Avaya CEO Q&A: 'I don't think we are where we were 10 years ago, but you'll see us get back there'

CRN quizzes Avaya CEO Jim Chirico on the firm's progress after exiting Chapter 11 earlier this year, and listing on the stock exchange

Avaya listed on the New York Stock Exchange in January, bringing to a close a troubled period of restructuring and bankrupcty. Since, the comms firm has posted impressive revenue growth and claims to have made good progress moving into the cloud. CRN caught up with CEO Jim Chirico at the Gitex tech conference in Dubai.

You floated on the New York Stock Exchange in January, just a few weeks after you had exited Chapter 11. How has the first year gone since then?

It has been very rewarding just to see the company rally, focus on the customers and drive new technologies. Being a publicly listed company sets new standards, and the teams have done really well.

We have stabilised the revenue and the business model is industry leading. We have brought out well over 100 products so far this year, added 5,000 new logos and 1,000 channel partners. The employees have responded well, and more importantly our customers have.

We needed to build back to credibility, because the restructuring stressed the systems a bit.

We wanted to be predictable and consistent; I think our customers have recognised that. All and all it has been a fantastic year.

If you take a look at our product revenues, 30 per cent of them are new products that we have released in the last year, so it's a really positive sign of traction. On the cloud side we are up roughly 300 per cent year on year in cloud seats, and then we continue to invest in existing products. It's very positive.

Clearly you always want to do more, you're never satisfied with where you are, but we have a number of new products in the pipeline.

On a personal level, have you enjoyed these first few months as a listed company?

What gets me the most excited is to be winning again. Not just in the employee base but the customer base. I honestly, in fairness, didn't have an appreciation for just how much our customers relied on Avaya technology, how deeply embedded we were, and how much disruption the Chapter 11 situation really weighed on their minds. I've been going around and letting them know that we are back, stronger than ever, and will continue to investment. To see the delight in their eyes because of the certainty that we will be here; it is by far the most rewarding year I've had, and I've been around a while

I'm sure there were difficult times while you were going through the restructuring process, but from your point of view does it feel like a different company now?

It does. It feels different in two aspects. First is the pace of the company. It is a heightened pace to the one from two or three years ago. That is driven by the industry, but I think the investments that we're making in innovation are helping that. Secondly it feels different because the employee base seems to be more driven. We came out with five new cultural principles, we have invested back in the people, but they just have a different rhythm to them.

It takes a while for the employee base to feel comfortable and know that when you say empowerment you mean empowerment. We tell people that we trust them to go out and make decisions and it takes a while for that to sink in. the execution and rhythm that we have picked up is significant. We are new and energised.

What would you say is different about helming a public company, compared to being private?

When you're a publicly traded company you're measured every day and it just sets a new bar for us. When your results are compared and shown against your competition it gets a bit of a fire in your belly and you want to win. People in this company have a lot of pride, and they should be because they have done a lot of hard work. It is a great employee base, second to none, and it is nice to see that fire. It takes away a lot of the internal conflicts that might exist internally

Do you think you're being seen as an innovator again?

We're an iconic brand and we are known for technology expertise, and we are going to be putting Avaya back on the map.

In fairness I think we are registering back on the radar screen. I don't think we are where we were, 10 years ago, but I think you'll see us get back there.

If you're an all-in company versus some of these in particular segments, with bright shiny tools, they'll be known as innovative. The guys that do everything won't get the innovation tag like the start-ups. With investments that we're making, not just in technology but also in people, you'll see us get our rightful spot back in innovation.

You have been accused by some of being late to the cloud party. Do you think that is fair and, if so, what steps are you taking to address this?

That is a fair representation. Even a year ago we didn't have much of a cloud solution whatsoever. We had a story, but we didn't have results. This year we have the results. In the midmarket space we have grown 300 per cent year on year which far outweighs the industry. We acquired Spoken at the enterprise level and have done a lot of work on other cloud solutions that we'll bring out in the near future. I'd say we're about halfway to where we want to be, but in the near future we will be very competitive. I don't think we have lost too much ground.

We have 145 million seats in our customer base so we want to make sure we continue to invest in that technology, but cloud and emerging technologies are the fuel and growth areas for us. We have done a nice job with the Spoken acquisition. We'll have a really competitive UCaaS solution in the not-too-distant future, we are deploying digital channels in our contact centre space and driving that in the midmarket.

Earlier this week you announced that your SMB-focused public cloud offering will be launching in Germany. Is this a sign of Avaya trying to reach smaller organisations that you typically wouldn't have catered for before?

In the US [cloud] SMB space we're probably about 25 per cent penetrated, the midmarket is probably 15 per cent and enterprise is low single digits. We have a little bit in the UK but other than that the penetration on a global perspective hasn't come close to what we see in the US. There is a still a lot of room there and I think we'll be very competitive. We can reach down in the single digits.

You mentioned that you have added around 1,000 channel partners this year. What is the rationale behind this?

We have added about 1,000 this year - most of which have been more cloud savvy than the old, existing partner base which has typically sold hardware. The ramp cycles have been longer because obviously it's a subscription, but it has started to pick up. We knew it would take a while.

We are also building out new channels. We have launched with three master agents in the US. We have been underinvested and penetrated in SP (service providers) to drive innovation for us in the market, so I think you will see Avaya utilising more channels to help deploy cloud.

Finally, what are your personal objectives for 2019?

For me, I am going to spend more time on strategy. In 2018 we came out of Chapter 11, went public, brought 800 new employees into the company, got pretty much a new management team… there was a fair amount of internal activity that we needed to spend time on to make sure we execute at the levels we said we would. This year there is a bit more stability in the employee base and the technology is rolling out on schedule, so I'll be spending more time on strategy and with customers - not on credibility and consistency.