Welcome to the Connected World with Jim Chirico
Chirico outlines Avaya's commitment to innovation and operational excellence on the journey to digital transformation
>> The the Mardi Gras band, big round of applause.
>> Ladies and gentlemen, please welcome Jim Chirico, Avaya Chief Executive Officer.
>> Good morning everybody. Wow, what a great welcome. Thank you very much to the Mardi Gras band, you gotta love it, you gotta love New Orleans. Yeah, what an excellent way to start this event, Avaya Engage 2018. There's another band over the my left, you heard them when you came in this morning, their actual name is the Hey Jimmy Band.
Can you believe that? It's amazing. How cool is it to have a band named after you, right? So, I was backstage, I was feeling pretty good, right? And then I heard the events coordinator tell Mercer. She goes, hey Mercer, when you get up there, by the way, the name of the band is the Hey Mercer Band.
And then I heard her talking to Pat, and she said it was the Hey Pat Band. I tell you, I was crushed. Here at once I got a big event, we're here to share and engage. I thought I had a band named after me. I thought maybe I'd get a chance to sit with those guys and play a couple songs, but I guess not.
But that said, oh there we go, see.
>> Little off cue, but not too bad. But that said, while they're still known as the Hey Jimmy band, let's give them a round of applause, thank you very much.
>> I don't know about you, but it sure feels a lot different to me.
I hope everybody is doing well. I hope everybody had a great time last night. The energy in here this morning has been nothing short of awesome. And I want to tell you, we feel that same energy each and every day at Avaya. We have a ton of great stuff to share with you on what's happening with the company.
There's something different in the air. Maybe it's New Orleans. Maybe it's our new product announcements, who knows? But it is different. And it is really an exciting time to be at Avaya. And we can't wait to share all that with you this week. Wow, what a difference a year makes.
Simply amazing. But I do want to thank you all for joining and taking the time to celebrate with us together here at Avaya Engage. Throwing the beads and I threw a few out here this morning actually dates back from a Mardi Gras perspective more than 100 years ago.
In fact, similar to the heritage of Avaya. And you may not know this, but the color of beads actually stand for something. Gold beads signifies power. Purple symbolizes justice. And the green ones, the green beads, they represent faith. Every one of you in this room deserves a very long string of green beads.
I certainly appreciate that, and I certainly share my deepest thanks for all your support over the last year, and all the years to come. And I don't know if you know this or not, but this event is the largest that we've had since we've had the Avaya Engage conference.
And I would just like to take a minute, if the customers and partners could please stand up. Cuz there's a number of you here. You deserve a round of applause, and thank you, thank you, thank you.
>> Awesome, thank you guys, thank you for all you do, day in and day out.
>> I'm a student of history. I actually do like to do a fair amount of reading. One of my favorite writers is Mark Twain. Mark Twain, as many of you know, spent a lot of time here in New Orleans going up and down the Mississippi River as an apprentice.
One of Mark Twain's most famous quotes, the rumors of my death had been greatly exaggerated. Stealing from Twain, the rumors of Avaya's death has been greatly exaggerated. We're not only alive, but we're back, and we're stronger than ever. Thank you all very, very much.
>> I have the best job in the world.
I mean that. I am truly honored to be representing our world class team. The folks at Avaya are unbelievable. I'm extremely proud of each and every one of the Avayans. The ones that are here And the ones that are back in the office is doing our work and for that, I wanna thank them.
This morning I will however be sharing with you not only where the company is today but more importantly, where we're headed, right. I'm gonna share with you about our capabilities, provide insights to what we're driving, and how we're positioned to succeed and win with all of you. We've done a lot of things in recent days, and months, but three things that we've worked on, and we'll continue to work harder on.
We have increased our operating cadence, right? That equals execution, and equals speed. We've renewed our focus on our customers and our partners. More importantly, we've aligned the voice of our customers to our R&D investments. And we'll continue to work on those three, day in and day out. This week as a result of that, we will be announcing a number of incredible new products driven by your input and many more announcements coming this calendar year.
Avaya's moving forward, Avaya's moving fast. It's not by coincidence that we're actually here in New Orleans for Avaya engage. The city's known for two things. In fact, after being here for a couple days, I'm sure it's known for a lot more than just two things. But that being said, one is obviously its great warmth and appreciation.
And as we've all learned, certainly, its love for music. We kicked off the event last night. It was a great time. We've started to celebrate, if you will, Mardi Gras a bit early, it's actually in about two weeks from now. But how cool was it to actually spend some time, celebrate, socialize, have fun and what's the most important to me is the fact that we're just beginning and we're gonna continue these celebrations and successes moving forward.
Secondly, New Orleans is known for its resilience and frankly its innovative strategies for rebuilding, similar to that of Avaya. Many don't know this, but I'm a twin. I have a twin brother, his name is Anthony. I'm the older by ten minutes so I make sure he knows it every day.
But when I was younger my father actually taught me a valuable lesson when it came to resilience, he said boys you need to try boxing, so okay. One thing I didn't realize at the time that Anthony was not only a good boxer, he was a very good boxer.
He was also about twice as big as me so it didn't work out that well. But the one lesson I learned and what I learned that matters most, it's how you get up off the mat, right? If Anthony were here today, he would be more than happy to tell you and share with you that he gave me the opportunity to go off the mat many, many times.
Another thing I learned was to run very fast and in fact, I asked my mother, she gave me an old video of myself when I was a kid and that I should me in the blue, right here. That's me running away from my brother Anthony as fast as I could, so I became a real fast runner.
However, the one thing I probably should have learned that I didn’t, and you'll see it here in a minute oops, not to trip so I learned early on not to trip. But on a serious note, what my father meant is that when someone knocks you down, it’s how you get up, it’s how you carry yourself that matters.
You need to get up with character. You need to get up with dignity, and you need to get up with respect. You need to learn from the experience to fight and win another day. It's these characteristics that truly make a real champion. Just like the city here in New Orleans, and equally as important, just like Avaya.
The point is, it's how you position yourself to succeed in the next fight that matters, that holds true in business as well. I'm extremely proud of the way Avaya got up off the mat. It was amazing how we remained focused, how we continued to deliver what our customers expected.
And what they needed, we realigned and reenergize their partner community, not only that but we improve and strengthen our financials. Just last week, we announced our Q1 revenues for FY18, four quarters to stabilize revenue in a very, very challenging year. I've been with this company a very long time, and not once in my ten year here, have I ever saw four years of stabilized revenue.
That's a real testimony to all of you out there for all your support, all your help, and all your dedication. And on behalf of all the Avayan's, we thank you.
>> Through the past year, we continue to develop and deliver innovative solutions and emerging technologies. You'll see a lot of those this week.
Please when the Expo Hall opens this evening, see what you can do to go down there because you will experience first hand these technologies deployed in real life customer applications. The point is we overcame destructions, we continue to take the necessary steps to strengthen our business, but more importantly strengthen your success.
Collectively, we succeed as one team. And that's what gives me great confidence that we will succeed in the future. The industry is going through a massive change, and that's to move to digital. And when I think of digital, I think of Cloud, AI, Blockchain, and obviously in the cloud, sort of being the platform that connects people, data, and machines.
The period we're in now is truly transformative and as such, we require a significant amount of investment and a significant amount of spending. Avaya is the best company position to lead this transformation. We have the three critical factors for success. The first of those is financial strength. We can fund this journey.
We don't need to pull this journey, we don't need to push this journey, we can fund this journey. Secondly, we have the talent and expertise to execute. And third, is we are the proven technology leader, the trusted partner that delivers. We will do this by shaping connections, delivering what you expect.
And thanks to all of you, I'm proud to say Avay is up off the mat and we're positioned to win.
>> As I mentioned, I've been here a long time. I went by fairly quickly, to be honest with you. But many may not know that I've actually been here for more than ten years.
I started the company soon after it went private. Company went private in October in 2007, and I joined January 1st of 2008. So I've been here from the very beginning if you will. During that time, in fairness of companies made significant progress. Most importantly in driving a world class business model, and we're very proud of that, right?
We've worked hard, we're very proud of the business model that we have. The best in the industry. That being said, many good companies have a strong business model, but in order to be a good company, you need not only to have a strong business model, you need revenue growth.
This company has been challenged on its top line for a number of years, I'm here to tell you. And hopefully assure you that we are moving forward and what we're doing is focusing everything on growth. You'll see a lot of that this morning with a number of new product announcements.
Some of you might have read something that came out this morning, not sure, [LAUGH] but we are focused our efforts on growth. This will be a great company. Beyond my time at Avaya, I have 30 plus years in the industry. Started IBM, went to Seagate, and then I joined here.
I've learned a lot over that period of time and I've learned what I admire most in leaders. I would tell you. All great leaders have a vision. All great leaders have an appreciation for technology and innovation. But for me what stood those apart from the rest, if you will, is they understood that you need to keep the lights on.
The lights have to work. Maybe a better way of saying that is they know how to deliver, right? They are operational guys, they knew what the customers wanted, they knew how to deliver. I can tell you Avaya's here to deliver for you. It's funny, I've only been in the job for four or five months and people are already asking me about my tenure and how best to characterize myself and what is it we're focusing on?
I can tell you we're focusing on six key areas. The first one, as I mentioned, is we're gonna be transforming Avaya in ways that drive sustainable, improved performance. What I mean by that is revenue growth. The second thing we're doing is we are developing, and have developed compelling plans for taking immediate actions, we are leading with a clear vision however that's grounded in solid objectives.
The third thing we're doing is we're building a world class organization that attracts the very best talent in the industry. At this center of this company is our people, we will never forget that. The fourth thing we're doing is innovating. We are innovating such so we can provide all of you with the competitive advantage.
Of course we're driving shareholder value. And last but not the least is we will be an organization that's customer lead in everything we do. So how are we gonna accomplish this? What's different? Well, I can tell you, like anything else in life, it all starts at home. And what do I mean by that, is that there's an old saying.
It goes something like this. Culture eats strategy for lunch. The point is, if you wanna change your company, what you need to do is change the culture of that company. And changing that culture is by far the toughest thing a person needs to do. By far. What we did on October 1st of 2017 is we deployed 5 culture principles that I wanna share with you.
Because there at the core and the fabric of what we do every single day within the company. The first thing we did is we simplified. We had an executive committee of 13, executive committee meaning reports into the CEO, today we have 6. We had the better part of a 100 VPs.
Today, we have roughly 50. The point is, we eliminated complexity. The point is we eliminated fragmentation and what we're doing is driving decisions faster. I hope some of you were saying that. The second thing is accountability. Accountability simply means our teams now are measured on your success. And they're measured on doing what we say we're gonna do.
How profound is that? But that's what we're measuring on. We're actually measuring on doing what we say we're gonna do, what we committed to all of you. The third one is teamwork. I've been here ten years, there's one word that has roots in this company. It's called inertia.
It's really hard, it's really hard to break down inertia. I can tell you what, we are breaking down the functional silos. We're having our teams collaborate such to drive better outcomes for all of you. The fourth thing, empowerment, we're moving decision making to the field, closer to you.
I hope many of you are seeing that. We're not done yet, there's still the silly word inertia. We still need to work a little bit, but I can assure you within a very short while we will move all our decision making to the field. The fifth one, and the one that means probably the most to me, is trust.
We need to make sure that day in and day out, we earn it. Trust is not given, it's earned. And we need to earn it from you each and every day. And we are here, and I am here and you wanna meet the new leadership team. They are here so you know that we expect and we will work hard to earn your trust.
And as I mentioned, these five cultural principles are deployed in neurofabric of every thing that we do within the company. With that said, we never lost sight of the fact that if you wanna have success, success starts with your people. Throughout my career the most valuable lesson I learned, and maybe it was back in my IBM days when I've been with a pretty cool place to work.
You probably still is but it's different than when I was here. But I learned that the most successful businesses aren't just focused on product and solutions. They're focused on the most valuable asset. And that's their people. Avaya has been investing in our people. You may or not know that, but we have.
We continue to hire more early career and recent college graduates than ever. In 2017, we hired significant amount and in fact in 2018, we're gonna hire more. And I'm proud to stand in front of you guys to let you know that if you get a chance to go to the EXPO hall, and I hope you do, you will see this lego city, it's pretty cool.
You should really go check it out. It's run by IoT applications. And that was developed by two of our very recent hires. I mean, how exciting is that? To kinda get you up in the morning and get you jazzed to come to work. But at the end of the day, the equation still remains pretty simple.
I say it every day. Does anybody here in Avaya they're probably tired of me saying it but, great people equal great teams, great people equal great teams, great teams equal great companies, works every time. Works every single time. As I mentioned the industry's going through a transformation, and we need to transform.
By the way, we've had a couple successful transformations. When I joined ten years ago, we were bleeding cash like nobody's business, our operating metrics didn't even make the bottom quartile of the benchmark studies. We work long and hard on that and now we have best in class business model.
Not five years ago, we're so kick off the transformation to move from hardware centric complete that one software services. Proud to say that over 80% of our revenues today are software and roughly 60% are those are services. We all know that businesses need to transform if they wanna remain competitive.
And in fact, they need to transform about every five years. However, it's hard work. And I said the move to digital is the next transformation, if you will. But the one thing companies need to be mindful of, is they need to make sure that they don't become captive through their past experiences.
And we're very mindful of that in the company. If you look Avaya's prevailing approach was caution, right? Caution equals fear, caution can stall decision making. Caution paralyzes an organization. Going forward, and one of the reason I'm so excited about this new management team. Is our prevailing approach will be thoughtfulness.
Thoughtful leaders engage and empower. Thoughtful leaders posses a confidence that others will follow. The bottom line is thoughtful leaders will move us ahead. We'll be thoughtful, we will take measured risks. We'll focus on execution, and equally as important, we'll focus on all of you. You are customers are at the center of our thinking.
You know, I started my new role, as I said, roughly four or five months ago. And already I've met with over 100 customers and partners. For that, I'm deeply appreciative of your time and frankly your continued support. And thank you all for being here as well, but that's my job.
I have an open door and will always have an open door. I'm listening, I'm responding and most importantly I hope you see that we're acting. If I haven't met you yet, I look forward to the opportunity to meeting with you all. As I said, that's my job. In the last months, now we've gone through and made a number of significant changes.
Am proud to say we have a couple of our new Board Members here, with us, this week or certainly for today. They have deep relevant experience. We are fortunate to have these Members on our Board. As I said, we have a new management team. There are new management team that has a track record and successful transformation.
More importantly, they know what good looks like. They're winners and they're proven leaders. At Avaya, we understand what's required. This week, you will see a number as I said of significant new product releases. You'll be learning more about our new and emerging technology. We have made investments in innovation, and we're excited for having the opportunity to share those with you this week.
And the best part of all, we're just getting started, we're just getting started. You know, as many of you may know, ten days ago, and some of you had the opportunity to join us, we went public. As a great, great event, more importantly it was a huge milestone for the company.
I was talking with Leslie Picker at CNBC, she's a TV personality. She goes on the Business Shows. So, I got done with talking with her and letting her now what Avaya's all about. So, she looked at me, her head kinda tilted and she said, so Avaya, you're no longer the voice company that is silent.
I was like, wow yeah. You're no longer the voice company that is silent. She said, I haven't heard about Avaya in ten years, right? So, I can tell you that going public was important from many fronts. But ringing that bell on the New York Stock Exchange provided us and provides us today a new platform.
And that's a platform to share our story. We began it last week, we're doing it again today. It's a story by which we're very proud of. And it's a testimony not only to the Avayans, for the hard work and dedication. It's a real testimony to all of you for standing in there with us, supporting us.
I'm sure there were times when you had to talk to your bosses about, so tell me why we're still with Avaya? You put your badge on the line for us. We understand that, we will make sure that what you did was the right thing. You know, as I was preparing for this talk, I was trying to figure out exactly what I wanted to say.
And I don't know, many of you may know this, but it kinda dawned on me. That number one, Avaya's very profitable company. We generate more than 25% interest percentage of revenue. Number two, we're market leader. We're number one or number two, and the CC and UC spec. We have our magical global foot print.
We have over a 130,000 world wide customers. And did you know more than 90% of the fortune 100. Run their mission-critical applications on Avaya, day in and day out. Not only that, we have the industry-leading business model. We generate approximately 8% of our revenue in cash. And now, we have a new capital structure that adds roughly about $300 million of additional cash for the company to invest, right?
And we will, we will be putting those assets to work. You know, we now have the ability to maneuever. We have the capability to fund additional investments. We can fund additional investments in R&D, we can fund additional assets in our people. People kinda know me as Jim, The Chief Restructuring Guy.
There's no person that wants to spend more money that me, trust me. Trust me, I did that job far too long. But we all do, we wanna spend more on R&D. We wanna spend more on our people, more on our process, more on our tools. You never know we may wanna spend some on M&A, not sure.
But we have the capability. A references the point of we're no longer driving our car with the parking break up, right? We're no longer playing prevent defense, right? We're not playing not to lose. What we're doing is we're playing to win, were gonna be aggressive. We're gonna invest in solutions and technologies that you, our customers, are demanding.
And it's in that spirit, and frankly one of the reasons why I'm thrilled to announce, right? For the first time, a new strategic acquisition, right? Some of you may have read it and we signed in definitive agreement yesterday, in fact. We expect to close it this quarter, that we'll be acquiring the Market Leader in Intelligent Cloud Communications, and that's Spoken Communications.
>> Spoken is an industry leader in the Cloud Context Center. And they come onstage before they're supposed to.
>> They do.
>> That's okay.
>> We're that kind of family.
>> That's right, but first, the market.
>> Exactly, always.
>> For those of you, this is Mo Afshar.
Mo is the CEO of Spoken. So Mo, welcome.
>> Thank you, thank you, Jim.
>> We are certainly very excited to have Spoken become a part of the Avaya Family. Their platform, you know, on the cloud, UC will also have the, CC will also have the opportunity to expand that on UC Service Offerings.
And I asked Moore to come up here on stage with me this morning. So he could share a few words about collective vision and where we're going in the future.
>> Thank you Jim, fantastic. So first of all, it's wonderful to be with all of you guys this morning.
Phenomenal news, and this has actually been three years in the coming. So, when I came to Spoken with some two years ago, and I was thinking about what to do at my previous company, another company with a red identity, Oracle, by the way. I was thinking about what to do, and I was looking for a space that was ready for transformation.
With a great upward puff to the cloud, with great room for innovation around technology, such as AI and machine learning, etc. And it's Spoken, I've found an amazing company that had built technology over 10 years that took me three or four or five years to build in my previous company, less swell and for a different market segment.
So arriving at Spoken, I saw a great technology team, great technology portfolio over 200 patents. And an amazing market position in collaboration with Avaya, in taking Avaya solutions and putting them in the cloud in a multi-tenanted, highly scalable, secure platform that could scale beyond the magic thousand contact center agents.
Cloud first, ready to go off the bat. And during the last two years, we've been working together very closely as teams to really help bring these innovations to market for each and everyone of you. And I think as we think about what the future holds, I think we can jointly say that we have an amazing opportunity for you, our customers, to radically transform the way that you do customer engagement and CX, to transform you engage with your customers through AI and Machine Learning, and to evolve to cloud in the most seamless way.
And I wanna say a few words about what that means. My view and our shared view is there is no other solution in the market that provides the most seamless path for you, our customers, to the Cloud that gives you the most scalability anywhere. And great investment protection in modern technology, such as machine learning, and big data, and voice analytics.
And this marriage of our companies enables you, our customers and you, our partners to really evolve to the Cloud at the pace that you want. And with the latest technologies that enable you to leapfrog everybody else and do great new things
>> Great. Now also part of this acquisition which many of you may or may not know, there's also intelligent wire.
>> Which is the AI component of the previous Spoken. Maybe you can just share with everybody a little insight into intelligent wire and the AI applications.
>> Thank you, Jim. We're very excited about AI in general at Spoken, and we've build a great team that has expertise in that areas specifically in the area of voice.
And if you think about the modern world today, think in your contact centers, you have person who's typically an agent, who's typing stuff into your system while they're listening to what a customer wants. They type things like call summaries. With intelligent wire, we offer for the first time in the industry, a solution that analyses each and every conversation in real time, turns it into text, summarizes that, and the puts it all into any application of your choice.
So for example, application such as sales force. And this breakthrough technology fundamentally changes the economics of the contact center, because things like off the call work are radically reduced. And secondly it gives you guys, our customers and partners, unbelievable insights into what your customers are really saying and how your agents are handling the interactions with those customers.
So leading edge technology, running in the cloud, and most importantly with this announcement, we are the first solution in the market that combines a communications platform and a voice-based AI platform integrated into a single offering. Yes, thank you.
>> Well, thank you very much.
>> Thank you, Jim.
>> Thank you for the partnership.
>> Yeah, thank you. Thank you. Wow, what an incredible time to be in this industry. What an amazing acquisition, and we look forward to continuing to build that out. But as more pointed out let me just re-emphasize a couple of points.
Number one, Spoken was built off the Avaya platform. It was purposed built to fit us. It's cloud native, it's cloud first, and all by the way we're going to market with this immediately. And in fact, when Mercer Rowe gets up, and Mercer leading our newly formed Cloud BU, he's gonna take you through a new and important customer win that was born out of the Avaya Spoken solution.
This will be the first of many more to come from this cloud-dedicated business unit. The move to digital is here and now. As just discussed, it has strategic importance. It strengthens Avaya's position as the largest pure play in the industry. Spoken will be a game changer. It certainly differentiates it from the pack.
But not only with Spoken, we will also be highlighting a number of new and innovative cloud solutions to all of you this morning. Little known fact, Avaya actually has been gaining traction in the cloud. We had more than 3 million seats today and it's growing. With this acquisition and with our new product announcements, we now have the portfolio to lead not only in the CC space, but the UC space as well.
If you remember one thing from my talk this morning, it's just four simple words. Think Avaya, think CLOUD, it's a different company. We're excited, it's an exciting time to be here. We're just in the early innings. Throughout the next three days, you'll hear a lot more about our product announcements.
For example, what we're doing with Omni Channel and contact center, IP office in the Cloud, Equinox meetings online, AI chat bots in over 40 languages, huddle rooms, new end points, real-world examples of AI and block chain in practice. And the list goes on, and on, and on. Watch us, watch Avaya.
We will be acquiring and partnering with technology innovators. We're gonna be accelerating and bringing together world class solutions. We'll be customizing no solutions to fit your specific needs. It's a new day, it's a new team, it is a new company. We're at the beginning of the journey. And we look forward to helping guide you on yours.
We will not settle for less, and in fairness, nor should you. I hope you feel the same way I do. Frankly, I hope you see it the way I see it. And more importantly, this week, I hope you'll get an opportunity to experience it, not only this week but also each and everyday.
As I open my talk let me close with, wow, what a difference a year makes. Now if you could do me one thing, let's do this together. Let's turn those green beads into gold. Thank you all very, very much.