Avaya Bankruptcy: A Sign of the Times

In January, Avaya Inc. and all their domestic affiliates filed for Chapter 11 bankruptcy protection. The world’s most widely used on-premises communication system, Avaya has long been a cornerstone in the enterprise technology space. Its bankruptcy offers a critical lesson in the importance of adapting to the market.

Through a release on the Avaya website, CEO Kevin Kennedy explained the bankruptcy was a forward-looking move geared toward debt reduction and long-term stability. Perhaps more revealing, Kennedy also disclosed that the move was the first step in Avaya’s “on-going transformation to a successful software and services business.”

As evidenced by Avaya’s bankruptcy and projected rebirth as a software provider, enterprise communication is undergoing a massive shift from being hardware-focused to being software-driven. This shift isn’t just being fueled by cloud-based or mobile technology. The rise of solutions like cloud phones and unified communications is a symptom of much larger industry trends surrounding how employees collaborate. And it’s these end-user trends that are shaking up the market that legacy players like Avaya used to lead.

Workforces are more agile and nomadic than ever before, which means they require tools and technologies that empower the levels of flexibility they’ve come to expect. Enter solutions like cloud and unified communications. And as these solutions hit the market and a growing number of “born-in-the-cloud” vendors enter the fray, legacy on-prem providers will find it increasingly difficult to hold market share – unless they adapt their solution suite to these new market trends, like Avaya. Will more legacy providers follow suit? Only time will tell.

Read Avaya’s full Chapter 11 announcement here.