AV and IT - Dealing with IT invaders

‘Convergence’ means that IT integrators are increasingly moving into AV territory. AV installers must fight back, says Bob Snyder
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‘Convergence’ means that IT integrators are increasingly moving into AV territory. AV installers must fight back, says Bob Snyder

In his InfoComm presentations, Gary Kayye, chief visionary at Kayye Consulting, pointed out that 92% of AV installations by IT installers are network installations, while AV installers do less than 30%. In addition, 81% of digital signage installations are done by IT installers, and 68% of videoconferencing by those IT integrators.

Besides the sting of those statistics, this explains why IT integrators are pouring over the walls, spilling over into AV territory. It’s not rocket science – they’re just following the network across AV border lines. And they are scaling those walls in hordes because there are a lot more of them than there are of us. We show very little intent to follow the network into their IT world. If the battle for the AV customer was the World Cup, we’d be the own-goal scoring keeper.

For years, we have been calling this ‘convergence’ in the same way as some companies that get taken over try to call it a ‘merger’. It’s not convergence. IT has no intention to converge as it is already on the verge of rolling right over us in AV.

You could blame all this conflict on the commoditisation of video. The more popular video becomes, the more it is everywhere, and the more our business attracts IT resellers and distributors who thrive on selling volumes with low margins.

I mentioned last month that the best IT distributors make less than 8% profit, while the multitude of successful disties make closer to 2-3%. Also, there are a lot of less successful ones, teeter-tottering between +1% and -1%, spoiling the market for the rest of us.

Prepare for battle
Maybe AV integrators should take a tip from Microsoft. When it encounters a worthy adversary, it dedicates a room to focus on the struggle. In this War Room, a whiteboard shows the known strengths and weaknesses. Any team member can post information, and meetings across different teams are held here.

Dedicating a room is not the point: the key is to focus the organisation on the struggle. To have at least one place where the collective knowledge is posted and shared.

The process starts with recognising your own strengths and weaknesses, whether you use a traditional SWOT chart or not. Then, you need to identify the competition in your area. What organisations are you up against? This may be geographically based or customer based.

But if you are sharing customers with an IT integrator, you’ll want to analyse their strengths, their skill sets, their business proposition. What partners do they work with? What services do they offer? Much of this information is generally on their websites. But, like most information, it is only useful if you know how to apply it.

Mapping the competition is the way you grow to understand the hard shoulders and soft belly, to get a handle on why your customers need IT integrators and how that need changes as technology, markets and industries evolve.

Our typical AV attitude is: We don’t want that IT work. The question you need to ask is: Do you want that customer? And, if you leave that work to an IT integrator, will the door be open to lose all the AV work? Where the line is drawn goes back to your own strengths and weaknesses.

We tend to be strangely arrogant in AV, and we often look down on IT integrators for their lack of expertise with video. We do this in the same way that a standard-fare restaurant might view McDonald’s coming into town. Then we find our lunch business is off and that the customer may not share our full appetite for better dining.

On the other hand, we also fear these barbarians at the gate, who threaten our very existence and our way of business. It would seem there are at least four strategies for coping – if you don’t count the most popular one: doing nothing and ensuring your seat at the upcoming pillage and plunder scenario.

Buy in
The IT business is a very competitive environment and the owners are suffering from the same ‘greying’ that we see in AV: they are getting older and looking for exit strategies. It is very possible that you can find an IT integrator of size that is compatible (no matter if you are big, small or mid-sized). These businesses may be just as eager as you are for a wedding of skill sets. If you do buy in, be sure you keep enough of the management with IT experience because the technical skill sets need the IT commercial skill set. Probably you’ll want to run it as two separate business units, sharing resources, but you’ll need a plan that recognises your own strengths and weaknesses.

Sell out

If you are nearing retirement anyway, you may find it a better play to exercise your exit strategy. IT integrators commonly acquire other companies in search of skill sets, profits or both. The value depends upon your customer base, your brand and your ability to deliver future business. A lucrative consulting contract can also add to the sales price and your benefit.

Grow your own
Particularly now, there are plenty of IT sales and technical people looking for work – many of these are skilled and dedicated professionals, and some come with a customer base. You can pace yourself and add expertise as you learn. This talent collection could turn out to be the start of something, but you’ll have to balance their industry culture with your own (in order not to frustrate both parties). The coming shift in IT to cloud computing and managed services means an opportunity to start on an equal level without increasing employee numbers.

Get out of the way

We identify IT with any high-volume, low-margin business. But it’s important to know that they target any high-margin business with the idea that they can offer a better price. To sidestep their aggressive business tactics, you need to constantly re-evaluate your offerings and move quickly when you see opportunity (or impending invasions!). Any business where customisation is the key will allow you an angle that IT hardware companies often find discouraging. Their ability to hit low prices and low margins depends on the availability of common technology components at volume prices.

In summary... Barbarians at the gate? Sally forth and battle them before they get to your doorstep... Open the door and invite them in as family... Capture a few and learn from them... Or move to a better neighbourhood.

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Next feature in the series: The impending IPcalypse

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