Recently, RingCentral announced that they will become the exclusive provider of UCaaS solutions to Avaya. They also announced plans to introduce a new solution: Avaya Cloud Office by RingCentral (ACO).
What does this mean? There will be some confusion in the marketplace until this all settles down, but in the meantime, I’ve summarized my thoughts on why the partnership was formed and what it means to customers, VARs and sales agents.
Why did the partnership form?
Avaya’s attempts at creating a multi-tenant cloud solution were not successful since their solution was simply to put a PBX in a colocation and call it cloud. It was not scalable or profitable, and Avaya’s investors wanted an exit.
The partnership benefits Avaya because it gives them a revenue stream that would have evaporated otherwise. The partnership benefits RingCentral because they gain access to 100 million endpoints, which could double their valuation if only two percent of their customers convert.
The $500 million deal is broken into $125 million in equity with the rest held for future considerations (loans, warrants, future licensing). This is important because licensing could translate into a future contact center offering. RingCentral uses InContact now, but Avaya has stated that they want to be a player in the Contact Center as a Service (CCaaS) market in 2020, so it will be interesting to see what happens there.
Confusing Messages for Avaya Customers
Avaya’s message to their customers was that their Private Cloud offering was the holy grail, but now they are saying the RingCentral partnership will be the perfect solution. When they come out later with another offering will that they will claim is best? The messages are confusing, and possibly present a conflict of interest.
What Does it Mean for VARs?
There is a lot of uncertainty in the VAR channel. Existing Avaya VARs were asked to invest heavily in equipment and put in their own private colocation, but it’s unclear what will happen once the RingCentral offering comes out. That uncertainty is heightened by the fact that Avaya has a track record of taking customers direct and leaving the VAR out of the equation. Only time will tell if they embrace this new development.
What Does it Mean for Sales Agents?
The Avaya/RingCentral offering is only available to Avaya VARs, and it’s unclear where this leaves sales agents who favor RingCentral and are working on Avaya replacement opportunities—these deals could stall or evaporate.
The Bottom Line
As the RingCentral/Avaya partnership progresses, we’ll keep on top of the developments and offerings, but it shouldn’t affect your decision-making in the short term.
No matter what solution you are considering replacing, if you are looking at cloud it’s the perfect time to take advantage of the best technology out there rather than simply replicate what you are doing in the cloud—something I always advise against. By taking a more strategic approach you have the opportunity to truly transform your business with new applications and workflows.
If you want to talk further about this feel free to reach out to me.
As CEO of Packet Fusion, Matt sets the tone and vision for our company and our customers. His 20+ years in telephony gives him a deep understanding of unified communications and collaboration technology. He is an engaging presenter and has a knack for breaking down the often over complicated VoIP technologies into plain and simple English. Outside of PFI, Matt’s happy place is on the golf course or on a bike ride with his daughters.