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Many challenges ahead following Avaya bankruptcy proceedings

With the Avaya bankruptcy proceedings over, the company will need strong sales, marketing and customer service to win deals in a highly competitive market.

Avaya has exited bankruptcy court with the financial footing it needs to compete in the unified communications...

and contact-center markets. The next step is to regain the customer trust that eroded over the last year as the company fought to remove business-crushing debt.

Avaya exited federal bankruptcy court last week with roughly half the debt that had forced the company to reorganize its business under Chapter 11. The lower debt obligation resulting from the Avaya bankruptcy settlement produced a healthier company, with more than $300 million in cash on its balance sheet.

Besides the stronger finances, Avaya has a new management team led by former COO Jim Chirico, who took over for CEO Kevin Kennedy when he retired Oct. 1. Also, the company has a new board of directors to help guide it against its many competitors -- the largest of which include Cisco, Microsoft and Huawei.

The positives, however, only let Avaya back into the market. Succeeding will depend on making prospective customers aware of the product innovations that got little attention while the company battled creditors in court.

"Very few of their customers, much less their prospective customers, heard the [marketing] messages," said Drew Kraus, analyst at Gartner.

Additionally, Avaya has to reverse a tarnished reputation. In the years heading to bankruptcy, the company tackled declining revenue by cutting spending, which led to the loss of experienced managers in sales and professional and customer services, Kraus said. As a result, Avaya's relationship with customers deteriorated "pretty badly."

"Good technology with crappy service gets you nowhere," Krauss said.

Addressing shortcomings following Avaya bankruptcy proceedings

Avaya has made changes to correct its sins of the past. For example, the company has carved the United States into smaller regions, so sales teams can respond faster to leads, said Jim Geary, the general manager for sales and service for Avaya in the Americas. The company has also added 10 to 15 consultants charged with helping businesses respond to market disruptions caused by a more digital world.

"It's not necessarily about the Avaya products and solutions, but it's really to the deep dives into what customers are trying to solve," Geary said.

A survey conducted this year of companies using Avaya UC products found the vendor has "stopped the bleeding, and that customers are generally satisfied," said Irwin Lazar, an analyst for Nemertes Research, based in Mokena, Ill.

Companies sticking with Avaya UC products are doing so because of Breeze, the vendor's application development platform, Lazar said. Breeze lets developers customize communication applications, so they're more useful to an organization. On the contact-center side, Avaya has made inroads with companies through another customization platform, called Oceana.

"Their [Oceana] platform competes well against Genesys and Cisco in the contact-center space, and they have an opportunity to grow, especially internationally," Lazar said.

UC challenges following Avaya bankruptcy settlement

Avaya's ability to increases its share of the UC market, however, will be harder. "I don't see them growing their customer base in UC in the mid- to large enterprise [market], given how that is dominated now by Cisco and Microsoft," Lazar said.

A growing UC market segment where Avaya lacks a competitive product is cloud-based UC as a service (UCaaS), which is increasingly popular with small and medium-sized businesses, analysts said. In October, Synergy Research Group, based in Reno, Nev., reported that the UCaaS market was on track to increase 29% this year to more than $1.6 billion.

Avaya, however, isn't ignoring UCaaS and plans to announce products for the market at its ENGAGE customer conference at the end of January, Geary said. "Look for us to be very active in that space in the coming quarters."

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