While cell phone providers, cable companies and entertainment industries all profitably grasp the concept of “as a service” business models, the AV integration seems to lag behind. It’s a challenge for traditional AV integration companies to wrap their heads around the concept of AV as a service.
I can understand that.
Integration firms have been selling hardware for years and then providing friendly, courtesy service on the back end.
It was only recently (generalizing here) that many firms came around to the realization that they ought to be charging for that back-end service and that their time is valuable and billable.
Now the concept of also not selling that hardware blows a lot of integrators’ minds. Instead of the traditional business model built around margins from selling and installing equipment, the idea is that the customer pays on a recurring basis for access to their AV solution.
Even reading my own explanation in the previous paragraph, I’m a little confused. However, I like how Paul Konikowski explains AV as a service in a blog on his site PK Audiovisual, “AVaaS = Audio/Video as a Service.”
AV as a Service (AVAAS) Explained:
I try to explain AV as a Service using the cell phone model. The average American cell phone user often spends a few hundred dollars on their phone, plus a monthly fee for service. Ok, I know, they mean cell service, aka coverage, but it’s the same model.
You need cell service or wifi to use your mobile devices, right? You need the calling or chatting software, plus the other apps, to run on your phone, or it is worthless, right? Some of those apps are free, some are a one time fee, others you might pay monthly. Some SaaS sales models will offer the first month free, then a monthly fee, or a discount if you pay annually. This is how you need to structure you AVaaS business.
OLD WAY: Integrator sells client conference room hardware, installation, and one time programming fee for the DSP and Control System. Annual service plan is optional.
NEW WAY: Integrator sells the client the hardware once, or leases it to them. For the hardware to work, the client pays the integrator a monthly fee, which includes all service calls and software upgrades. The client pay a monthly fee per room, just like you pay a monthly fee for your cell phone. In return, they get free reports because you are now monitoring their AV systems for bulb life, energy usage, and downtime.
Savvy programmers will figure out a way to lock the AV systems if the client misses payment … most importantly, please remember that AV as a Service, is just that, a service! We are now in a service industry, not a sales industry. Customers can buy AV gear with a click of a mouse; what we offer our clients is our professional services.