The telecom industry has been experiencing a lot of changes recently, especially among some of its top vendors. By now, most people have heard news of Avaya’s bankruptcy filing. While the company is reorganizing under Chapter 11, and looks to be making progress in cleaning up and moving forward, the need for financial restructuring offers an important message for other vendors: Despite years of major success, even in a rapidly changing environment, industry giants are susceptible to a fall.
First and foremost, let me be clear that I do not necessarily believe that this financial stumble means the end for Avaya. Sure, this is a troubling time for any business to have to go through; however, numerous companies, both large and small, well known and not, have gone through bankruptcy and have come out all the better for it on the other side. Do a quick Google search of “companies that have succeeded after bankruptcy” and you’ll find story after story of organizations near-death that have turned around for the better. So while I would keep a cautious eye on any company that’s currently in bankruptcy, it certainly doesn’t mean that all is lost.
Second, I truly feel this announcement showcases just how easily routine or outdated business processes can damage a company. In this instance, I believe that Avaya’s “tried and true” pricing model and closed solution architecture have contributed to the company’s current state of affairs. Closed systems, with pricey vendor-only updates, feature-enhancements and integrations, inherently limit a customer’s ability to adapt a solution to their unique business needs. And in the past, where the other options were only other closed solutions, this was just fine. If you didn’t like one closed system, you would have to choose another closed system, so really you were only comparing pricing and features. However, as newer players in the space have developed open standards or are based on open source solutions, no longer does a company need to bend their business process around a technology. The business process can now dictate how a system functions and the vendor(s) with the most interoperability and openness can thrive.
Similarly, with today’s marketplace mentality of “all you can consume,” whether it’s YouTube videos, cellphone data plans, or even technology solutions, consumers don’t want to have to pick and choose and piecemeal together a product package. Their expectation is an all-inclusive, easy-to-understand pricing model that isn’t limited and that doesn’t require “upgrades” to function.
So what does all of this mean, going forward?
While Avaya’s fate will be determined in the near term, I believe the real take-aways here are simple. Even if you’re a major player in your industry, the adage “you’re too big to fail” is clearly no longer applicable. For that reason, I think customers and resellers should be cautious of assuming that a large brand name vendor is always the stable, safe choice over other solutions. Large or small, the strength of a company lies in its management team, its products, its support, its partners, and its community.
Next, open standards and integration are key. The world has changed. And in today’s world, if a company isn’t comfortable enough to have some level of openness in its products, clearly consumers are at the disadvantage.
Lastly, despite the argument that having thousands of SKUs helps to lower the bottom-line cost for “the small businesses that don’t need everything,” it may no longer make sense to offer so many products or features, especially as costly add-ons. The complications that arise and the fundamental feeling of “losing out” if you don’t pay a premium is something consumers will no longer stand for. In a market where feature parity has never been closer, opting in or out of features due to price is unacceptable.
When reviewing what helps a vendor to be more competitive and stable in today’s marketplace, I think Digium as a whole embodies those requirements. Open source products, like Asterisk, and Switchvox (built on Asterisk) with published APIs and all features included are the foundation of our company. This isn’t something new to us. It’s the way it has been since we started and it’s what continues to make Digium a reliable, trusted player in the telecom space.