Market Survey: Users and integrators face up to change
Peter Lloyd, October 1, 2012
The AV systems integration business has been coping with new technologies, tough economics and competition from IT. But the changing ways in which users manage AV communications could alter everything, says Peter Lloyd.
AV systems integration used to be about meeting rooms or, if the bidder got lucky, about large single spaces such as auditoriums or lecture theatres. That is all changing as AV becomes indispensable to the organisations using it.
The use of conferencing technologies which let meeting participants dial in to events from anywhere, on any device, alters the room control and networking equation.
The increased use of interactive media, digital media delivered using the web, digital signage (for internal and external communication) and collaborative communications increases the value of AV to user organisations. But standalone room installations will become a rarity.
It’s already happening. “The first question being asked by our business administrators is now: ‘Does this room have AV?’ says Peter Rugg at UBS. “The morning trading briefing is now expected to be picked up via a webcast. Presentations from other rooms are being fed live to trading floors, and 23 per cent of all meeting time, excluding video conferenced meetings, now uses AV.”
The AV-IT relationship
Such enthusiasm means that the future should be bright. But the threats from IT could be as serious as the opportunities.
“The decision makers within client companies have shifted from being FM to IT guys,” says AVM ceo, Ed Cook. “IT managers are having AV and VC requirements thrust upon them and they are going to their suppliers as their first point of call. More and more business is being given out to the big IT companies which are then looking for partners to do it for them.”
Cook believes that IT integrators will want to partner, rather than to acquire AV businesses, arguing that the recent wave of vcon specialist purchases by IT companies was all about accreditation box-ticking and that “the IT industry is beginning to understand that you can’t do video without IT.” But “the AV business will have to become multi-functional.”
Consolidation could happen another way says Visual Acuity md, Blair Parkin who sees a “big wave” approaching us from across the Atlantic: “There is significant consolidation going on in North America because integrators’ margins have been hit by big brands discounting to make their numbers, and by clients who don’t value AV design and service,” he argues.
The same pressures are, in his opinion, driving large IT systems integration companies to take AV on board, setting up their own divisions to handle “AV and IT systems that all run on the same backbone.”
Whatever happens as a result of this consolidation – which is causing fragmentation as managers and engineers shed by large integrators set up their own niche, low overhead business – nobody’s in any doubt that the AV-IT equation is changing.
Finding the expertise
“IT management now forms the largest proportion of decision-making,” says Polar Audio md, John Midgley. There is, he adds: “An increasing use of consultancy, perhaps as a result of the change in decision makers’ individual expertise.”
Pure AV director Alan Marshall makes the same point, suggesting: “IT and AV still seem to be separate businesses, even when they are under one roof. I suspect that the average person in either industry can only absorb so much information, and we may be at or nearing the limit.”
The implication is that some organisations have devolved their AV needs to IT managers who don’t understand the technical requirement. But they may not be the only ones.
“To keep up with demand integrators need audio visual, video conferencing, video communications and network skills,” says Martin Finlayson, principal solutions architect at Stratus Services. “True skill in just one of these areas is hard to come by. Excellence in all of them is rare indeed, but system integrators need to have these skills to stay on top of customer requirements.
“The same is true of AV consultants. Their skill in AV is beyond question but providing good quality advice in all of these other areas and helping the customer create a solution that interoperates is the major challenge that faces them. Then they have to find somebody that can install it all,” he concludes.
Even without embracing all the implications of collaborative communications users are starting to realise that buying AV is becoming more, rather than less, complex.
“Our multimedia department moved from corporate services into IT last year,” says Morgan Stanley vp, Owen Ellis, “and we see continued convergence with IT. System integrators need to adapt to change and embrace that convergence – which some seem prepared to do, although others are doing so more successfully.”
Rugg agrees, saying: “Systems are becoming more complex, and video and audio are expected to be available on demand and on mobile devices. The need to ingest video from multiple locations and distribute it fast will need new AV solutions and more exacting IT networking. This will demand good consultancy.”
The real issue, however, may be around how users deal with AV communications that affect the whole organisation, which are fundamental to its working methods, and which embrace everything from interactive meetings to webcasting.
hit.” Blair Parkin, MD, Visual Acuity
“AV requirements have traditionally come from areas such as marketing, but as we move to workflow technologies like collaboration then funding will come from organisations’ core expenditure,” says Parkin. “We are effectively trying to introduce new technologies in new markets, which involves two axes of difficulty.”
Increased user demand
The good news is that some users are already responding, but for different reasons.
“Our demands are increasing because the demands from students are increasing”, says Simon Birkett, the University of Derby’s technology enhanced learning manager (and new chairman of SCHOMS). “Our AV function sits within our IT Services team, but we have now created a partnership approach to designing our learning spaces which is led by Learning Enhancement and Innovation and delivered through a client-type relationship by IT Services and Estates. This has proved to be a fruitful approach, helping us to be more strategic and to be clearer about our AV and technology requirements.”
Dan Crompton, AV service manager at The Tate Galleries, is also seeing organisational change driven by new technologies and audience demands.
“We are seeing a transition from static displays to truly interactive systems for both visitor engagement and in our internal meeting rooms,” says Crompton.
“We are talking about an open level of interaction which involves communication with the outside world and external partners.”
For example, the Ai Weiwei sunflower seeds commission in the Tate Modern’s turbine hall invited visitors to make video messages and send them to the artist in China. He would then respond to those messages but they needed to be on the web site ready for the next morning. “We had to link both the internal and external systems and set up procedures to moderate, if necessary, what the visitors were doing with it. It’s unpredictable and involves much more than technology,” says Crompton.
It’s the unpredictability – as well as the cross-organisational implications – that all users are going to have to deal with once collaboration, remote meetings attendance and video casting take their places in working practice. So, whatever industry they are in, users might have to learn from The Tate.
“We have a bunch of internal clients, our fellow departments, whose job is to think about what they put in front of the public,” adds Crompton, “so part of my job is to hold briefings and have meetings with them about what is possible. Many of the projects we now work on have external partners, including programmers, and how we manage it all is the subject of an ongoing discussion, because we are working collaboratively across departments.
“Our visitor experience department – the people on the front line – need to be involved. Tate Media, which handles web sites and video production, needs to be involved and to work with the creators. AV sits within IS, so they also need to be involved. Any number of different departments and sections need to work together.
“The conversation we are having internally is about the extent to which that needs to be managed – whether there has to be an overview or just systems in place that mean the necessary boxes are ticked. It’s an ongoing conversation and you can’t have a standardised system because we are learning as we are going along.”
THE CURRENT AND FUTURE MARKETS
AV’s online research for this issue’s systems integration survey drew responses from an equal mix of integrators and end users, with a dash of consultants and suppliers thrown in.
Products and technologies
Taking the products used in ‘most’ installations as a guide, the top items on the AV installation agenda are, in order: Control systems and switchers; audio-video distribution; sound reinforcement; flat screens; projectors; conferencing systems; and IP-based signal distribution.
The only surprise in the list is confirmation that flat screen usage has overtaken projection in the meeting room market.
Looking ahead, we asked: Which AV products or technologies have the highest priority over the next two years? There were clear winners, with 85 per cent of respondents saying that their use of IP-based signal distribution was likely to increase. Other priority items were remote rooms control-systems management, which was prioritised by 75 per cent respondents despite its lowly position in the current usage listings; flat screens (75 per cent); audio-video distribution (65 per cent); and conferencing systems (60 per cent).
On the negative side, 50 per cent of respondents said their use of projectors was likely to decrease.
The most-used services are: Installation services (used in all installations, according to 70 per cent of respondents); equipment service and maintenance (55 per cent); systems design services (30 per cent), and ongoing facilities management (30 per cent).
Although most service requirements are unlikely to change over the next few years, there was strong respondent resistance to the increased purchase of AV FM, systems design or IT networking. Over 60 per cent said they were unlikely to buy in ongoing facilities management.
Markets and business
Encouragingly, 50 per cent of respondents said that the value of the installations they were likely to commission or carry out in the next two years would increase, with just 12.5 per cent expecting a decrease. And 45 per cent expected most AV installation contracts to be awarded direct to AV installers, with 20 per cent going via consultants and 20 per cent going to AV installers via IT companies.
We asked respondents which skills AV integrators needed to add to their portfolios, and what they thought the greatest threats to AV systems integration were likely to be.
The greatest threats, mentioned by half our respondents, lay in the IT arena – competition from IT companies developing their own AV skills; AV companies’ lack of IT and networking skills; and being treated as accessory items to IT and unified communications (UC).
The skills needed to compensate were all about IT and networking, which were mentioned by 70 per cent of respondents.
DOING THE NUMBERS
The European AV installation and integration market is slated to grow from $5bn in 2012 to $6.7bn by 2015, according to InfoComm International’s Global Market Study (GMDSS).
Established sectors of the market are expected to grow strongly, with installation-integration rising from $3bn to $4bn; design increasing from $212m to $282m; and programming growing from $471m to $664m. But the biggest forecast increase is in managed services, which InfoComm expects to be worth $1.8bn in 2015 against $1.3bn this year.
However, there’s one note of caution raised by InfoComm that chimes perfectly with the reactions to AV’s current survey – that the industry needs new blood to succeed.
As InfoComm puts it: “There are concerns that many of the most experienced pro-AV specialists in Western Europe, especially the UK, are approaching retirement age. They need to be replaced with new blood .”