt restructuring. With over 90,000 customers in 190 countries, Avaya has always had a very loyal brand following but 2020 changed the game and the flexibility of the cloud became king. They are still self-admittedly behind the market, since customers care less about premise-based hardware/software and want the flexibility of the cloud. Avaya tried to advance the migrations to the cloud with the RingCentral deal in 2019 but obviously it wasn’t enough. Reflecting on this and customer loyalty, here is what Avaya’s bankruptcy means for their customers.
Avaya’s approach has limited their ability to meet customer needs.
You might not care about the logo on your desk phone. You might not even know what it is. What you care about are the features and functionality of the underlying platforms and the integrations.
If you have a phone with the Avaya logo on your desk, you have very few options to move to the cloud.
In my book The RFP Alternative, I write that you don’t invite your divorce attorney to your wedding. This is my tongue-in-cheek way of saying why you shouldn’t limit your ability to scale, move, change, or adapt by purchasing a solution that locks you in. Avaya is one of those providers that locks you in. They have chosen to focus on hyper loyalty to their product while Poly, Yealink and some other phone manufacturers chose to make products that work with virtually all UCaaS/CCaaS solutions.
What are the benefits of switching from Avaya after their bankruptcy?
Let’s say you make a $100k purchase on phones that will work with everyone. The benefit is that you get the full ROI on those phones by being able to take the phone elsewhere if you are unsatisfied with your service. If the underlying vendor has hiccups in service, another vendor makes advancements that better suit your business (such as AI), or the operational costs are significantly better elsewhere you are not stuck. Unfortunately, if you make a $100k purchase of Avaya phones and you are unhappy with Avaya 3 years later, you either settle for being unhappy or strike another big check for a new system long before the Avaya system’s end of life.
What will happen to Avaya after bankruptcy proceedings?
I am certain Avaya will come out of this and it’s proposed they will reduce their debt load by 80% in just a few months. That stated, two bankruptcies in 6 years during a time when other UCaas/CCaaS companies were showing astronomical growth speaks volumes about the company.
Some businesses have excelled with the hyper loyalty model. Microsoft and Cisco are two obvious choices. I’m wondering if Avaya’s struggles are a sign that maybe that model isn’t resonating as well in the UCaaS/CCaaS space anymore. The missed filings, SEC investigations, big layoffs and crushing debt show a company with real leadership challenges. Those companies historically tend to fall short of delivering quality customer experiences.
If you are one of the 90k customers and want to see options, we are happy to help. Our RFP Alternative solution will bring multiple options to your doorstep. Let’s talk.