Avaya continues to build up channel business 8 January, 2007 By Chris Talbot

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Ken Archer, vice president of North America channels at Avaya, joined the company about 16 months ago, and his role initially was to assess Avaya's channel program and channel strategy, and then to make sure the program was incenting and motivating the channel in a way that made it a true extension and augmentation of Avaya's own selling and delivery capabilities.

"In '06, we were extremely successful on both fronts. We shifted five per cent of our business from our direct to indirect sales," Archer said. As the end of 2006 is drawing near, 60 per cent of Avaya's business is now going through the indirect channel, which is a significant jump from the 10 per cent of a few years ago.

According to Archer, Avaya had double the growth rates on the channel side over the direct sales side. Channel sales grew 19 per cent in the last quarter and 16 per cent in four quarters. Going into 2007, Archer said he's expecting the channel to grow even more, but the company needs to tweak and tune the channel programs to get those higher growth rates.

"The market is changing, and with our strengths and our partner portfolio, we have many, many capabilities to increase market share, increase consideration rate and drive a differentiated channel strategy," Archer said.

Customers want the channel or Avaya (or both) to provide the best voice and data expertise, especially now that telecommunications has been merged into IT and CIOs don't have a comfortable feeling or understanding of the new voice world, Archer said.

"We are not looking to match our competitors feature for feature. ... What we believe we can do is drive the most competent and capable channel in this convergence market," Archer said.

Many customers don't want to be supplied by just one vendor, he said. Instead, they want someone capable of aggregating the solution components and integrating them all together.

"We are, in our program, working on a couple of key things that really are different from last year. We spent a lot of '06 developing what I'll call wholesale offers, which are service packages that are discounted for the channel so that they can mark them up and still be competitive, that would still be complementary to our channel services offers," Archer said.

Additionally, the company is also looking into how to make certification easier so that partners and customers can understand the roadmap to convergence.

Through 2006, Avaya created a new services development managers team to help partners understand core competencies and to figure out how Avaya can complement the channel's solutions.

"What we are also doing is we're building solution suites, application suites, which is another piece of the strategy," Archer said.

Additionally, the company has created solid rules of engagement because of its strategy for going to market through multiple channels. Archer said there's a delicate balance needed to keep channel harmony.

"We have real solid rules of engagement that do not allow for predatory behaviour of one channel over another," he said. Avaya has put tools in place like the rules of engagement and the deal registration program to keep predatory behaviours in check.

"We've maintained the channel harmony and we also have created the recognition that we need more sell-with type of programs," Archer said.

In 2007, Avaya plans to make an investment in training and continue to drive its convergence strategy.

As a networking vendor, Avaya is a bit of a different beast. While many of its competitors are trying to deliver a little bit of everything, Avaya really is a telecommunications and IP communications company, not a general networking vendor. Its strengths are in its communications technologies, and that's what the market sees, said Bill Trussell, managing director for the networking sector at TheInfoPro, an independent research company offering market intelligence based on IT professional and end-user interviews.

"Avaya is establishing a foothold in the IP space through a convergence of existing legacy TDM and PBX infrastructures, so if you take a prototypical large organization, they would have a large Avaya switch infrastructure and converting that to talk IP relatively inexpensively, you can interconnect all your branch office sites with IP capability and you can be running IP PBXes and gaining some of the cost differential by doing that at a relatively low cost, and it extends the life of the hardware that you already have in place, and oh by the way, it's a relatively easy transition," Trussell said.

Avaya is capitalizing on transitions from traditional telephony to IP telephony, he said.

"From a pure IP standpoint, in particular from a SIP-enabled technology, Cisco really does have a leg up on Avaya in the sense that if you are a Cisco shop for your data network, it's relatively easy to add IP voice communications to the infrastructure you already have," Trussell said.

Although both Avaya and Cisco tend to make claims about being number one in the IP communications market, the truth is the fight is far from over, Trussell said. Both companies are right at the top, fighting for dominance. Who will become the dominant player remains to be seen at this point.

"It's a real contest. It's interesting to watch who's going to come out on top of this whole thing. Obviously Avaya has a lot to lose, in the sense if they stumble at all, Cisco will take advantage of it. So far, it hasn't happened yet, but you can see it coming," Trussell said.

From a data networking perspective, Avaya isn't even on the radar, he continued. The company does a lot of partnering to get its data networking technology, so when Trussell talks to networking professionals that mention Avaya, the discussions starts and ends with IP communications.

That said, Avaya's reputation in the market is it knows voice "backwards and forwards," he continued.

"That's good in a way in the sense that your customer base recognizes your strengths and is willing to acknowledge you do a great job in your core business. It's bad in a way that if Avaya is trying to make inroads on the data side, it hasn't really happened yet because the customer base hasn't really recognized it, or at least they're not willing to talk about it," Trussell said.