Avaya Targeting ShoreTel

Last week I was at an Avaya analyst event. I know this because I wrote in my calendar, but I did get confused at times based on the content. For example, I kept hearing about "simple" and "net promoter scores." The term "enterprise" came up, but not as much as "Mid Market." I even heard hints about a potential iOS-friendly endpoint. These and other clues throughout the two-day event told me Avaya is getting serious about ShoreTel.

Actually, it was more than ShoreTel. Enzo Signore, Vice President Competitive Strategy and Marketing, explained the processes and strategies around Avaya's competitive intelligence processes. As one might expect, his presentation focused heavily on Microsoft and Cisco. But clearly ShoreTel has Avaya's attention, too.

Last August during ShoreTel's quarterly update, the firm cited Synergy Research reporting "ShoreTel as Number 3 provider in the USA," and "ShoreTel above Avaya in the 1-5000 market." Those were some pretty aggressive claims considering Avaya's 2012 revenue was $5.17 billion and ShoreTel's was $246.6 million. Reviewing the statistics shows that Synergy was focusing on "pure-IP" (the IP Office is a hybrid solution) in U.S. accounts with fewer than 5,000 users.

It appears ShoreTel woke the giant.

Avaya is much more serious about both the mid market and the IP Office solution. Kevin Kennedy stated that the mid market didn't slow as much as enterprise. That means lots of new investments in the product and channel. In the past year, Avaya improved the scalability of IP Office to 1,000 users, released a software-only version, made enhancements to its management and licensing, integrated it with its SBC products, and announced a new support offering. Today, Avaya announced a new Video Collaboration Solution for IP Office that combines desktop, mobile and HD room system capabilities. Avaya is also positioning the IP Office as the natural migration for its mid-market (Nortel) CS1000 users.

Signore detailed a fairly comprehensive competitive analysis program that includes labs, objection handling, and competitive training. Six vendors and seven products are in various stages of analysis. Avaya believes IP Office has a significant competitive advantage over Shoretel in terms of redundancy, disaster recovery, and total cost of ownership. A recent Tolly study compared the Avaya IP Office 8.1 to ShoreTel and determined several points that favor IP Office:

• 32 percent average TCO savings when compared to the ShoreTel Unified Communications Platform.
  

• 30 percent lower initial costs than ShoreTel for phones, licenses, and hardware.
  

• Up to 33 percent lower maintenance costs than ShoreTel over five years.
  

• 41 percent less energy consumption for phones than ShoreTel.
  

• Deployment flexibility with Avaya's hybrid architecture, which helps reduce TCO by reusing existing wiring and legacy endpoints.

I spoke with Karl Soderlund, Vice President Americas Channels, who indicated that Avaya is aggressively going after new mid-market dealers. Avaya recently signed up SYNNEX as a new distributor (Avaya does not make distributor changes very frequently). SYNNEX is recruiting from its base of dealers, but Avaya will handle the onboarding with a new 95-step process (a comprehensive, internal process to better support new partners and accelerate their time to revenue).

The question is, can Avaya beat ShoreTel at its own game (namely being simple with high satisfaction)? ShoreTel has been pitching simplicity for years, and it is clearly ingrained into their corporate culture. Avaya's culture is many things, but not simple. In Kevin Kennedy's keynote, he pointed to a 38 percent improvement in Avaya's Net Promoter Scores, yet it still isn't as high as what ShoreTel claims. Also, the previously mentioned Tolly report was commissioned by Avaya without ShoreTel's direct participation.

Despite all that, Avaya's timing finds ShoreTel at a vulnerable time. The firm is going through a significant amount of management upheaval, and its current CEO intends to remain until his replacement is found (his total term will likely be less than three years). ShoreTel's acquisition of M5 put it into two separate businesses, with each requiring ongoing investment and management. Meanwhile, Cisco, Mitel, and NEC have also simplified their mid-market solutions.

Dave Michels blogs at TalkingPointz.com.