Under pressure - Integrators Roundtable
We got together a group of integrators to find out the biggest obstacles they faced in their work. Paul Milligan found the group feeling squeezed from all sides of the AV world.
Integrators are a conscientious, hard-working but ultimately underappreciated part of the AV industry, if the mood from our recent Roundtable event is anything to go by. AV systems integrators are feeling pressure from IT companies and distributors moving into the AV integration space, manufacturers releasing unfinished new product into the market they have to fix, and clients still intent on putting projects through the dreaded ‘value engineering’ phase.
Add this to shrinking project/budget sizes due to the new breed of wireless presentation devices hitting the market and an ongoing skills shortage, it’s not the ‘best of days’ to be an AV integrator.
Jim Harwood, Focus21
Kevin Madeja, Snelling Business Systems
Mike Brooman, Vanti
Chris Sulej, Pacific
Peter Critchley, Beaver Group
Ross Burtenshaw, Avensys
We began by asking the attendees what the biggest obstacle was to their job right now. Jim Harwood, the CEO of Focus21 said it was finding projects large enough, with enough systems and good margin. “We have traditionally made money in meeting rooms, but those are becoming commoditised, not just in terms of simplification, but from the creation of one-stop box solutions from manufacturers.”
Chris Sulej, sales director from Pacific agreed commoditisation was a danger, and comes from the growing synergy between AV and IT; “AV is being implemented into the IT function in a lot of corporate businesses. The danger that lies there is that in the IT environment it is treated like a commoditised market, where you are almost selling tin, and they expect AV to be the same solution. They aren’t seeing the bigger picture, as integrators what we are trying to do is give them added value, to give them the things that makes them quicker, better, smarter.”
It wasn’t just in the small-to-medium meeting room provision that integrators are feeling the pinch, as Kevin Madeja, technical director at Snelling Business Systems points out. “At the other end of the spectrum you have the banks and the big jobs that aren’t going to AV companies even if they are €15 or €20m a year businesses. The market is bifurcating. The sweet spot – the €50,000 boardroom – we all used to work in, is now turning into a €20,000 boardroom with some Apple TV on the wall.”
He had also found that winning big contracts was further complicated by globalisation. “With international companies they will have already have a deal in place with a preferred AV supplier, you might get in (to the job as) a sub-contractor, but you will often find the deal is done in Hong Kong or New York, so you won’t even get a chance to bid on it. Those big jobs were often loss-leading, but you would do the service or maintenance and that’s where you would make your money.”
Everyone agreed increased competition meant it was harder to win jobs than ever before, and that most of the jobs out there were shrinking in size and complexity. “You need to work harder to find big projects with bigger skillsets for bigger margins,” says Ross Burtenshaw, purchasing and operations manager at Avensys.
“With huddle rooms proving popular now, clients are using a one-box solution (Lync etc) in each room and you’re losing a hell of a lot of margin both in the value of the kit but in service contacts as well. You are moving from a €30,000 install to a €1,000 box.”
Another threat to the livelihood of system integrators was pointed out by Harwood, and it comes from an unlikely source. “Distributors have changed from a distributor to a value-add. A solutions team from a distributor shouldn’t be delivering the solution, it should be facilitating the design or providing ideas, not delivering the installation or the back-end service.”
The biggest obstacle for Vanti was finding the right people, says Mike Brooman, the company’s CEO. “We have always baked IT with AV, so we want people across the industry essentially. People with both skills don’t really exist so that’s where the investment in training comes in. We’ve found it’s easier to go the other way (train IT people in AV, rather than the other way around).”
Another problem Brooman has encountered in the past few years is with rushed products. “Manufacturers are releasing products too early to the market. We shoot ourselves in the foot sometimes by installing brand new products sometimes, so now we err on the side of caution.”
Harwood has also seen this happen again and again. “Ever since a manufacturer has been able to put a network connection on something it has given them the excuse to being products to market that don’t actually do what they say they should do. That is margin erosion straight away. If you buy a product which doesn’t do what the manufacturer says it does, you have to get an engineer to come to site and write firmware because the manufacturer won’t do it, and that’s your margin on that box gone.”
With new products not always working as well as you would want them to, or as well as they are advertised to, it’s hard to see who this won’t hurt innovation in the long run.
One criticism often leveled at integrators from other sections of the AV world is that they are reticent to innovate, and will instead rely on tried-and-tested products over and over, is this fair? “Manufacturers don’t appreciate that swapping from one manufacturer to another and installing 20 firmware updates costs time and effort,” says Harwood.
“You will lose the margin on a new product by training up a new person in how to use it. It’s unfair criticism. Manufacturers want to shift products and walk away. Sometimes the less trusted manufacturers have got the innovation but you don’t want to take a risk on them, because you know if it goes wrong they won’t have your back.” Madeja was in agreement things have gotten worse: “In the old analog days things had to work, and they did. Now with digital, because you can make changes to things, manufacturers are taking advantage of that fact. It’s convenient for them and not us.”
Others like Peter Critchley, managing director of Beaver Group, liked to use new products when they can. “Trying products helps build relationships with manufacturers, if you are seen as someone they can go to with new products. It keeps the team engaged internally too. Problem-solving is a technical skill, which is only maintained through practice. If you aren’t being put through problems them you won’t be able to do it when you are put in a situation when you only have 30 minutes to solve it. It spreads our ability to do more complicated jobs year-on-year.”
So many of the medium-to-large AV projects now involve an AV consultant, so how would our attendees describe the current state of the relationship between integrators and consultants? It can go one of two ways says Madeja. “If they take the position that their role is to take their client’s needs and wants and translates that into a system that an integrator can deliver then that’s great. The consultant sits in the middle and cross-pollinates. The other way is that the consultant is used to cost reduce and beat on the AV integrator, then that’s usually not the most effective way for either party.”
Harwood estimates 60 per cent of its project work involves a consultant, so over time it has developed a particular mindset on order for that relationship to run smoothly. “As a contractor you have to see the end user, the main contractor and the consultants as your clients. If you can accept that you’ll work well with them. You have to accept that just like integrators, consultants will make mistakes. If you want a relationship with a consultant you have to be prepared, when they make a mistake to manage it effectively, to a point where you can find a solution for the end user, and this is very difficult. Balancing three customers is difficult.”
Pacific was one company which hadn’t worked on a lot of consultant-led projects, but that wasn’t for want of trying says Sulej. “One of the biggest problems for us is the unwillingness of consultants to broaden the pool of integrators they will talk to. They tend to have a group of 8 who are their ‘go to’ guys, and we can’t break in to that. We’ll call consultants and they won’t even speak to us. With a group of eight integrators in their pool, they’ll always find at least one who will do the job for them.”
Madeja was one integrator who saw value in AV consultants, because of the affect it has on the final result; “We are asking some of our bigger university clients to go out and find a consultant, because they will help them formulate what it is they are trying to accomplish. That way we can better deliver what they want.”
Another tricky relationship to manage in the systems integration chain was with architects, who are often more preoccupied with form rather than function. Is this still the case? “It’s an old boys network,” says Harwood. “What they don’t except is the guiding principals of being able to read data at certain distances, at certain heights.” Again, Madeja was in agreement; “They don’t accept the laws of physics! The IET (InAVate September p44) was a huge architectural job. We still only got in at halfway through the job, and our CAD expenses went up hugely.”
Are integrators still the last ones to access to the site? “Yes, we always go in as the paint dries,” says Sulej. “We become the scapegoat for everyone else’s inadequacies. They eat up time in a project, and get given extra time, we don’t get given time. Usually our 6-week delivery schedule shrinks to four weeks, then three, because somebody didn’t finish the floor or the painting in time.”
This is a problem as old as time it seems, but is there any way to minimalise the pain? “All you can do is badger. You have to provide a constant reminder of the risk,” says Burtenshaw. “It’s having technical knowledge, the fundamentals such as what sort of cable you will need,” says Critchley. “It comes down to knowledge and experience, because assumptions get made if you aren’t in the room that can be really costly.”
With product simplification affecting the size of projects, are budgets still as carefully scrutinised? Are we still seeing the dreaded phrase ‘value engineering’ out there in the market? Sadly yes. “People are getting involved at the bottom line who have no idea of what is being delivered, and the outcome of that project, all they are interested in is shaving €50,000 off the bottom line. Inevitably it’s your margin that gets taken out, and the project has no value to us anymore,” says Sulej.