With revenues falling 21 percent year on year, a new CEO at the helm, and convertible debt due, Avaya has endured a storm of disruption in recent months.
Yet, the communications vendor is not sitting around, hoping for the tide to change. Instead, it is already kicking new plans to rightsize the business into gear.
Indeed, Avaya has now submitted an SEC filing in which it claims to be undertaking a series of cost-cutting measures – which, unfortunately, include layoffs.
As a result of these measures, the vendor hopes to cut $250M in annual costs.
Discussing the potential of these changes in a recent interview with UC Today, new Avaya CEO Alan Masarek, stated: "It’s not about cutting in areas that are important, it’s about getting us aligned organizationally."
I tell the organization: I’m not asking you to do more with less, I’m not asking you to do the same with less, I’m actually asking you to do less with less.
The extent of the cuts may surprise some, with Avaya expected to incur $23M-$26M in pretax restructuring charges relating to severance and termination benefits.
Nevertheless, the stock market reacted well, with Avaya shares gaining 24 percent on volume.
Which Roles Will the Layoffs Impact?
For now, Avaya remains coy as to where it will axe jobs. However, the central focus is removing areas of duplication across the business.
As Masarek said: "In certain instances, you might have similar functions staffed in IT, in services, and in the software product. It just lends itself to being brought together. Whereas, in the past, it was just too overly siloed, so you had redundant costs."
These siloes perhaps blurred organizational clarity – something Masarek appears keen to re-establish by galvanizing the company behind a roadmap. This will revolve around its "cloud-based products" and "modern architectures".
In doing so, the new CEO hopes to avoid distractions, including near-term financial noise and investments in areas that defer from its central aim. Masarek added:
Sometimes you have to lower the level of the lake, reveal the rocks, so you can deal with it and end up with a more efficient, better aligned, faster-moving company. You’ve got to bring that focus and agility, and that is what I intend to do.
As Masarek hinted, much of this alignment aims to gather momentum around its OneCloud suite, a fully-fledged cloud communications platform.
A central part of this is OneCloud CPaaS, a technology coming more into focus, allowing companies to more easily build differentiated experiences.
Avaya may also leverage its Experience Builders Program further, which has received warm reviews for enabling CX innovation.
Any restructure will likely lift these aspects of the Avaya portfolio, while marketing may enjoy additional investment – if Masarek takes a similar approach as he did when leading Vonage.