Avaya’s chapter 11 bankruptcy filing yesterday is big news in the enterprise communications industry. Avaya, which had its beginnings as part of AT&T, is the world’s largest and most widely installed legacy on-premise communications system, and its demise is an industry milestone. It also signals just how much the communications landscape has changed in recent years as it keeps pace with larger changes in the way we work, communicate and collaborate in an ever-more-connected world.
The move to the cloud is transforming every industry, and the enterprise communications market is no exception. Today’s workforce is mobile and works from anywhere, while requiring multiple ways to communicate. On any given workday, it’s not uncommon for the modern employee to use his or her laptop, phone and tablet to field calls, chat with his or her team, or join a video conference. The transition to the cloud has accelerated because of what today’s mobile and distributed workforce requires to work efficiently and fluidly.
We have also seen this transition in the consumer world, where online retailers like Amazon have significantly impacted brick and mortar stores. In enterprise communications, this transition is affecting all of the legacy, on-premises vendors, not just Avaya. These legacy players are seeing their business disrupted by companies that were born in the cloud and that are leading this disruptive charge. As we’ve seen in the case of Avaya, it’s not easy for legacy vendors to transform—especially when cloud is not part of their DNA at every level.
While no one who is sympathetic to the incredible challenge of running a successful long-term business likes to see companies fail, Avaya’s bankruptcy reflects a bigger shift in the enterprise solutions space: Mobility is at the penetration point where it is dramatically impacting business models. Legacy on-premises players in every industry are feeling pressure from the rapid growth and adoption of cloud solutions, and the move to the cloud is continuing to accelerate while on-premise systems vendors struggle to survive. It’s because of this shift that we will continue to see disruption and upheaval in the business communications space.
While it’s a painful shift for some, at such inflection points I am reminded of the time-tested economic principle of “creative destruction,” in which new technologies, products and methods rapidly push older ones into obsolescence. The idea is that existing companies are forced to either quickly adapt or fail, and I believe this is what we’re witnessing in the marketplace today. The good news is that the continuing and accelerating move to the cloud is ultimately the better path for business. It’s helping to empower the world’s workforce with next-gen communication technologies that are better, more flexible, more scalable, and better equipped to help us keep pushing the wheel of progress forward.
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Originally published Jan 20, 2017, updated Sep 17, 2021