Electrosonic’s new CEO talks to Duncan Proctor about the consequences of the changing AV/IT landscape and reveals the integrator’s future direction
Firstly, could you tell me a bit about your background and the stages of your career up to now.
I started my career in retail banking. I then went into professional services 20-odd years ago when I joined Accenture (or Andersen Consulting as it was) and spent a couple of years there earning bootcamp stripes in management consulting and business process change.
I left there feeling that I wanted something a bit more and I joined a small management consultancy, which quickly got acquired by an IT specialist consultancy. I really grew my career in that field, mainly in the enterprise apps space. We ran a UK listed business that when I joined was $100m and when we got acquired was $700m. At the point of acquisition in 2009 I was chief operating officer. I continued in effectively the same role in a much bigger Indian IT services firm. My responsibility at the point I left there recently was for all applications project work in any of our applications technologies. I had 2 or 3,000 people in my world by the end of my time there. I was keen to move from the IT and applications space into the technology sector.
What was it about Electrosonic that appealed to you?
I got a call from a headhunter who talked to me about Electrosonic and I just thought that it was really interesting. I'd been on some of the ride systems we do in the US and I was really inspired by some of the cool things that the company did.
One of the things I'd really missed working for a large Indian corporate firm was that you lose the dynamism and the culture of adapting. I really enjoyed the conversations I had with the leadership team, for me it seemed very people-centric.
You've been in the job about six weeks now, what was your first order of business?
For me as a leader joining any professional services business, the first order of the day is meeting the people. I've probably spent the last four weeks on the road around all of our offices in the UK and US. I've been meeting clients, hearing some of the success stories and getting up to speed with the challenges and opportunities that lie ahead of us.
As someone with an IT background coming to AV, have you identified any major issues facing the AV industry?
The changes we've seen in the AV industry over the last 10 years, I think we'll see far more changes over the next 10 years. You see some of this in the fundamental technology shifts in the corporate world away from owned IP infrastructure conference systems to hosted conference systems. This year in the entertainment and tech world - less simple projection, more LED. One of the interesting things for me, when I've been out meeting people, particularly service engineers, is the conversation now is much more about "well I don't need a screwdriver, now I need a laptop". And that's a fundamental shift for a lot of people.
One of the things I hear talked about in our business is that as more devices are IP-enabled, the opportunity for convergence between the industries grows significantly. I think particularly in our services business we'll see significant change as IT and AV converge. And then I think on the front-end as design of experiences becomes much more integrated between what you can do with technology in AV, in addition to broader disruptive technologies, I think again that'll be a huge opportunity for us.
AV and IT convergence - do you see the opportunities rather than the threats?
I do see it as a huge opportunity. I see the opportunity in the market-facing side of the business. For example in how we innovate and improve the experience for the people, for our customers. I think it presents opportunities to lower cost of ownership through the service business, the after sale service business in particular, as well as in the opportunity for more remote commissioning, etc.
It does also present some challenges and I think if you look at IT, the worlds of IT and applications and infrastructure have become much more commoditised over the last 10 years, and continues to be. It's very hard to sell value. Most of your bid process becomes about cost and I think one of the risks in the AV industry is that it becomes more and more commoditised as IT and AV come together.
Expanding on that, how do you tackle undercutting on AV projects?
At Electrosonic we see ourselves as a premium provider of both quality and value. And we see ourselves as engineering experts more than anything else – it’s not about the hardware that is an enabler. In a bid process we're not afraid to step away and say "the client is going in the wrong direction here, having the cheapest possible solution isn't the right answer”. This applies not just in narrow AV/projection but also in acoustics, ICT setups, etc. If you choose something with the cheapest price as the buying criteria, frankly you can get an end user experience that is poor.
As an engineering-led company, we believe the experience is what matters and if the client is willing to invest to get to the right answer then we are on that journey with them. That's how we see ourselves and I think you can see it in other industries like IT. My last couple of years in a much more application-centric IT environment had been dominated by the race to the bottom. We won't be immune to that and we will see pressure around our cost base, around our locations, and how we service clients.
You have to find a way to demonstrate the value you bring as an organisation, some clients won't value that. It's similar to the supermarket or auto model. You know that Premium supermarkets and discounters are different things; you know that some auto brands offer different experiences on the same chassis. As a consumer we know these are different things, and that's how I view the market and customers have choices to make - some will choose the discounters.
With your IT background, do you think that gives Electrosonic a leg-up on some other integrators?
I do - I haven't seen other integrators embrace IT in the same way. Having joined the industry, it's really interesting from my perspective because the AV industry talks about itself as an AV industry, yet talks about the convergence between AV and IT. And the fact that the AV industry talks about the AV industry suggests to me that actually we haven't understood what convergence means. Maybe there won't be something called an AV industry in the future, maybe it'll be something around experiences in IT.
With IT being so much bigger than AV, do those in IT understand what AV does? And is that now starting to change?
I do think that's changing, and I think you are starting to see some of the more traditional IT services firms, particularly around videoconferencing and corporate, encroaching on the space that has been traditionally AV. I think in the world of corporate clients you are seeing the AV and IT domains married up. Where in the past it's been more facilities-centric, a number of our major customers see AV as being an IT-managed domain. I think that will cause significant change in the industry because it's more evidence that the markets are colliding when your clients are telling you that effectively AV is a sub-discipline of IT now. That doesn't affect every client, but we have major financial services clients that now have AV managed by IT providers.
When your appointment was announced you talked about taking the company to its next phase of development - what is that next phase? And what are your hopes for the company in the short and mid-term?Six weeks in I'm still on a journey of understanding where the strengths of the business are and how we might leverage opportunity.
We are in our planning process at the moment and what I'm fairly clear on is a number of tenets. One of them of course is around the convergence of AV and IT and what opportunities that presents to us. Both in terms of improved end user experience, but also reduced cost of ownership. The other area we are very clear we need to further expand our footprint is in professional services. As a business we've always done some design of systems and then focussed on the integration piece, and historically we've had reasonable focus on the service piece but not to the same degree as our competitors.
I think we will see much more focus on the professional services end of the business, in the upfront design, representing owners in the implementation and in post implementation services. In the past, professional services represented around 30% of Electrosonic's business. Our goal is to lead with this practice.
And can you think long-term and what is long-term to you at this point?
As you know, Electrosonic is owned by a family business and long-term for them is 20 years, which really is quite a long time. We'll be mapping out the next 3-4 years and investing to go on that journey and we'll be clarifying that over the course of the rest of this year as part of our strategic planning process now that I'm on board. The other tenets for me are much more about where do we see vertical market growth and where do we see geographic market growth.
One of the reasons for having a chief exec come into the group is to say not only in technology terms 'what is the future?' but in geography terms and in vertical market terms 'what's the future for the business?’
How do you view the AV industry’s move to an experience-creation model? Does it offer opportunities for an integrator like Electrosonic?Absolutely. Not just in the AV domain but in many domains - the way we experience technology is changing and I think that's an exciting and challenging element for the market. As we look forward I think we will see much more of how we create that experience in some of our markets that haven't seen that before. We've done a lot of work in theme parks in terms of how you create a 'wow' experience with your AV capability. Then the question becomes how do you bring that to a more traditional AV world in for example the corporate sector. How does what we do in theme parks enable us to think differently in executive briefing centres or huddle rooms or other interaction points within corporate life.