What Customers Should Do as Avaya’s Financial Stability Collapses

September 06, 2022
Avaya IT

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Avaya, a once multi-billion dollar cloud communications and collaboration company faces new fiscal hurdles after a debt refinancing plan ran aground. Now, only five years after a Chapter 11 bankruptcy and entry back into public markets, Avaya’s financial stability is in question again as investors fume at potentially being led astray. The vendor’s stock currently hovers around $1, at times grazing a mere $50M market valuation in total.

This rapid shift has left many flat-footed, and the company has stated in an SEC statement “that there is substantial doubt about the Company’s ability to continue as a going concern.”  This is alongside reports that the company has allegedly set aside around $10M in its remaining funds to deal with the anticipated layoffs/severance of many of its thousands of global staff.

Although it is likely the vendor’s intellectual property will be acquired by other parties, it’s possible some (or all) of its major solutions could go unsupported in the near-term. Because of this, NPI recommends clients make an immediate review of any Avaya investments while identifying any viable replacement solutions.

Contact Vendor and/or Reseller Account Reps Immediately

The first step is to establish communication with your Avaya account rep. Our purchase optimization work with our clients suggests many Avaya customers aren’t even aware of Avaya’s financial woes, even those that were considering or had already made significant new investments. To be fair, there hasn’t been significant coverage of Avaya’s troubles until recently despite debt concerns arising in early 2022.

If Avaya shutters operations completely, clients may be pushed to find off-brand support options for versions of their software, not to mention hardware spares or added capacity where needed. Because of this, NPI recommends reaching out to reps as soon as possible to schedule time for a discussion about  how current events impact any past, current and prospective Avaya spends.

Determine Alternatives, Anticipating Worst Case Scenario for Avaya’s Financial Stability

With the collapse of the vendor’s latest debt deal putting operations into jeopardy, NPI advises enterprises that have a large Avaya footprint to begin the process of identifying alternative solutions for any major areas of investment. Although Avaya tends to have solutions that are difficult to switch, the rapid and continuous degradation of the company’s financials necessitates actions be taken.

Because of the direness of the situation, NPI advises customers to consider all Avaya products at risk of becoming unsupported in the near future, and potential security issues because of this. In an ideal situation, there is little disruption from Avaya’s current situation, but preparing a game plan for the worst-case scenario is wise.

Compare Costs and Risks of Any Viable Alternatives Before Making a Final Decision

Avaya’s financial mess is a win for its competitors. They will be looking to poach Avaya customers that want/need to switch solutions and that will equate to vendor-side leverage. Our experience indicates competing vendors tend to price their wares well above fair market value rates. It’s critical that customers perform IT price benchmark analysis on any new purchases to ensure pricing is within best-in-class target range, and that contract terms are cost- and risk-optimized.