According to coverage in the Australian press Salmat, which handles over 100 million inbound and outbound calls each year on behalf of its clients, had “scoured the world” for a new solution provider. Its vendor selection started with 10 prospective winners but, in the end, was winnowed down to Avaya and one other (unnamed) candidate.

We’ll presume that Genesys, as incumbent platform provider, was considered as a candidate from the start. Indeed, it had shown an impressive array of enhancements to its core Customer Interaction Manager (CIM), including the introduction of a Conversation Manager to support “intelligent” handling of multi-channel and multi-modal interactions. Genesys also has a longer history of hosted implementations of CIM as well as the use of the Genesys Voice Portal (and its precursor VoiceGenie platform) for applications involving voice-based authentication.

The transition to a totally new platform is, to the best of our understanding, something of a rip-and-replace operation during which business continuity could be something of a challenge. This is especially true because Avaya, has had a love/hate relationship with “hosted” or “cloud-based” implementations. The move to IP-based implementations provided some initiatives toward hosted renditions of IP-based ACD and Contact Center resources. According to literature, both Telecom Italia and Sprint have offered hosted renditions of Avaya’s IP-based call processing resources.

However, to the best of our knowledge, Avaya has yet to bless or integrate voice biometric authentication into its IP-based Contact Center or its Experience Portal. By contrast, Salmat has made a point of differentiating itself by offering caller authentication as a service to financial institutions, healthcare providers, telecom service providers and government agencies in Australia and New Zealand. We’re anxious to see how smoothly the re-hosting takes place in the coming year. And we want to welcome Avaya into the community of voice biometrics-based solution providers.

In the contact center will continue to support Aurix’s existing customers and channel partners. It is a product that has proven its mettle in the classic context of deploying analytics on an existing corpus of stored voice files to support agent training and workforce optimization. It is also the root of delivering “relevant screen pops” based on the context of the call and “nuance detection” aimed at both agent and caller.

But that’s only the beginning. The acquisition was driven by the Emerging Technologies business unit, under VP Chris McGugan. He sees the Aurix core engine and IP as foundational technology that can be spliced into a variety of solutions across the entire enterprise. The same attributes that make it possible for the Aurix phonetic speech search engine to monitoring up to 100% of recorded calls makes it possible to do the sort of “near real-time” speech processing to tag the content of the streamed audio associated with video content or collaboration platforms. This, in turn, enables real-time identification, searching and audio mining.

Avaya’s new in-house approach to speech analytics turns it into the connective tissue that can help its enterprise customers connect the dots between other “Big Data” analytics initiatives. It’s no coincidence that only yesterday database and CRM giant Oracle purchased Endeca, a small New England-based company that specializes in analytics and pattern recognition across large repositories of both structured and unstructured data. The difference is that Endeca conducts its analysis of text and other content on the Web and e-commerce sites. Note the lack of speech analytics. In the world of multi-channel, multi-modal and real-time commerce, Avaya recognizes that treating content and meta-data that starts as spoken words may be more important than ever, and now it Avaya doesn’t have to look outside its Emerging Technologies group for what it considers to be the best-in-class technology. At the same time, the company brings a robust set of analytic tools into its mainstream product line and will add an important component to the quality of service that it delivers to its enterprise customers and, in turn, to their customers.

As Jorge Blanco, VP Product Marketing-Contact Center Solutions, explains, “We are at the earliest stages of helping companies connect their disassociated experience.” Yet many customers (or prospects) find it unforgivable for companies to “disconnect” media from one another. In Blanco’s view, this is especially true when they make the transition to real-time conversations, especially voice communications with contact center agents.

As we noted a year ago, when Avaya announced its programs and products to support the transitional contact center, Avaya had set out to provide software and resources that “orchestrate the user experience” based on the rich set of context received via a number of channels. This year, Blanco encapsulated Avaya’s efforts by asserting that “We are at the earliest stages of helping companies connect their disassociated experience.”

At the heart of today’s product announcements is the Avaya Aura Contact Center Version 6.2 (AACC 6.2) which is the third major rev of its core contact center technology. The emphasis on end-to-end customer experience awareness and orchestration, which naturally shifts attention to the tools needed to create and support new applications (Avaya Aura Orchestration Designer) and the resources that provide for monitoring and analytics for fine tuning applications (Avaya Aura Performance Center, which will be coming out later this year). In addition, the operations and administrations capabilities of the Avaya Aura Control Manager are being expanded to have purview over the whole stack of contact center and “experience management” features and functions.

Another noteworthy development is the transformation and evolution of the Avaya Experience Portal (which is the re-branding and repositioning of the Avaya Voice Portal). Blanco notes that, even though many people continue to refer to it as “the IVR” the Avaya Experience Portal is adding video (as demand grows) and provide for more multimodal features and functions, especially as they add enhanced routing and outbound services.

[Opus Research provides deeper description and analysis of the Avaya announcement in a forthcoming Advisory.]

In its most recent quarterly filing, revenues for the first six months of its fiscal year (started September 1) were up nearly 16% to $2.8 billion when compared to the same period one year ago. However net losses ballooned by 50% (from $419 million to $612 million) during the same time; but that included a one-time charge of $246 million attributed to the “extinguishment” of some expensive debt. If the one-time charge were not included in the results, the company would have witnessed a 50% improvement in its net loss. Indeed its Operating Loss for the first six months of this fiscal year had been trimmed to a mere $86 million from $209 million in the prior year.

With long-term debt exceeding $6 billion and interest expense on track to reach $480 million (though it might be slightly reduced with the refinancing), the $1 billion IPO would be timely. But investors should get a better grip on what Avaya does for a living. Characterizing it as a company that “sells phones and other telecommunications gear to corporations,” as the WSJ reporters do, Is like damning with very faint praise. Almost as an afterthought, they add, “It also sells hardware and software used in the call centers that companies use to communicate with retail clients.” And then compound their criticism by saying that Avaya “is unlikely to drum up the same level of investor interest as today’s Internet darlings, and indeed a better proxy for the company might be Freescale Semiconductor Holdings, the private-equity-owned chip maker that had a lackluster market debut late last month.”

But Avaya is most definitely not a semiconductor maker. As enterprises retool their communications and computing infrastructures to take advantage of IP-based telephony and communications-enabled applications – not just in the contact center – but throughout the enterprise (including mobile devices), the company is one of a handful of companies with a broad portfolio of software to support communications, collaboration and electronic commerce. The 16% growth rate in Avaya’s revenues reflects the refresh that is going on in the marketplace; that said, as we all know, it is a domain where hardware has been transformed into a commodity and software is the battleground where Avaya is confronted by direct competition from Cisco Systems, Alcatel-Lucent, Microsoft and IBM.

Dealogic data reports that the lead underwriters are Goldman Sachs Group Inc., Morgan Stanley and J.P. Morgan Chase & Co. In addition Citigroup Inc., Barclays Capital and Credit Suisse Group are among the banks bringing the new securities to market. With these blue chip firms involved, the IPO deserves close attention.

Because the package of software uses the same core logic as full-blown Aura implementations, Communications Manager is the call handling resource and all of the other Avaya-branded resources support presence management, system management and reporting, resiliency and fail-over. Sales people and channel partners require no special training to sell it and, by Avaya’s calculation, solutions carry a retail price that is 15%-22% less than competing products.

This is a low-cost, starter package designed to run on a single HP server, or to be virtualized and put on a shared server. That means it automatically ships with Avaya Aura® Session Manager, Avaya Aura® System Manager, Avaya Aura® Presence Services, Avaya Aura® Session Border Controller (in April), Avaya Aura® Application Enablement Services, Communication Manager Utility Services, Avaya Aura® Communication Manager and Communication Manager Messaging. It also fits with Avaya’s Agile Communications Environment (ACE) to enable quick and easy integration through “connectors to “connectors” for Cisco, Avaya (including the vestiges of the Nortel CMS line), Tandberg (video endpoints), IBM SameTime, and Microsoft Lync.

In an analyst pre-briefing, Avaya cited a few beta customers (under NDA) who are deploying configurations that include multiple contact centers, video and the “FLARE Experience,” referring to the AJAX-dependent, dynamic desktop (if not Avaya’s own enterprise tablet).

The branch or retail gateway is a cost-effective way to extend Aura functionality to sites with no more than 384 users. This architecture provides for centralization of system management and applications while supporting popular local functions, like auto-attendant, voice mail or clients for Aura-based apps. This gateway is set to ship “in March.”

Avaya is starting its marketing push for Aura Midsized Edition (Aura ME) today, with general availability for “greenfield” implementations (as well as “bolt on” for selected versions of Communications Manager and Communications Server 1000) in April. Programs to support “easy migration to SIP” from Aura ME 5.2.1 and older CS implementations scheduled for “the first half” of 2011. The same for implementation of the Contact Center package in “greenfield” envirnoments.

As reported in this press release, Empirix will provide Avaya and its authorized channel partners with “on-demand” access to its validation solutions through a Web portal. It serves as “a uniform, easy-to-use tool set for scheduling, executing and viewing validation results for new and existing Avaya real-time communications implementations.” Consistency will be key in providing companies with confidence as they add new apps and move to new architectures.

BTW: Opus Research is putting the finishing touches on a survey (sponsored by Empirix) of customer care professionals and here’s a “teaser.” Chat, IM and cloud-based apps have made dramatic inroads into enterprise workflows, to support collaboration and better customer care. As these technologies continue to proliferate, the importance of quality assurance will become increasingly self-evident.

No financial (and precious few technical) details were provided today, but the result of the alliance is that Avaya can respond to a long-standing demand from existing customers to support low-cost long distance service over the Internet via Skype. The two companies have been working “in parallel” (to quote Avaya’s Alan Baratz) for some time now. Indeed, support of Avaya-branded PBXs were core to the launch of Skype Connect back in August. In addition, because both companies reside in the investment portfolio of Silverlake Partners, a tighter alliance has been long anticipated.

Now that the two companies are overtly working together, Avaya customers are being prepped to expect a package of solutions that will make it easier to use a broader array of Avaya-branded resources to control who, where and how their employees can have their voice calls carried over Skype. The roster of “session management” resources in play includes the Avaya Aura™ Session Manager or Avaya Aura SIP Enablement Server, as well as the CS1000, Avaya IP Office, or BCM (for those Nortel customers now supported by Avaya). Note that overall Quality of Service (QoS) for calls carried over the Internet cannot be guaranteed by any of the session initiation resources.

Avaya plays an important role in the process of “enterprise hardening” Skype. Avaya’s elements will handle important functions around security and regulatory compliance allowing Skype to fulfill its long-standing role as a network for cheap long-distance and international calls. As the technology roadmap takes shape, the two companies are talking about support of contact center functions, eventually including support of work-at-home agents.

According to Alan Baratz, who heads Avaya Global Communications Solutions, Avaya’s customers are just beginning to make their move to Aura and the Session Enablement Server, so this announcement may not have as wide-reaching impact as it suggests. In addition, the tactical decision to confine roll-out to North America will also put a lid on its global dimensions. The lack of mature standards for interoperable videoconferencing and federated IM will also serve as speedbumps when it comes time to deploy solutions in 2011.

Meanwhile, enterprise migration to IP-telephony is destined to accelerate organically. Competiting infrastructure providers Cisco and Alcatel-Lucent are articulating strategies to bear that seem more “open” and developer-friendly. But the power of the Skype brand and its popularity among a loyal following of 125 million “active” users serves as a ready-made base of users who are familiar (and in most cases quite pleased) with the service.

BTW: Elsewhere in the social and mobile realm, Skype is doing some “deep integration” with Facebook, as noted by Greg Sterling here.

The corresponding transformation of Avaya’s contact center portfolio begins today with the introduction of five new products or major updates, including: two flavors of contact center to support “experience management”; two new “performance solutions” including IQ 5.1 for reporting and analytics across multiple channels and agent activities and a major update of Avaya Workforce Optimization (WFO); and a new application called Proactive Outreach Manager 2.0 which is part of Avaya’s Automated Experience Management Suite.

The new approach was described to analysts by Jorge Blanco, Avaya’s VP Product Marketing-Contact Center Solutions. He sees the core Contact Center Suite as a “multimedia work assignment engine”. Its components and architecture are depicted in this diagram:

Over the next 10 months, Blanco promises a rapid succession of product refinements and announcements. The result will be software, services and platforms designed to “orchestrate the user experience” across multiple channels, culminating in the introduction of the full-fledged Avaya Experience Manager in May 2011. At that point, the venerable Voice Portal will be supplanted by the next-generation Avaya Experience Portal as the contact center fulfills its role as an “Experience Center.”

Blanco explained that the product introduction strategy is predicated on the idea that managing the user experience is paramount and it is dependent on four major factors: orchestrating the user experience, applying real time data to support contextual or “purpose driven” collaboration, establishing the “full context” of a contact (so that data isn’t lost), and bringing live agents into the experience in order to accomplish “first session resolution” of a customer’s concern.

This sounds like a lot to accomplish, but Blanco asserts that the solutions that Avaya is introducing will not result in a forced migration to a complex set of products and services. Instead, as he put it, “We will have a complete, easier to sell portfolio when we’re done.” Acknowledging that Avaya’s Professional Services group has a major role to play, Ajay Kapoor, Managing Director, Strategic Communications Consulting, provided an overview of the support services that Avaya will bring to bear to make the fundamental transformation take place.

Avaya has a team of approximately 1,300 professionals comprising its professional services group. Traditionally, these were communications professionals, but the company it is in the process of changing the teams mix and chemistry to put greater emphasis on the business operations and front-end tasks like discovery, requirement design and defining what it takes to “get started” on business transformation.

One element of the Professional Services offering that will be especially important comes under the banner of “Assurance”. It includes “stress testing” and “readiness testing” based on simulation of real call traffic and customer activity in advance of bringing a new system, feature or service online. As companies grow more ambitious in their efforts to provide multichannel, multimodal and context-sensitive customer service, “assurance services” will be a necessity. Such confidence-building, risk reduction activity should provide enterprise decisionmakers the confidence they need to deploy new technologies that ensure a better user experience.

Lest you think this will only add more confusion to the already amorphous market for UC products, consider that it truly plays to HP’s strength. As illustrated in the chart below, the IT giant’s revenues from software and professional services are eclipsing those from printing, imaging, storage, servers and personal systems combined, making it a system integration powerhouse. As we approach the two-year anniversary of the acquisition of EDS, it is bold acknowledgment that HP is ready to apply its considerable expertise and experience with Avaya infrastructure to help smooth over many of the bumps and fill in the gaps as they apply the principles of UC in inherently multi-vendor, non-homogeneous environments.

The deal brings Avaya a partner that can provide a number of service delivery options for its core call processing and contact center technologies. HP has the potential to ease the potentially painful transition from those rock-solid, fully-depreciated, PSTN-friendsly Definity ACDs over to the more future-proof SIP-friendly world of Aura. The move looks so seamless on a project plan, but there are only a handful of system integrators that can work with customers to orchestrate the transition as a managed service encompassing resources around the globe, both on premises and “in the cloud.”

This press release provides more color on the agreement between the two firms. It clearly emphasizes such capabilities as life-cycle management and support that HP brings to multi-vendor environments that are ripe for Avaya Aura. It is clearly a professional and managed services play that also serves the purpose of helping Avaya maintain its presence in enterprise IT environments where the move to IP-telephony is an open invitation for competition from Cisco, Huawei, Alcatel-Lucent and others.

In other words, Web developers can build communications-enabled apps “without knowing anything about communications.” Genius!

As characterized by Hussain, ACE is the product of marketing “pull” that crosses several functional areas in an enterprise. Demand starts at the functional level, where platform incompatibilities may have thwarted a departmental head’s efforts to reap the benefits promised by providers of “unified communications.” ACE comes to the rescue with shrink-wrapped “connectors” for Cisco, Avaya (including the vestiges of the Nortel CMS line), Tandberg (video endpoints), IBM SameTime, and Microsoft OCS. Thus Avaya makes it possible to overcome incompatibilities with a single DVD that runs on a couple of servers and carries a list price of $10,000-$12,000 for the core license plus per user fees of $50-$100.

As for common use cases, Hussain provided profiles of implementations at a number of global businesses. For example a multi-branch global bank provided a form of “follow-me” connectivity by providing “hot desks” for itinerant executives. The service integrates a voice network that includes IP-PBXs from both Avaya and Cisco with presence management and call origination based on IBM Sametime. In other instances, the ACE SDK was used to “communications enable” business processes and workflows with APIs to CRM and knowledge management systems to support better medical care or customer care in financial services.

Architecturally, ACE resides “on top of” Aura, Avaya’s branded middleware SIP-based communications. Hussain explained that Avaya’s product offering has changed so that ACE will emerge as the application development environment for Aura as well as multivendor environments, and that the “lower layer toolkit (back into Aura Session Manager) will be ACE.”

Hussain, who is a veteran of the “Nortel side of Avaya”, was especially pleased that ACE is now a part of Avaya’s DevConnect program, referring to Avaya’s community of 3rd party developers, acknowledging that this sort of program was “missing at Nortel.”

Avaya is on the right track with ACE. It is putting tools into the hands of the people that are driving enterprise-wide innovation and making sure that key elements of Avaya’s existing fabric for call-handling, voice processing and multi-media interactions remains entrenched in multi-vendor solutions. The short list of supported vendors – IBM, Microsoft, Cisco/Tandberg – is not as “open” as might be ideal, but it does represent a high percentage of Avaya’s current market space.