Roundtable corporate av: Why client indecision is costing the av industry

Client procrastination, coupled with limited technical knowledge, is hampering corporate av projects to an alarming degree and making any sensible business forecasting nigh on impossible, according to participants at AV’s most recent roundtable discussion.

The gathering, which is the second in a series of four events – sponsored by Bosch and Biamp, and hosted by AV – brought together end users, integrators and manufacturers to identify the major issues affecting corporate av.

While client expectations are as high as ever, delivery has become increasingly challenging for suppliers who are having to cope with shrinking lead times and budgets. The result – only a fraction of the planning, transparency and consultation time av players have had in the past – is detrimental on all fronts. Almost without exception, end users come under fire for everything from failing to give a comprehensive brief, to revealing even an indication of the true budget. ‘There is a big difference between pitching kit for a project with a £100,000 budget and one with a £300,000 budget,’ as Martin Dawes’ Jason Ward points out.

One of the panel’s main gripes is the fact that the effects of such delay tactics trickle down to all aspects of projects. As Church House Conference Centre’s Ben Pain indicates, the scope of what you can turn around when a client calls you at 9am wanting to run a conference at 11am the same day is going to be limited. For starters, the quality of the brief is likely to be impaired: Pain cites projects where the av integrators weren’t given a brief at all, but were only shown around the venue and told to suggest an appropriate installation. ‘If clients aren’t clear about what they want, then how on earth can their expectations ever be matched by either the av integrator or the manufacturer supplying the products?’ he asks.

When briefs are forthcoming, constant revisions pose a new set of problems. Martin Dawes’ Ward admits he’s on version six on one current project, and knows full well the brief is going to be revised a few more times before the project is completed. While it will always be the clients’ imperative to change the plans – they are paying the bill, after all – the consensus is that better communication in the initial stages could save time and costs for both parties later down the line.

‘We have to give the customer confidence and the right solution; we have to design for the future,’ acknowledges Reflex’s Roland Dreesden. ‘The customer has to understand this isn’t just a means to get more money from them, it’s actually a way to help them cut costs further down the road. If it’s designed well, it’s as much for our benefit as the customer’s.’

Knowledge is key

This lack of clarity could come from the varying levels of technical knowledge on the part of clients. Our panel was certainly quick to define two levels of client: users and super-users.

Users tend to issue very vague briefs, specifying technology required but having little or no knowledge or experience of its actual capability; super-users have a good degree of technical knowledge and expertise, and need very little, if any, guidance on products and systems.

The proliferation of users, most commonly found in areas such as local government, brings a series of challenges, especially at pitch stage, says Polar Audio’s John Midgley. ‘If there are six proposals and five of them have the same product, they only have one decision to make out of the five bids – who is the cheapest?’ This is, in part, due to the growth of procurement departments within corporates that don’t know about the differences in products, says BT’s Simon Frusher. ‘Yes, the two LCD screens look the same but they don’t do the same job. Procurement personnel have knowledge, but they’re not experts.’

This cheapest-bid-wins scenario leads to price erosion, which raises the hackles of all our participants, and for obvious reasons: it’s had a damaging impact on those making a living selling projectors and LCD/plasmas.

Price erosion is further compounded by internet wholesalers. Because clients are able to compare prices for a host of projector or plasma models with incredible ease, prices are being driven down. The worry for the av industry, according to many on the panel, is that integrators have traditionally made a margin on the kit and the installation – if you take half that margin away, you have a problem.

Meanwhile, consultants came in for criticism in the design process of av installations. For Crestron’s Jamie Blakemore, a major frustration is the reluctance of the av industry to pick up new products that would save the client money down the line, in favour of more widely accepted equipment. Too many stuck to products they had already used, regardless of whether it was really the best piece of kit for the job or not. As a result, a lot of repetitive project designs were occurring, and six boxes were being used on a job where two newer products would suffice.

However, Dreesden defends this process, saying the skill to integrate different products is what his company is paid to do, and that it has to be the right of the integrator to decide what is best for the job in hand. He was pragmatic: the customer ultimately makes the call, and if he was speaking to an existing customer, he would use his relationship to fully explain the benefits of the new kit. If it was a new customer, cost would be crucial to Reflex winning the business, and in the current climate, the extra outlay would be harder to justify.

Despite these drawbacks, however, the panel agrees that clients are, as in previous years, discussing future projects in large numbers. But while participants are optimistic about the volume of work, the elusive final sign-off is creating problems for the channel at large.

Decision deferral has made it difficult for suppliers and integrators to forecast efficiently, resulting in what Dreesden describes as lumpy business – three busy months followed by three fallow months. This has led to loss of work as companies face problems in appropriate resource planning – something that has led to Reflex having to turn business away this summer because the company was already working at full capacity, largely on education projects. As the universities come back, he is fully expecting a slump.

When it comes to financial concerns, fluctuations in currency are also an issue. Customers taking six to nine months after a tender process to reach a decision are subsequently shocked to then face a revised quote due to the increased price of kit.

‘You can talk about how expensive the costs of things are on holiday in Europe now that the euro has gone up, but when you tell the customers the price of the kit has gone up, they don’t understand why.

‘We are seeing customers 18 months after the first meeting and they are saying we need to buy the kit at the originally quoted price. But the kit has gone up 25 per cent against the dollar or euro,’ explains Midgley.

In the past, the lengthy gap between tender and decision hasn’t posed too much of a problem for av companies because nine times out of 10, time has seen the price of kit fall. However, in the current climate the cost of kit is going up as manufacturers look to maximise revenues in times of falling sales.

Growth potential

It’s not all doom and gloom, however, as our roundtable highlighted the selling of managed services as an area with great potential for growth and one which many of the companies around the table are exploring. With the margins for equipment ever decreasing, the av industry must turn to its most prized asset – its knowledge – to make money.

As our debate concluded, that knowledge can provide corporate clients with the security they need to deal with mission-critical tasks. The more important the user, the less they want to know how the kit works; they just want to walk into a room and for the kit to be fully functional. Which is where a service contract comes in: having skilled av staff on site (or monitoring remotely) to provide peace of mind is something for which companies will always be willing to pay.

THE PANEL
– Jamie Blakemore, UK commercial sales manager, Crestron
– Adam Breeze, strategic marketing manager, sponsors Bosch
– Roland Dreesden, managing director, Reflex
– Simon Frusher, audio visual manager, BT
– Andrew Littlewood, senior project manager, Martin Dawes
– John Midgley, managing director, Polar Audio, Biamp’s UK distributor
– Ben Pain, technical supervisor, Church House Conference Centre
– Geoff Taylor, manager partner and alliances, Western Europe, Tandberg
– Jason Ward, general manager, Martin Dawes
– Paul Ward, head of sales, communication solutions, sponsors Bosch