Brent Kelly on Avaya, UC ROIBrent Kelly on Avaya, UC ROI
Avaya has a lot of work to do. I attended the Analyst Conference, and yes, I agree that putting in a new management team at Avaya is clearly needed. Avaya will now have to execute on what they told us. But the bigger story is how much they have to execute.
November 7, 2008
Avaya has a lot of work to do. I attended the Analyst Conference, and yes, I agree that putting in a new management team at Avaya is clearly needed. Avaya will now have to execute on what they told us. But the bigger story is how much they have to execute.
My previous post, Beyond Cost Savings, went out as a VoiceCon eNews, and Brent Kelly of Wainhouse Research responded with a very insightful critique that I wanted to share with you, along with the original newsletter, because Brent takes a more skeptical look at the two main subjects that I covered in that newsletter: Avaya's attempts to retool for the next phase of the industry; and enterprises' potential for taking advantage of Unified Communications. In his note to me, Brent noted that many of these points will likely turn up in Wainhouse's next UC Products forecast, due to come out shortly. I'm mentioning this of my own accord because Wainhouse's work in this area is among the best around. Brent's key points are after the jump:
1. Avaya has a lot of work to do. I attended the Analyst Conference, and yes, I agree that putting in a new management team at Avaya is clearly needed. Avaya will now have to execute on what they told us. But the bigger story is how much they have to execute. If you think about the $8 billion Silver Lake/TPG invested in Avaya, one could suppose that if that money had been put in the bank or in the market, SL/TPG could have earned about $800 million annually with no effort - just investing it in a good fund (well, maybe not lately, but in general, the S&P 500 does reasonably well). Avaya is currently squeaking by just about breaking even. To get a decent return on that investment over and above the "little risk" option, Avaya has got to generate net income of over a billion dollars annually. The company has a long way to go. Can it do it? Maybe, but we predict significantly falling ASPs in our crystal ball for telephony offerings in 2010 and beyond.
2. With respect to UC ROI - I'm thinking that people need to put on their thinking caps. UC must impact one of three things to be rapidly adopted:
a. The company's financial drivers,
b. What the company does best, or
c. What the company cares passionately about.
If it doesn't impact one of these three areas, then companies should only adopt UC if it is required to maintain parity in their particular business space. Otherwise, they should ignore it. People asking about ROI and business case need to look to the three areas listed above. If they can tie it to one of them, then moving forward with UC is a slam dunk. If they can't, then they should ignore it or continue to wander about asking how to cost justify UC.
It takes hard work tying in UC technology with a company's business objectives, its people, and its processes. Most people/companies are not willing to do the hard work required; hence, they don't see the benefits nor the ROI.
Avaya has a lot of work to do. I attended the Analyst Conference, and yes, I agree that putting in a new management team at Avaya is clearly needed. Avaya will now have to execute on what they told us. But the bigger story is how much they have to execute.
2. With respect to UC ROI - I'm thinking that people need to put on their thinking caps. UC must impact one of three things to be rapidly adopted:
a. The company's financial drivers,
b. What the company does best, or
c. What the company cares passionately about.
If it doesn't impact one of these three areas, then companies should only adopt UC if it is required to maintain parity in their particular business space. Otherwise, they should ignore it. People asking about ROI and business case need to look to the three areas listed above. If they can tie it to one of them, then moving forward with UC is a slam dunk. If they can't, then they should ignore it or continue to wander about asking how to cost justify UC.
It takes hard work tying in UC technology with a company's business objectives, its people, and its processes. Most people/companies are not willing to do the hard work required; hence, they don't see the benefits nor the ROI.
