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Avaya shows evolution to cloud at Engage user conference

The company has moved its business model to subscriptions, cut a deal with RingCentral, and built a communications platform as a service (CPaaS) platform.
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Written by Zeus Kerravala on

This week the International Avaya User Group (IAUG) is holding its annual user event, Engage, in Orlando, Florida. I attended the event and found it interesting for a couple of reasons: The first is that it returned to an in-person format after a one-year hiatus due to the pandemic, so it was nice to see the enthusiasm from an audience that seemed to be excited about seeing colleagues again. Second and more importantly, it was the first Engage held post-Avaya's transition to a cloud company. 

The transformation of Avaya has been well underway for several years. It had evolved its business model to subscription-based, cut a deal with RingCentral for a cloud communications solution, and built a communications platform as a service (CPaaS) platform. Last year the company launched its cloud contact center product and most recently announced its Experience Builders program to build an ecosystem of "experience creators" that use Avaya's platform.

The proof of its success in this transition was highlighted in the keynote delivered by Avaya's CEO, Jim Chirico. He reported that the company has had six consecutive quarters of accelerating growth, and all of its cloud-related metrics are up. The biggest measure of its cloud growth is the annual recurring revenue (ARR), which was up 180% from 2020 to 2021. However, while numbers certainly tell one story, more meaningful to me is customer use cases to highlight success.

What is interesting about Avaya is that its definition of cloud bucks the trend of most of the cloud communications industry. The majority of communications vendors use the term "cloud" as a euphemism for "UCaaS" (unified communications as a service) or "CCaaS" (contact center as a service), and while these are indeed cloud offerings, there is more to cloud than public cloud -- cloud can also mean private and hybrid clouds. It's this ability to deliver a cloud in any format (public, private, or hybrid) that makes Avaya unique because it doesn't force any customer into a particular deployment model. 

At the event, I caught up with the following customers that were using the different flavors of Avaya's cloud.

  • Skybridge Americas is a business process outsourcer (BPO) that supports contact center-heavy verticals, such as financial services and retail. The company had been on a hosted platform for several years and is in the process of migrating to Avaya's OneCloud Private Cloud for Contact Center. The organization has about 1,000 total agents and moved to a cloud model so it could rapidly scale up and down as needed due to seasonality in its customers' businesses. I asked why Skybridge chose to go private cloud, and CIO Bryant Richardson told me: "We wanted control over updates and wanted to ensure we are able to manage the environment ourselves." The customers I work with consider control is one of the most common reasons businesses choose private cloud over public. 

  • Engagent Health is a BPO with a speciality in healthcare payers. It provides a variety of services, such as commission payments, CRM, agent onboarding, and others. The company chose Avaya's OneCloud CCaaS solution, which is the public cloud version of its contact center technology. I met with Austin Ifedirah, founder and managing partner, and asked why they chose a SaaS model for its approximately 600 agents, and he told me it was a matter of economics. Given that the company is only a couple of years old, the public cloud model allowed him to start with very little upfront cost and then cost-effectively ramp up as needed. He did tell me that he chose Avaya because its strong brand in the contact center would help him attract customers. "Everyone knows Avaya in contact centers, and when I'm talking to healthcare executives, they don't question the quality or reliability of the product," Ifedirah said. 

He also said he believes the use of the public cloud was transitional and thought it would be more cost-effective to use the private cloud when they got to about 6,000 agents. Avaya having both public and private would make the transition easier, he said. 

  • Liberty Mutual is the sixth-largest global property and casualty insurer in the U.S. and ranks 71 on the Fortune 100 list of the largest American companies. The company currently has about 11,000 agents that run on an Avaya hybrid cloud. I won't get into the technical details regarding the hybrid architecture; the more important point is why Liberty Mutual chose to go hybrid. Josh Hoium, Director of Engineering and Global Network Communications, told me: "We have a mix of legacy and new systems all around the globe, so we had to go hybrid. We use public cloud where we can and then keep on-prem what we need to control." 

Avaya's unique capabilities in offering UCaaS, CCaaS, and CPaaS in various configurations is due to its new Media Procession Core (MPC), which creates a hub-and-spoke model between the services by offering a single set of channels into the platform, regardless of use case. This enables Avaya to deliver services such as voice or video as part of the contact center, in a meeting tool, or even APIs in any cloud configuration. 

To date, much of the hype around cloud communications had been around public cloud, and that makes sense because early adopters were smaller companies -- many of whom had no contact center. Looking ahead, as more large enterprises plan to move UC and CC to the cloud, the definition of what constitutes a true SaaS offer has evolved. Whether an organization deploys in a public cloud, a dedicated instance, or a hybrid approach, the benefits of the solution, not where it's operated, will be crucial. 

With very few providers having the capacity to offer all flavors of cloud, Avaya's ability to deliver to the customer's needs is something they should continue to amplify. While it's fair to say Avaya was a latecomer to cloud communications, the company has done a nice job of building a platform, OneCloud, that can deliver a cloud any way the customer wants.

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