Firms that do well with service contracts tend to sell a lot of mission-critical solutions, Wilson adds. The good news, he says, is that more AV communication and digital signage type solutions are starting to be deemed mission critical.
“I think as we move up the food chain and into that strata of having those systems truly be required for the operation of that entity we’re going to see more acceptance of managed service and service contracts,” says Wilson. “So maybe we’re trying to force our hand into a glove that doesn’t quite fit yet.”
Don’t Be Left Behind
It might be cliché to advise integrators to lean forward, keep fighting and not be left behind, but the reality is NSCA’s Wilson is seeing companies left in the dust every day when they call him to discuss potential exit plans.
“They’re the ones who are like, ‘I’m done putting money into a technology company where I don’t know what I’m going to be doing a year from now and if we’re going to be irrelevant.”
The No. 1 thing integration firms can do to push forward and sustain relevance is improve their network ability, Wilson says. “I know that’s the last thing a lot of people want to hear, but we have to learn the network, be IT-centric and talk the talk. We have to be digitally equipped. We have to think digital audio. We have to think digital video. We have to think transport and everything being done on some sort of network device.”
Take a look at the State of the Industry slideshow here.
Integration firms that are already evolved in this way still can’t sit back, Labuskes insists. “Was it Steve Jobs who said, ‘Success is the greatest inhibitor of innovation’?”
Whoever it was, the InfoComm executive director challenges integrators to embrace a year “as full with challenges and opportunities as the years that are past.” To do that, “those solutions that you have put in place should be examined every day to determine whether or not they’re still relevant. Some of them will [be]; some won’t. The most uncomfortable thing to do is throw away something that worked for a long time that is no longer going to be successful.”
There was a time when selling based on hardware margin was a formula for success. That no longer appears to be the case. Only 25.9 percent of those surveyed cite typical hardware margins on a project to be 21 percent or higher. Meanwhile, 22.3 percent are seeing 10 percent or less in margin.
“Those people that are in the 1-10 percent group, that’s nuts,” Wilson says. “That means there are 22.3 percent of our people that I don’t know how they’re in business unless they’re back-ending the labor side of things. I don’t know how they run on that.”
There is a bright side, of course. Wilson says he hopes that group overlaps with the 11.8 percent of respondents that say their labor rate is over $100 per hour. “If they’re in the under $50 group [26 percent] we’re saying ‘goodbye’ to them soon.”
Want to learn more? Join CI and NSCA for the 5th Annual Integration Business Outlook Webinar on Jan. 20, 2014 at 12:00pm. NSCA and CI will present a joint “state of the industry” research project that not only captures the performance of the commercial integration industry and its vertical markets, but analyzes the real-world challenges and opportunities integrators face in 2015. Click here to sign up for this free webinar.
