Include:
Tech
Cybersecurity
Business Strategy
Channel Insights
Stay Connected
Acer America
Acer America Corp. is a computer manufacturer of business and consumer PCs, notebooks, ultrabooks, projectors, servers, and storage products.

Location

333 West San Carlos Street
San Jose, California 95110
United States

WWW: acer.com

ChannelPro Network Awards

hello 2
hello 3

News & Articles

June 6, 2013 |

MSPs Show and Tell Profits with AV

As audiovisual services increasingly move onto company LANs and over TCP/IP networks, some MSPs have found an open door to new offerings.

MSPs are challenging a traditional divide between audiovisual and IT practices. Conference calls, digital signage, and corporate videos look tempting when you face competitive pressure and shrinking margins.

Adding popular types of business services, especially when they can be delivered through a homegrown cloud offering or by reselling a third-party solution, makes sense. But there’s a significant skills and experience gap between the two worlds, and managed AV services can be unexpectedly complicated.

RISING STAR OF AV POPULARITY
There is no single set of numbers for the AV marketplace. But indicators for some segments show the opportunity:

  • Digital signage – This includes display of information, from directional signs to marketing and advertising messages. Market research firm IHS iSuppli forecast signage display shipments alone would grow by 12.6 percent between 2011 and 2012.
  • Video teleconferencing – A videoconference can free up money that would have otherwise gone to travel expenses. Infonetics Research projects a 6 percent compound annual growth rate through 2017.
  • Corporate video – Companies use video to train employees, provide technical support to customers, sell products, or keep investors warm and fuzzy. Infiniti Research Ltd. estimates a 19.3 compound annual growth rate through 2015.

There are practical reasons that companies are considering AV technologies. “As our business has grown, we were doing a lot of traveling,” says Jennifer Mazzanti, president of Hoboken, N.J.-based eMazzanti Technologies Inc. Teleconferencing was a great alternative. That expanded into a new client practice. “The more services you bundle, the higher [the] potential,” she says. “So you need to be able to meet all of your client’s needs instead of compartmentalizing.”

Traditionally, AV providers have been fragmented, building deep expertise in one area but with narrow options of what they could offer customers. As video has moved increasingly onto corporate LANs and over TCP/IP networks, IT expertise has found an open door, especially as clients want to manage fewer vendor relationships.

Some, like Eric Schlissel, president of Los Angeles-based GeekTek IT Services Inc., remain skeptical. “The AV engagements we see tend to be project based and don’t provide the same recurring revenue model that managed services do,” he says. “Another issue is that AV consulting services seem to be undervalued by our client base, and each sales opportunity is highly competitive.” That drives down margins.

OF MICS AND MEN
And yet, some companies make it pay, though constructing an AV solution is significantly different from what MSPs have traditionally done. First, you need different equipment to demo and install solutions. Videoconferencing solutions, for example, require special monitors, cameras, microphones, possibly mixing equipment, and amplifiers. A digital signage practice must have not just monitors, but also the software and expertise to create content to display. Corporate video requires different cameras and mics, lighting equipment, and sound and video editing software, as well as facilities for filming and recording sound.

Not all AV business lends itself to an MSP’s business model. Corporate video production is very much hands-on, for example, and not something that could easily be automated, although the distribution is often best handled with a combination of content distribution networks, properly configured WAN links to compress and transmit video, and enterprise software that can efficiently preplace video at times that network use is low. Some of these aspects could be handled remotely by an MSP. In contrast, much of the digital signage creation and placement can be handled remotely and automated.

There are also aspects of operations that require ingenuity on the part of the MSP. “You can’t [directly] ping a microphone, unfortunately [because it’s an analog device],” says Rob Gilfillan, president of AV and conferencing solutions provider Cenero LLC, based in Malvern, Pa. And even if you set up a conference room to let you ping a microphone’s availability, the device still needs an audible signal to see if it is, indeed, working and whether audio levels are adequate.

Gilfillan has found that his company needs multiple technical certifications and a single tier of technical support, because people frustrated with problems during a videoconference have no patience for multiple support layers. It took Cenero more than two years to build a first version of its monitoring system, to say nothing of the constant development since that keeps two developers busy full time. That was 13 years ago, and the first efforts cost the company about $250,000.

It would be more today, and the up-front costs remain whether you have one customer or 50. The upside is that close to 5 percent of project fees are recurring. Cenero often partners with IT firms, which is ironic as that was how the company started. But it split into two separate entities, so it lost the IT expertise it would eventually need again.

BUILD OR BUY
Other firms, like Bizco Technologies of Lincoln, Neb., opt to buy instead of build. Founded in 1994, Bizco was a traditional IT service provider that eventually became an MSP. Last year, Bizco bought a company that sold AV products and services. Two customer sets that didn’t overlap gave the company the opportunity to cross sell.

Integrating the companies took six to 12 months, according to CEO and President Paul Zoz. “We had to invest in sales talent that overlapped between the two groups and get the other salespeople trained,” he says. “When you teach salespeople new technologies, sometimes it takes a bit of time to get initial success.”

Zoz says that AV product margins seem better than those on the IT side, but IT service margins are higher. One sales problem: Many customers become accustomed to free services like Skype, so educating them to understand the need for paid services can be challenging.

Developing a compensation program was also tricky. “What happens when [AV salespeople] go into someone’s data account?” he asks. “Do you double pay? Split? You want your data people to bring in the AV people to pull the solution together, but then who gets the credit for the sale?” Although not yet providing managed AV services, that is the company’s eventual goal.

And eMazzanti found that AV brings additional benefits. “When you talk about managing the network, a lot of what we do is behind the scenes,” Mazzanti says. “It is a way to interact with the customer in a way they appreciate.”

Success isn’t easy, but getting an AV practice up and running can suddenly expand the range of products and services you can sell to a client, and protect your current income from someone who could offer to solve more of the client’s problems than you might be able to.

Related News & Articles

Growing the MSP

Editor’s Choice


Explore ChannelPro

Events

Reach Our Audience