Avaya Chief Eyes Opportunity in Downturn

Not all communications vendors will survive the current economic downturn, but it's not the worst the business has seen this decade, Avaya President and CEO Charles Giancarlo said Tuesday.

"While the next several years are going to be very difficult for everyone, including high tech, I've been through nuclear winter -- it was 2000 and 2001 -- and I don't believe that this will be quite as difficult a time for high tech as that was," Giancarlo said in a keynote address at the VoiceCon trade show in San Francisco. He was a longtime executive at Cisco Systems until taking over Avaya earlier this year.

Giancarlo does expect a "flight to quality" as enterprises adjust their plans or deal with consolidation in their own businesses. "There will be fewer vendors, without a doubt, in this industry several years from now than there are today," he said. Avaya's private buyout by Silver Lake Partners and TPG Capital in 2007 is an advantage, Giancarlo said, because it allows the company to focus on long-term goals instead of the quarterly financial results that public companies have to deliver.

As one of the biggest players in IP (Internet Protocol) phone systems and the "unified communications" infrastructure of voice, video, messaging and presence that has built up around them, Avaya has staying power, said Giancarlo. But to succeed, Avaya has to shift its focus from the needs of network engineers to those of end-users, he said.

Putting voice and all other forms of communication on packet networks originally was about saving money through consolidation and making IT administrators' jobs, such as adding and moving employees in the phone system, easier, Giancarlo said. Now it has to help general employees do their jobs, he said. They need unified communications features to be integrated with their daily business applications, which now include tools such as social networking that originally were conceived for personal use, he said. People need to be able to create their own communications environment with the tools they are comfortable with, he said.

"We have, to some degree, lost control of that end-user. ... I think we need to look at that as a positive thing," Giancarlo said.

Tough economic times actually demand better communication tools as companies cut staff and the remaining employees are asked to make better use of their time, Giancarlo said. But he believes Avaya and other vendors have fallen short on ease of use. For that reason, the company has reorganized its product development organization to focus more on user demands and interfaces.

"Engineers will no longer have any influence or say whatsoever in the way that their product appears to the outside world," either to end-users or IT administrators, Giancarlo said.

One Avaya customer was disappointed in the speech. Avaya still operates like an old-fashioned phone-switch vendor, said the customer, a network engineer at a large U.S. insurance company who declined to give his name. The insurance company finds Avaya's products reliable and doesn't urgently need unified communications yet, but he wants Avaya to embrace the new world, especially in terms of interoperability with other vendors' gear and applications, he said. A major figure like Giancarlo may still be able to lead that change, he added.

Giancarlo said Avaya is committed to industry standards but that it often takes proprietary developments to get new technologies started.

IDC analyst Nora Freedman was surprised Giancarlo never mentioned his successor, incoming President and CEO Kevin Kennedy, who is set to take the reins in January as Giancarlo becomes chairman. But the company, which has its roots in the old Bell telephone system, seems to be shaking up its old corporate culture by bringing in outsiders in some top jobs, she said. Freedman believes the pieces are in place for Avaya to become a more progressive company, and it now depends on execution.

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