There was a time when business was almost exclusively about making things and selling them. Now, so-called ‘service economies’ like France, Germany, Italy, the UK and the US, for example, derive more than 70% of GDP from activities that have nothing to do with manufacturing. Ian McMurray finds out if the AV industry is in line with world trends.
A survey published earlier this year by Business Solutions magazine, a magazine targeted at the IT channel, found that, on average, 50% of respondents’ end users were signed up to some form of managed services contract; that those integrators derived 44% of their income from services; and that around 30% of those surveyed had seen their services revenue increase by between 25% and 100% in the preceding year.
The question is: to what extent is that success being replicated in the AV channel?
Terry Wilson, commercial director at integrator AVMI, who believes his company is probably the largest provider of AV services in the UK, has a clear vision of the opportunity.
“IT industry research tells us that 80% of clients’ budgets are spent on IT-support opex versus 20% on project capex,” he points out. “While AV integration is still a large part of our business, we believe our portfolio of services enables our clients to leverage more value out of their AV investments and maximise availability and productivity to their end users, and those services now represent a large portion of our business. Our service business offers us more consistent and manageable revenue streams and allows us to maintain a closer and more supportive relationship with our clients.”
Adrian Edwards, customer services director at integrator proAV, attaches similar importance to his company’s services business. “The support services business has become increasingly important in terms of both turnover and profitability over the last few years and provides an ongoing and sustainable client engagement model,” he notes. “It complements our ability to deliver projects and hardware solutions and provides the client with a full end-to-end service. We anticipate that the ratio of services business to projects will increase over the next three to five years as clients are looking for more visibility of the true cost of ownership of installed systems including all ongoing support costs.”
Range of services
What is perhaps surprising, or perhaps not, is the enormous range of services offered by AV integrators. It starts with basic hardware maintenance, and at the other end of the scale, integrators are offering complete AV facilities management. Between the two are preventative maintenance, room checking, remote monitoring, training, on-site support for customer events, help desks, hosted videoconferencing, loan and rental systems, content deployment, video production – and many more. It seems as if the list is limited only by an integrator’s imagination, and the skills and resources at its disposal.
“The general trend is that offering extra value services will continue to grow and is rapidly becoming a core part of any new business,” says Gareth Lloyd, marketing manager at integrator Saville. “Clients are looking towards a complete solution and that extends to pre- and post-support services. The days of installing equipment and beating a hasty retreat are no longer an option. From an integrator point of view, this is a no-brainer. Engaging with a client throughout a project builds trust and respect which will undoubtedly lead to new and continued business.”
“Providing a high-quality support service alongside high-end products is key to CDEC’s business model and will always play a large part in CDEC’s revenue and profitability,” declares CDEC managing director Toni Barnett. ”A strong support service is vital for repeat business and also for gaining new business.”
Roland Dreesden, managing director of integrator Reflex, sees how changes in the market have made it easier to offer support services. “Offering services is increasingly important to our business,” he says, “and now that manufacturers provide longer-term warranties on hardware, the risk to the integrator is a lot less than it was five years ago. It’s meant we can provide an enhanced maintenance contract at a very affordable price, as we only need to address the labour element and any other enhanced services that are needed.”
“A major benefit to us of providing support services is keeping engaged and building relationships with the customer,” he continues. “When we maintain a customer’s system, we have a deeper understanding of their needs and how the equipment is used. When we provide additional added value services, this leads to a better long-term relationship with the client.”