The shoe has finally dropped. As most No Jitter readers will know by now, Avaya, a significant player in the UC industry, filed for bankruptcy protection on Jan. 19. That this is almost eight years to the day that Nortel announced its Chapter 11 (Jan. 14, 2009), makes this the second bankruptcy in less than a decade that Avaya "Blue" enterprise customers (those picked up when Avaya grabbed Nortel's assets out of bankruptcy) have had to contend with... and they feel the pain.
Every CIO, CTO, and UC director at any Avaya enterprise customer must help their executive management teams understand what's going on with the company and help manage the risk associated with its Chapter 11 filing. Each Avaya enterprise customer must understand potential outcomes, and put a contingency plan in place.
Good News, Bad News
At this early stage, questions about Avaya's outcome outnumber answers. The good news:
The not-so-good news:
A Lot at Stake
Avaya is among the leading providers of contact center, UC, and telephony systems globally, and is highly ranked in related Gartner Magic Quadrants. So the company has a lot at stake, as do numerous stakeholders, including:
We are hoping for the best -- that Avaya will be able to ride out this financial storm and come out of it as a stronger, viable long-term player in the UC and contact center spaces.
The final outcome from Avaya's bankruptcy could be:
Enterprise IT executives must take a variety of considerations into account when putting together their contingency plans. Some of the short-term effects under Chapter 11 status could involve:
If you are currently procuring a new unified communications or contact center system, or data network hardware, to replace an existing infrastructure, consider the following:
The Contingency Plan
With Avaya in Chapter 11, all owners of Avaya equipment have some level of risk. Enterprise customers need to do their due diligence and, while hoping Avaya remains intact, plan for the worst. The goal is to minimize business disruption.
If your organization is an Avaya customer, note that the contingency plan should not deter it from doing business with Avaya as usual during this period. Because Avaya's ultimate future is unknown at this juncture, enterprise managers must take the steps described below in the interest of protecting their Avaya-based enterprise operations. Taking these steps will also leave organizations with an understanding of Avaya products' roles and impact within the enterprise, which will be valuable going forward in any event.
Engage the help of independent industry subject matter experts, leverage their knowledge, and secure their counsel in finding an approach that will minimize risk as you develop your contingency plan.
The goal of the contingency plan is to:
I recommend starting this process now, without waiting to see what happens with Avaya. Putting together a solid contingency plan could take several months, depending on the size of your enterprise. As you put together your contingency plan, watch Avaya and its operations closely as the bankruptcy process proceeds.
Your contingency plan should take a holistic look at your UC and data network infrastructure, and should include the following steps for presenting to executive level management:
1. Baseline and inventory your current enterprise UC and data infrastructure, if you have not already done so.
2. Review your corporate and IT strategic plans for possible growth and change. While Avaya is in Chapter 11, your organization is not likely to remain static, which means you'll need to respond to your environment's needs. These areas could include:
By doing so, you will align any current (or new) UC technology with these plans, thus addressing your operational and strategic needs.
3. Determine your level of risk.
4. Develop and execute an RFI, to help facilitate budgeting for a replacement system. The RFI should comprise all possible replacement components, including the full UC system and contact center, UPS, PoE switches, cabling, and other key trends listed in No. 2 above. The RFI should contain:
In addition, be sure to consider proposals from enterprise-level UC private cloud providers as a possible alternative. Cloud offers fast ramp-up if needed, with an understanding that you will need to move and migrate your enterprise from a CAPEX to primarily an OPEX model. In addition, look for creative leasing programs that can complement your financial requirements and provide time to build out and replace the system.
Lastly, determine timing requirements for deployment based on number of sites involved in the RFI. Will the project take place over a weekend, several months, or even a two- to three-year period, based on the size and timing requirements of your organization?
5. Leverage any capital investment with cost-savings and cost-avoidance opportunities to manage costs. As a part of the needs assessment for our clients, we perform an ROI analysis. We look to manage capital through cost-savings and cost-avoidance measures, thus creating a strong ROI and the case to move forward with a UC and contact center investment. Here are a few examples:
Telecom audits are another excellent way of obtaining one-time savings by reviewing and correcting billing errors and reducing telecom costs going forward by eliminating circuits no longer in use.
6. Develop a budget for the project, using a balance of capital costs and savings from the telecom audit and network optimization.
7. Document and execute the contingency plan and overall project plan.
Look to develop an overall project schedule for full system replacement.
Summary and Conclusions
As Avaya works through the Chapter 11 process, you must stay proactive during this period and develop your contingency plan. In the end, even when loyalty to Avaya and your VAR is high, you need to protect yourself and your organization. To do nothing and hope for the best is not a viable option.
That said, developing a contingency plan should not deter you from continuing to do business with Avaya.
You can hope that Avaya emerges as a stronger company, while concurrently preparing your organization for any outcome other than a positive one. With a contingency plan in place, you and your organization will have the tools necessary to help minimize business risk.
This article was originally published on No Jitter.