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10 Tips for Aligning Your AV Business With the Future
Type: Article, Report or Whitepaper
Topics: Business and Management
Date: November 2011
By Brad Grimes
In September, at the InfoComm 100 conference, an annual gathering of industry leaders held by InfoComm International®, much of the focus was on how AV businesses must evolve in a world where AV and IT have converged. The general consensus held that in an increasingly network-centric AV industry, companies that continued to operate the way they always have would eventually be marginalized or run out of business.
In his opening keynote, futurist and CEO of Burrus Research Dan Burrus acknowledged that people often fear change, but explained that doesn’t have to be the case. "Bad change," he said, "is just change that affects you that you didn’t see coming." The key, therefore, is to spot real change in the industry (like AV/IT convergence) and adapt to it before it’s too late.
After two days of InfoComm 100 meetings in Portland, Oregon, the group’s collective wisdom can be summed up in 10 very effective pieces of advice:
1. Revamp Your Sales Force. “The sales models we’ve used for the past 20 years have not changed,” Tom Stimson, CTS®, President of the Stimson Group, told the InfoComm 100. Today, in a world where integrated AV systems fall more and more under the purview of CIOs and IT managers, the AV industry needs to look hard at the way it sells its solutions.
"We finally got to where we have something to offer at the enterprise level,” said Bill Sharer, CTS, President of Exxel Management & Marketing Corp. “We finally have a chance to sit across the table from a C-something…and we’re right on the edge of blowing it. Because now that we’re there, too many of the sales people don’t know what to do with [the opportunity].” Sharer suggested asking your sales team to come up with “10 things that keep a CTO awake at night," the implication being that if they can’t, they don’t know their new customer well enough to sell solutions effectively and build enduring business relationships. How do you start? Well…
2. Learn IT-Speak. Hire IT Speakers. If you don’t know about IT networks or can’t discuss them in relation to your solutions, then you can’t expect CIOs, CTOs and IT managers to let your AV systems run on them. Simple as that. And if you can’t afford to re-train current personnel, look to hire from outside the AV industry. Dale Johnson, President and CEO of the Technology Assurance Group, encouraged the InfoComm 100 to “hire, train, and manage” new employees from the voice and data industries, but warned companies not to employ these new workers faster than you can train them in AV.
Apparently, some AV companies already understand the need to hire IT-related workers. According to its research, presented to the InfoComm 100, Acclaro Partners found that since the recession ended, AV companies have started to re-hire, only they aren’t rehiring the same types of people they let go during the economic downturn — they’re hiring more IT types.
3. Familiarize Yourself with the IT Decision Tree. While it’s a sign of significant progress that AV systems have caught the eye of CIOs and CTOs, it doesn’t mean that those people, in particular, will be evaluating and recommending your solutions. Erin Bolton, partner at Pivot Communications and one of two recipients of InfoComm’s Women in AV Award at the InfoComm 100, says a common misconception among AV companies is that they must sell to CIOs and CTOs. At Pivot Communications, Bolton maintains a panel of 100 IT buyers and is constantly profiling the actual decision makers. "There’s no single IT buyer," she says. “The IT buying team can be as many as seven people or more. They’re all researching solutions and getting back together to hash out recommendations.” So although it’s good to know the client’s CIO, it’s more important to know who has the CIO’s ear.
4. Embrace Youth. Young people—those at the heart of the Xbox, Twitter, YouTube generation — approach technology like no one else. They also think and solve problems differently than you. No one is saying give them the keys to the executive suite (yet), but it’s probably a good idea to invite them to your planning meetings. Ask them what they think of your products and system designs. Find out if they have any friends at prospective clients who might think like they do. Or just hire some good, smart twentysomethings, if you haven’t done so already. It’s either that or stand by as the new AV/IT companies they create come for your lunch.
5. Embrace Standards and Best Practices. IT integrators and network architects are used to doing this. Major manufacturers, such as Cisco Systems and Microsoft, have developed their own certifications and solution blueprints so that people who build IT systems build them a certain way and to an optimal level of reliability. To the extent that they can, IT managers embrace products and technologies that adhere to open, interoperable standards, handed down by industry consortia or standards bodies like the IEEE. To date, the same can’t always be said for the AV industry. “We don’t have the standards that others do and we’re often criticized for that,” said Randal A. Lemke, Ph.D., Executive Director and CEO of InfoComm. “But now we’ve got over 300 people who work on our standards all the time …. People have always had their own company standards, but to do business on a global basis, you need to have an international set of standards.”
To that end, InfoComm has released three standards that are accredited by the American National Standards Institute. Recently, the Judicial Council of California’s Administrative Office of the Courts implemented all three into its California Trial Court Facilities Standards. Several other ANSI standards are in the works and InfoComm is also developing formalized best practices around emerging trends, such as building information modeling, intelligent building technology and sustainability.
A rising tide lifts all boats. By adhering to standards and best practices, the AV industry can ensure high levels of performance and reliability and raise the profile of everyone’s work.
6. Accept Slimmer Margins (or Don’t). A hot-button issue if ever there was one. In a much-anticipated presentation at the InfoComm 100, Acclaro Partners presented research on business trends in both AV and IT and tried to describe relationships between the two. When it comes to profit margins, which IT companies have already seen collapse and settle into the single digits, the two sides see things differently. According to Acclaro, AV professionals attribute a drop in margins to the recent recession; however IT pros think low margins have to do with technology convergence. In other words, the AV industry thinks single-digital margins are temporary; the IT industry accepts them as the new reality. Addressing the group, Tom Stimson, CTS, said, “If you can get people to understand that single-digit margins are the future, maybe you’ll start implementing the changes in your organization you need to be a successful single-digit-profit company. Single-digital profits still buy boats.”
However not everyone in the InfoComm 100 was ready to accept single-digit margins — at least not it terms of their overall business. And no one insisted that an AV company must. As Julian Phillips, vice president at Whitlock, put it, “The erosion of margins is happening for hardware…but it’s not happening and it shouldn’t happen as far as [our] overall blended margins. There’s no reason to accept single-digit gross margins, and in fact, we should be looking to grow gross margins.” AV pros agree that margins for AV equipment — like IT equipment before it — are destined to remain low. To make up for that, it was (and has been) suggested many times that AV companies should…
7. Ramp up Your Services Business. Many firms already do this. The evolution from AV dealer to AV integrator represented an evolution into a services business. But at the InfoComm 100, it was clear than in an AV/IT world of complex, interconnected systems, services are the key not only to sustainable profits, but also to maintaining long-term customer relationships. In what ways might you boost your services? In explaining to the audience some changes his consultancy has implemented, Mark Valenti, CTS, President and CEO of The Sextant Group, described a process of training clients while systems are being built, not after. "We’ve expanded our capabilities to help our clients change their work processes during the design of the systems so that there is a contextual relationship between the training of the end users and the development of the systems,” Valenti said. “The stuff is too complex to get to the end and say, 'Here’s the manual. Bye-bye.'"
8. Diversify (Hug a Consultant). While you’re exploring ways of providing profitable, client-centric services, consider what other specialties you can develop. Going forward, integrating AV systems may still be a good, solid, bread-and-butter business for some. But to grow a business and fend off competition from IT, voice and other integration companies, AV firms should diversify. Will you be the “green AV” company, in which case you should put into practice the Sustainable Technology Environments Program (STEP)? Or will you create solutions from cutting-edge technologies such as 3D, virtual reality and streaming media, each of which, according to Valenti, should be on an AV pro’s radar?
According to Acclaro Partners, AV consultants have a better handle than AV integrators on data networking, smart building technology, unified communications and other systems not traditionally considered AV. So in the industry’s efforts to diversify, coordination and cooperation will be important.
9. Encourage Your Customers to Share (with Each Other). Say what you will about social media, but it’s not going away any time soon. At the InfoComm 100, business consultant and social networking strategist David Nour acknowledged that setting up an online forum in which your customers can talk about you, your products and your services may sound like you’re inviting unwanted criticism. But today’s companies should consider embracing such conversations in order to learn more about customers’ likes, dislikes, priorities, challenges, concerns, frustrations, and more. Over time, you’ll learn to strike a balance between letting your clients vent and engaging them in conversation to show you care and to help them solve their problems. In a separate InfoComm 100 session Andrew Milne, Ph.D., CEO of Tidebreak, described this phenomenon as the rise of "the conversation economy” — direct and constant interaction with customers in order to build relationships.
10. Learn Your Customer’s Business Inside and Out. It came up again and again during the InfoComm 100: If you’re to protect margins, increase services and expand into new fields, such as smart building technology, you need to demonstrate that you know your client’s business better than they do. "Too many of us are focused on what it means to connect devices and deliver content from point A to point B," said Valenti, a former president of the InfoComm board. "We get lost in the technical solution. We’re not thinking about what that means for our client in terms of their business. 'Why does this investment makes sense?'" Answer such questions, in terms the customer understands, and an AV company will be well on its way to success in an converged future.