Thoughts on Avaya Engage 21

by Dave Michels

It’s all about experiences. That was the theme of Avaya Engage #ExperiencesThatMatter. 

I attended the Avaya Engage conference this month. This event is part user group (IAUG) and part Avaya Expo event. The last one I attended was in January 2019 just prior to the pandemic. 

There wasn’t an industry analyst track per se, but a handful of us attended in person. There was an investor day for financial analysts. The CEO also used his keynote to share financial results. It just wouldn’t be a Chirico keynote without at least one reference to “EBITDA.” I will say Engage was a great event. I was pleased to hear about three major product developments. 

The most significant number in Avaya’s financial results was ARR of $530M. That’s impressive growth and a figure that drives valuation more than anything else. The company expects to report more than $1B in ARR next year. This is coming from new sales and conversion of its base to recurring models. They’ve only so far converted about 10% of its installed base. Even if Avaya never adds another customer, the ongoing conversion of its base to subscription services will significantly improve its valuation. 

Of course, the company will add new customers. Last quarter it added 1,600 new logos, and over 6,000 for the year. The momentum with Avaya Cloud Office (ACO) is improving, but its bigger opportunity is OneCloud private and public cloud. Yes, I said public cloud. Avaya confessed it now has a public cloud CCaaS with voice and digital services. I say “confess” because I am fairly certain the company was trying to keep this a secret.

Avaya regularly touts its CCaaS and cloud services, but it uses a broader definition than most. Most analysts include a multi-tenant requirement to be “CCaaS.” In Avaya’s defense, this is not a clear requirement coming from enterprise clients. It’s really more semantics. Multi-tenant is a simple identifier that separates modern CCaaS solutions from traditional offerings.

Sometime earlier this year, Avaya quietly added digital channels to its voice, multi-tenant CCaaS. I’m not the only one that missed this. I don’t believe there was a press release. It’s a significant achievement, and is already available in 42 countries running on Azure infrastructure.  

The voice CCaaS was announced in 2019 at the Gitex conference (I was there!). That seemed reasonable as it was architected primarily by Avaya International. It was pretty significant in that 1) it was a new multi-tenant platform, and 2) it was on Azure infrastructure. Support for digital services were expected in the first half of 2020, but it didn’t come. The last I heard was Avaya opted to take a different direction. New solutions are a double-edged sword because new is good, but unproven. I don’t yet have a sense for how deployments are going and if its more aimed at existing or net-new customers. 

I’ve been thinking a lot about enterprise contact centers and if/when/where they intersect with multi-tenant CCaaS. There’s widespread belief that all contact centers will eventually go to public cloud services, but widescale migration hasn’t occurred yet and there are reasons it may never happen. That’s a post planned for next month. 

The new CCaaS was the first of three recent and major product developments that Avaya confessed last week. The next one is a new media processing core (MPC) for Avaya Spaces. Avaya got into the CPaaS space back in 2016 when it acquired TelAPI. It was a small, PSTN-oriented CPaaS that was part of its then-current “snap-in” strategy. The solution subsequently relaunched as the CPaaS component within Avaya Spaces. 

Avaya Spaces has become a central part of OneCloud and its vision for composable communications. I knew Avaya was improving its CPaaS feature-set, but this is a major architectural upgrade. Avaya completely revamped the media core with a single engine that can handle voice, video, and text. It’s also application (UC, CC, other) agnostic, thus a core building block for all of Avaya’s solutions — and all of Avaya’s customers customizations. 

The new MPC offers improvements in performance, security, scalability, and provides a more efficient use of (customer) bandwidth. CPaaS has become critically important in enterprise communications. We saw that CPaaS lured Ericsson to acquire Vonage, and Cisco is reporting significant CPaaS traction from its acquisition of IMImobile. 

The third enhancement is a new integration between Avaya Spaces and ACO. This resolves an overlap conflict between ACO and Spaces. Most customers will use ACO or Spaces, but some customers use both. Since both of these services have chat and meetings, it’s possible that the two solutions end up competing against each other within an enterprise account. I don’t think this is a big problem, yet it can be awkward.

The obvious solution is a gateway, but RingCentral has limited interoperability options. Instead, Avaya integrated at the carrier level, and essentially uses RingCentral for dial tone with Avaya apps and clients. It’s a clever approach that solves the two-app conflict while respecting the exclusive UCaaS partnership with RingCentral. 

These were the most exciting product developments from Engage (but they were not launched at Engage). They are important enhancements that also end my concerns about Avaya’s rate of product development. These important developments, combined with Avaya’s momentum on execution, provides confidence about Avaya’s future.

Avaya WinterWonderLand (hat provided)

The event as a whole was very positive. I met with several product managers, enterprise and BPO customers, and partners. I also met with some impressive ecosystem partners. Avaya featured Google on the keynote stage for its cloud platform and CCAI. I was particularly impressed with Intradiem (WEM enhancements), JourneyID (trusted identity | podcast), and Cognigy (conversational AI | podcast). 

Regarding the Experiences theme, Avaya shared its keynote stage with Joe Pine, the author of the groundbreaking Experience Economy book. What I find so fascinating about this concept is how it applies to the contact center today. The book is about 25 years old and originally focused on how companies, like Disney and Starbucks, compete (and profit) from experiences more than the actual products and services they offer. 

This concept has now worked its way into departments, or more accurately how departments need to work together to deliver an intended experience. There’s two key points that pertain to the contact center: respecting the customer’s time and personalized experiences. When the experience matters, products and services become commoditized. Pine offered examples of companies using digital technologies to personalize the experience they receive. There’s a significant opportunity here for companies to differentiate through customer experiences during the digital renaissance occurring in customer engagement. 

That’s why Avaya launched a new program called Experience Builders that ties together its composable CC solutions with low-code/no-code technologies. You can hear more about that in this TalkingHeadz podcast

Altogether, Engage was a very positive event that left me more confident about Avaya’s ability to deliver, innovate, and grow.