From Defense to Offense Winning strategies to increase your revenues, profitability and accelerate...

From Defense to Offense

Winning strategies to increase your revenues, profitability and accelerate your time to cash

November, 2012Enzo Signore – VP, Competitive Strategy & Marketing

Notice: Avaya obtained this information from industry consultants, customers, published research, trade journals and internal research. To the best of our knowledge, this report is based on the most current information available as of the date of printing. Although reasonable efforts have been made to assure freedom from errors, Avaya Inc. is not responsible for the accuracy of the information contained in this document.”

© 2012 Avaya Proprietary & Confidential. Use pursuant to the terms of your signed agreement or Avaya policy. Do not distribute to customer 2

Competitive Focus

+23% YoY to $246M FY12 from $200.1M FY11 ShoreTel 13 released Summer 2012 17 straight Qs of unprofitability Less than 2% Market Share(1)

52 week low Stock Price in Aug 2012

#2 in WW Telephony revenue behind Avaya, but #1 in line share at 16.07%

+55% in Jabber licensing volume Improvements to Hosted Collaboration Solution

(HCS) and WebEx Premise TelePresence weakness (-8% YoY)

Barry O’Sullivan O.J. Winge Rowan Trollope (4)

Claims of rapid growth, but still <1% Voice Claim “free” solution with aggressive licensing T3i Lync Impact Report (Feb’12) 65%

evaluating/plan to evaluate (2)

Lync 2013 RTM, projected availability in 1CQ13

Announced Oct 12th but not GA Royalty Free SVC – MSFT Lync Software-based MCU RealPresence Collaboration Server 800s SVC support for the RMX RealPresence CloudAXIS Suite VC in a browser New room systems and an executive desktop system New mid-market video solutions

Stock lost two-thirds of its value over the past year and a half.(3)


Going from Defense to OffenseCompetitive Strategy & Marketing Team

Improve win rate & positioning of Avaya’s

business solutions, and influence future

solutions offers via the development and

communication of fact-based competitive

analysis and winning strategies

Develop thorough, fact-based competitive analysis, with primary and secondary research, to intimately understand key competitors in each major segment

Help set the industry agenda via the development of a compelling, differentiated competitive strategy, market positioning and marketing tools

Directly collaborate with sales and business partners to beat the competition and acquire new customers

Mission Strategy


Deliverables& Assets

Competitive Lab

Competitive Analysis

Trap

Man

agem

ent

FU

D M

anag

emen

t Battle C

ards

Tracking & Measurement

War Rooms

Competitive Training

Co

mp

etitive Pitch

Comprehensive & Integrated Competitive Assets


ShoreTel Business Communications Solutions

IP Telephony

Cloud based UC as a Service

Unified Communications

Instant Messaging

Conference and Desktop Collaboration

Unified Messaging

Contact Center and Call Center

Mobility Applications

Mobile UC Applications for Smart Phones and Tablets

http://media.shoretel.com/documents/SOLUTION_UC_Platform_050310.pdf


Why Avaya IP Office?

25%Lower TCO*

75%Less

Complex

*Based on a 2010 Tolly Group report comparing IP Office and ShoreTel systems.

Revised 2012 study coming in December

100%Resilient


Position the Value of Avaya IP Office

* Tolly Group Study 2010

Simple Scalability.

Users, servers and capabilities scale with ease including resiliency

Track record of bridging technology

3 year manufacturer support policy

User-centric, easy to deploy

Built-in Innovation.

HD Multi-Party Video & 128 party audio conferencing

Remote & mobile worker apps

SIP trunking support

Automatic Call Distribution

Call recording

Flexible Solution.

Compliant with 300+ 3rd-party Avaya-certified applications.

Hybrid - add digital, analog, SIP or any combination

Remote support offer and future software upgrades

Integration with choice of desktop (ACA via Lync)


Simple and Low TCO? Really?

4xMore $ for

Conferencing

6xMore

Redundant Hardware

2xMore $ for

SIP*

Let us show you the facts!


What Shoretel doesn’t want you to know

Nickel & Dime.

X InGate SIPerator ($6,000 vs. Avaya SBC at $2.5K)

X Audio conferencing up to $399/port

X Call recording separate professional service app $$$

X Higher energy consumption

Hidden Complexity.

X 4x more boxes for scale and applications

X 6x more boxes for disaster recovery

X N+1 architecture

X Conferencing, Mobility, SIP Trunking, and Call Recording each require additional hardware

Limiting Possibility.

X < 100 3rd party applications

X No networking portfolio

X No hybrid IP/digital phones

X Lacks multi-party video conferencing


Brilliantly Simple.

Low Cost High Availability.

FALSE

“Avaya products can struggle to provide the availability

many organizations require. With Avaya IP Office, the

failure of a control unit at a remote site can render phones inoperable…. implementing Avaya

redundancy options could be costly and add to architectural

complexity”

- ShoreTel Whitepaper

FALSE


16U rack space24 IP Addresses24 Switch ports

24 Power supplies

Add 1 more gateway

FREE resiliency all users

Active / Active

Disaster Recovery increases complexity 6x!

244

Avaya IP Office Server Primary

Avaya IP Office 500v2

PSTN

+500 users+500 users

PSTN

Voice Switch220T1A

DC1 DC2Voice Switch T1k Voice Switch T1k

Avaya IP Office 500v2

Avaya IP Office Server Secondary

vs.

ShoreTel Service Appliance

Shoretel Mobility Router

ShoreWare Server

ShoreTel Service Appliance

Shoretel Mobility Router

ShoreWare Server

Voice Switch220T1A

DC2DC1


ShoreTel’s pesky PR Problem ShoreTel Backup Facility Wasn't Ready In Time For Superstorm Sandy - November 05, 2012 Chad Berndston CRN News

Is Shoretel the right vendor for

the job?

“back-up option to another geographically located data

center was not yet operational in time for the

storm”

"Unfortunately, it is coming online early in 2013, too late to have helped us in the past

few days,"

January 2012

“began work on a project to update its "geographic

redundancy”

November 5, 2012 ????


IP Office Server EditionWins on Price/Value & Functionality

(3, 100) (4, 200) (5, 300) (7, 400)$0

$50

$100

$150

$200

$250

$300

IP Office ShoreTel

(Sites, Users) [HW+SW+Phones]

A revised Tolly TCO report comparing IP Office and ShoreTel will be available in December

Initial analysis shows Partner margins 2x with IP Office for same price

Support services is significantly less

AV: Core element priced per server starting at $215/list

ST: All billable elements increase service price as % of list


When is simple too simple?400+ employees; privately-owned medical research firm; Beverly, MA

IP Office Server Edition reduces complexity and costs (centralized management and licensing)

Ensure reliable call center ops (eliminate ShoreTel issues); provide critical call reporting

IP Office Support Services (IPOSS) delivers exceptional remote support/training

Correct serious call center issues with 12-month-old ShoreTel system – over 70 agents (scientists) provide critical medical research

Enable mobile agents to stay connected throughout facilities via wireless devices

Streamline/standardize on single platform for centralized management and reporting

“This is an outstanding example of how well IP Office serves the midmarket: simplified, centralized, scalable. We solved a critical call center issue and at the same time delivered a comprehensive, all-IP solution that simplified how they manage their communications.”

David Dart, Vive Communications , Avaya authorized partner

Chal

leng

eVa

lue


Introducing the Shoretel War Room

We are here to help!

Quick access to the experts that can increase your success in competitive situations.

Cross-functional support that addresses a wide range of issues.

Proactive learning that improves our tactics

Assisting the field: 16 deals, 2 hours response, Average $30k-$150k

https://avaya.my.salesforce.com/apex/sp_ViewDetailPage?Id=a3ja0000000LK4sAAG


Winning Formula against Shoretel

Know the competitive pitch– Simple Scalability vs. Hidden Complexity

– Built-in Value vs Nickel & Dime

– Flexible Solution vs. Limiting Possibilities

Demo Early and Demo well– Avaya IP Office – Designed for Small

to Midsize Businesses

Leverage the IP Office Toolset – Leverage War Room for more

information and tools

– Show Them the ROI and TCO

https://avaya.my.salesforce.com/apex/sp_ViewDetailPage?Id=a3ja0000000LK4sAAG

http://www.avaya.com/ipofficeroi


Microsoft’s Enterprise UC&C Portfolio

Microsoft Active Directory

Microsoft Exchange

Microsoft Sharepoint

Enabling Collaboration

Microsoft Lync


Embrace, Extend, Extinguish

The Microsoft Lync Penetration Strategy

Business Level Discussions

“Lync is Free”

“Lync is Self-Funding”

“Good enough”

“Lync Integrates”

Risk to Enterprise

“Locked into Lync”

3rd Party Apps

Voice & Video

ConferencingIM &

PresenceUser

Licensing


Competitive Strategy

Purpose Built Enterprise CollaborationIT Deployment Confidence

Open Collaboration PlatformFor all of your users

Everyday productivity experience

Misses key use cases

Enterprise-ready UC?Immaturity adds

risk to your business

Integrate & Surround


Immersive Video

PowerCollaborator

Mobile Collaborator

KnowledgeWorker

Task Oriented

Best in Class Mobility Natural Experience Choice at Desktop

High Quality HD

All major mobile & desktops

No firewall issues

Easy download

Optimized over public networks

Excellent meeting controls

Integrates with voice & video

Leader in the 2012 IDC MarketScape vendor assessment for Mobility

Mobile VoIP over WiFi/3G/4G/Video and collaboration and IM&P

Supports all leading OSs

Rich document sharing and collaboration

Thick client or browser based

Multi-party Audio, Video

Seamlessly communicate your existing phones and PC without having to re-buy expensive phones

Rich telephony features you are used to

Integrated Lync interface with IM&P

Integrated into your Office applications for click-to-call

Open Collaboration PlatformFor all of your users


Purpose Built for Enterprise Collaboration IT deployment with confidence

Engineered & Supported for Real-time

10x better availability - rated 5 9s to 6 9’s. 5 9s = 5.26 min per year downtime(5)

Full survivability in the event of failure

High scale to 250K users

Single point of support, award winning, J.D. Power (3)

Robust Management tool

Platform for Innovation

12-18 months R&D cycle

Avaya Aura 3-tier SIP architecture

Single management solution

Mature implementation practice

Rapid ROIs, match need & adoption

Consciously Open

Track record of interoperability

Flexible licensing grows with adoption

Rich web-based API ecosystem

The most open, interoperable solution

Predictable TCO

2x lower overall cost (Nemertes) and 3x lower OPEX

Leverage Avaya telephony

Leverage IT environment

End-to-end support included

33% lower BW HD video(2)

Avoid unnecessary CALs and 3 year lock in


PowerCollaborator

Mobile Collaborator

KnowledgeWorker

TaskOriented

Incomplete Video

X Lacks immersive HD, multi-party video, limited: 6 parties CVP

X Few advanced meeting controls

X Requires 3rd parties for integration for room systems

X Dependent on CPU and network for quality

X No Multicasting

X No central recording

Lacks Fixed Mobility Integration

X Lacks bridged mobility for seamless desk to mobile integration

X No call recording

X No mid-call control

Ad-Hoc Focused

X Ad-hoc oriented experience works for internal meetings

X Click to join from web business applications limited

PC-centric

X Requires PC uptime or else

X Or expensive new desk phone or USB speakerphone

X Headsets are not always on

Everyday Productivity ExperienceMisses key use cases


Enterprise Ready UC? Immaturity adds risk to your business

Hidden Costs

X 6x Operational costs

X New phones, gateways, network

X Upgrade PC, Win7+, SQL, Exchange

X 3rd party vendor support, T&M cost extra

X High BW HD video costs 1.5x more(2)

X Unknown license policy: tablets & smartphones

Closed Track Record

X History of deprecating API’s

X 3 year up-front EA commitment, all users

X Web-based API

Immature Solution

X Unpublished availability- estimated 3 9s – 4 9s (4). 4 9s = 52.56 min/year (5). Every “9” downtime costs $200K - $15M over 3 years (5,6)

X Partial survivability (lose contacts, presence, conferencing,)

X Scale unproven

X 3rd party support required

Monolithic Architecture

X 36 month R&D cycle

X 2-tier architecture monolithic

X 3rd party heavy solution, hard to manage

X Unproven implementation vendor


NEW! Independent 2012 Research Avaya has Lower TCO Versus Microsoft Lync

24

In-depth interviews and surveys with 211 organizations

Avaya Lowest TCO

Results

The Full Report will be accessible in ~1 month

Source: Nemertes Research: DN2382 Nemertes UC Cost Model Charts and Tables.pptx, Oct 2012


Microsoft Lync drives a higher TCO than Avaya

2x

Microsoft Lync is

2x higher

than Avaya to acquire & support first year for

IPT$2,482/user Microsoft Lync

$1,182/user AvayaOverall median all vendors $1,305/user



$-

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

Avaya Microsof tOperational $322.00 $1,912.00

Implementation $75.00 $90.00

Capital $727.00 $480.00

Driven by 6x higher recurring OPEX Costs

26

Key message: Microsoft startup costs for IPT are comparatively low, but

ongoing Opex is up to 6x higher.

6x higher Source: Nemertes Research: DN2382 Nemertes UC Cost Model Charts and Tables.pptx, Oct 2012

All user sizes


Driven by 8x more costly internal staff requirements

$1,411

$176$-

$200.00 $400.00 $600.00 $800.00

$1,000.00 $1,200.00 $1,400.00 $1,600.00 $1,800.00

Avaya MicrosoftTraining $25.00 $81.66

Third Parties $25.00 $86.23

Annual equipment Maintenance $66.67 $123.08

Internal Staff $176.44 $1,411.76

Breakdown of per-Unit Costs for OPEX (Median)


All user sizes


What Microsoft Doesn’t Want You to KnowWhat Customers Say

"I have serious issues with Microsoft. When I declined to deploy Lync, Microsoft

threatened to audit us for ANY infractions on our current deals and would be sending us a bill if we did not trial it" -

Major financial services company. Aug 2012

“It’s like the early days of VoIP. They lack the features found in

other systems”. Customer quoted from Nemertes Webinar,

1/17/2012

“We believe that Microsoft will increase the per-user list

pricing by 15% which will also raise the service assurance

pricing.” – multiple sources, Nov 2012

"Microsoft is very aggressive. When we indicated that we were not

interested in running the Lync proof of concept, Microsoft threatened to

talk directly with my CFO to audit our existing licenses." - COO of Infrastructure, a premier National

Cancer Institute, Oct. 2012


What Microsoft Doesn’t Want You to KnowWhat Analyst say

“Lync’s 1 year TCO is the highest in the industry, close to 80% higher than the median– Nemertes, UC cost analysis –

Oct. 2012

"Lync is Microsoft’s problem child. 99.9% of companies

deploying Lync keep their PBX". Bern Eliot, Gartner UC Lead

Analyst. 10/24/2012


Utilize Microsoft Lync Desktop Client

Standard SIP Integration Complete

Mobile Solution

Enable Avaya Signature Media

Session Management

Secure Remote Worker Support

SIP Trunking

Remote Call Control (RCC)

Communications Core

Integrating with Microsoft Lync

Avaya Client Applications (ACA)

Client Plug-In APIs


Integrating with Microsoft LyncAvaya Client Applications (ACA) – Available Dec’ 2012 Avaya Aura 6.2.1 and IP Office 8.1 FP1

Avaya Media Experience

Microsoft Lync Client

Avaya

Real-Time Toolbar

Avaya

Feature Control

No VoiceCAL required saves $87 to $107 per

user

Microsoft Lync Conversation Window

n

Integrates with

existing phones


Integrating with a Microsoft Environment

Click-to-Call

Click-to-Conference

Click-to-Call

Click-to-Call

Click-to-Call

Microsoft Outlook IntegrationMicrosoft Internet Explorer IntegrationMicrosoft Dynamics IntegrationMicrosoft Office Suite Integration


Increase customer value, reduce enterprise risk

IM & Presence

User Licensing

“Vendor Flexibility”

”Mobile Convergence”

3rd Party Apps

ACA Lync Plug in

IPT, Messaging

& CC

Video & Voice Conferencing

“High Value Video & Voice

Conferencing”

Mobile Collaborati

on

“Integrate Desktop Leverage Investment”

ValueRisk


Microsoft Compete Training Coming!

Strategy, Tactics and Tools to compete– December: SME

Training– Calendar Q1: Avaya

AM/SE and Partner Training


NEXT STEPS

December 2012 Calendar Q1+


Competitive Information on the Portal Updated Content Coming

https://avaya.my.salesforce.com/apex/sp_GeneralDetailHome?Id=a3j30000000L7UqAAK

Sales Portal > Competitive Intelligence




From Defense to Offense Winning strategies to increase your revenues, profitability and accelerate...

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