Corporate life is changing, and the proAV industry needs to be aware of these changes and how to react to them. Paul Milligan speaks to those delivering AV to corporate spaces.
Corporate AV is the lifeblood of the proAV world. Every single person reading this will have worked on a project for a corporate customer at some point or another. In fact, a healthy proportion of you will have worked on nothing else. And it has been this way for decades. What has changed is the way people work. Corporate real estate is expensive, so companies are looking at different ways they can squeeze every bit of efficiency out of a building. That includes hot desking, huddle rooms, informal breakout spaces instead of meetings rooms, and software-led video conferencing instead of hard codec systems in dedicated rooms. All of these changes involve technology in some way, or in some cases are completely technology-driven. So although the way we all work is changing, it is not greatly affecting the need (or desire) for AV technology to make our working lives that bit quicker, simpler or easier.
Speaking to integrators and consultants at the ISE and InfoComm shows this year it was noticeable how buoyant the market seems to be. Projects that have been on hold were now being approved, but is this the case across EMEA? Not quite. Will Hegan, director of sales and marketing for global AV group AVI-SPL has huge investments from the tech and financial worlds in AV in recent years in projects around London, but concedes if Brexit does affect the UK AV market, it will look elsewhere for work across EMEA. “If we do see it fall off in the UK we are pretty confident it will flatten out with investment going up in other areas of EMEA.”
“We are inundated with work at the moment. In the last two weeks we have signed 37 deals,” says Mike Kellaway, director of South African integrator Omega Digital. This news came with a caveat though he admitted. “The market as a whole isn’t doing that well, but we have kept an keep our eye on our core business and we are starting to pick up our competitor’s projects.” Others aren’t seeing any significant uplift. “Approvals are at a low level, not as much as the heyday of 4-5 years ago,” says Nick Shaw, director, AV integration, from UK-based integrator Anna Valley. “Brexit has made an impact on decision making, and some corporates are skeptical as to how it will affect them in the longer term, and what changes they will have to make with regards to corporate locations in the UK, and relocating staff overseas. It has dipped as a vertical for us, and it’s about keeping that risk to a low level.”
Cash drives corporate organisations, it needs to come in to go out. So how are budgets holding up for new build and refurbishments projects if project levels aren’t as high as we would all like? Graham Naylor Smith, associate director, digital, from global AV consultants Arup has seen new build projects fall in the last couple of years, but is still seeing a consistent level of spending on AV upgrades. “The type of AV is changing, but people are still spending money on AV,” he says. He added there is now pressure to do more with less, and for budgets to stretch further. “Where we might have designed something for every kind of meeting room now people are much happier to have something ad-hoc. We have got to the point where ease of connectivity, the need for ‘one touch’ is trumping quality at times.”
Others like Nick Shaw are reporting the same, “Budgets are shrinking, based on smaller requirements. There are still big tenders out there, but the tendency is for lower numbers and smaller requirements/smaller spaces.” Hegan feels that budgets have risen year-on-year, and estimates it to be around about the rate of inflation, so what would he put that down to? “It’s being driven by flexible working and dynamic workspaces. Companies are trying to squeeze real estate and need to find tools to help them do it, to make their staff and buildings more effective.”
Corporate projects were traditionally one-off affairs for integrators and consultants, but thanks to globalisation and the push for standardisation, they are becoming far more common, so are global projects now the norm? Naylor-Smith currently 26 different projects for one client on the go right now, while another client has 15 in operation, all across EMEA at the same time. The majority of project work for Anna Valley’s relatively new (it launched three years ago) integration group (they company made its name in rental and staging) is one-off projects says Shaw, but he expects that to change as the company becomes more established. Being part of global alliance would help he admits (more on that later), as the global approach by clients is unavoidable. “Globally most corporates want to rollout a global standard. They are trying to look for replication across all locations. They want to provide some continuity in each of those locations, so ultimately its makes it’s easier from an integration viewpoint but also from a sales and maintenance viewpoint.
The growth of global integration groups such as the GPA (Global Presence Alliance) and the PSNI Global Alliance has reflected the globalised world we live in, where they are able to pass global projects from one member to another. Does this move make more financial sense for integrators than setting up its own offices around the globe? It’s something Anna Valley is looking at down the line admits Shaw. “It makes sense for any integrator to be added to that alliance mix. We maybe don’t have enough of a reputation right now to be seriously considered but I hope we will be.” Omega is part of the GPA, and as such collects local work as part of a global rollout, “We have a portfolio of corporate clients, but as a member of the GPA we pick up global projects that have a piece in South Africa.”
As Naylor-Smith commented earlier integrators and consultants are expected to do more for less, which can often mean the price of every piece of equipment is heavily scrutinized, down to the last nut and bolt. “Value engineering still does happen, you have scenarios where the consultant will plan to budget A but it comes in more expensive, under those circumstances you have to find some money back,” says Hegan. Does this often mean the budget suffers? Not always adds Hegan. “Customer budgeting is much better than it used to be, a lot of real estate companies will give benchmarking numbers on what their competitors have done. It may be a budget per person, or budget per meeting room that they work off with their clients. Budgets are a lot closer to client’s expectations than they used to be.”
Things are changing in the workplace, and integrators and consultants have to reflect that says Hegan, but it’s not always happening. “There are consultants out there that I would say haven’t caught up with workplace trends yet. People are now looking for simplicity and large volumes of spaces, 2-3 years ago it was much more complex, more tailored solutions which were specific to that room requirement. We are now looking to roll out more standardised, simple to use, one touch to start spaces. Those consultants who do that probably won’t survive, there are others who have a pretty good idea of where the market is going, and have adapted their engineering philosophy, and aren’t afraid of their value being questioned. For me part of the value of a consultant is understanding the market.”
Part of this changing corporate word is the move away from large, formal meeting room spaces, to smaller huddle rooms and breakout spaces. This is because the nature of meetings is changing says Kellaway. “The bulk of our work is around huddle spaces, soft codec driven video experiences, easy to use, intuitive spaces that take the hassle away from the user, where you don’t need room control, you can wirelessly connect or use a cable to present or take a video call. You can get in, get up (and present) and get out.”
This does create a problem for the AV world however, as Naylor-Smith points out. “I don’t see there being much of an AV market for installers in breakout spaces, it will be a screen and people using USB conferencing devices. Most people wont even link the video, the video part becomes superfluous.” So if huddle rooms hold less AV won’t this hurt everyone’s bottom line in the AV sector? Not necessarily says Hegan. “It’s just a different model, you do more rooms, so job values actually go up.” Huddle rooms open up service opportunities too says Kellaway. “There are more spaces to manage, there are more things that can go down, so there are more SLAs, with AV now sitting on the corporate network there are more devices to manage. There are more spaces to schedule and book, so its driving demand for things like on-site technicians or a hosted video cloud service. It’s also driving demand for workspace management.”
Another factor that is chipping away at profitability for integrators in corporate projects is when manufacturers go directly to the client to drive and drive product sales. “There is a lot of direct engagement these days, some manufactures have pre-arranged discounts and pricing to clients, and you have to fit within those structures,” says Hegan. “That can sometimes hit your margins. Manufacturers are trying to create a market, but sometimes it has a knock-on effect we’d rather it didn’t. They can damage our market without knowing it.”
The products being asked for in the corporate space are the ones you would probably expect, high quality LED has fallen in price, so is not just being used for statement foyer and auditorium installs now but for digital signage too. Wireless presentation systems like Barco Clickshare, Crestron AirMedia, Kramer VIA etc have proven hugely popular as well. Again, it’s the one-touch facility that is making it attractive says Kellaway. “If we are putting in Crestron control on 90%+ of those occasions we are installing AirMedia too. It makes it easy to operate, within seconds you are screen sharing on a large screen,” says Kellaway. A knock-on effect of these wireless, one-touch products is that it is allowing integrators and consultants to have conversations with clients they wouldn’t have had five years ago, on building efficiency and building management. “We are seeing a lot of one-touch-to-start meeting spaces, where you walk in and all the invites are automatically connected in via building management systems,” says Hegan. “We are doing a lot of work with real estate companies, where we are able to show some value back to their business, in terms of savings, ROI on kit, utilisation of space. The cost of a space is entirely measureable, if you are able to reduce the amount of space they can use, and show the investment on the space you have used you can show a marketable value to that company. Pretty much every organisation out there is trying to reduce their real estate overhead.” At a time when all integrators and consultants are all looking for ways to add value to their clients, this one could provide a very valuable pathway to revenue.