February 07, 2013 By Mark Coxon
OK, so whoever first said video conferencing systems are “insulated from clients’ budget issues because they’re considered an investment toward long-term cost-savings” was just wrong. In fact, I’m not sure that insulated markets exist at all.
If your clientele as an integrator is the Fortune 500, then your customers are generally less sensitive to price. Let’s face it though: Most integrators are working in the small- to-medium business sectors and price is definitely an issue. So what is an integrator to do?
I thought it might be appropriate to share a quick summary of a meeting I had in 2011 with a mortgage company. It has three offices - one in Irvine, Calif.; one in Pasadena, Calif.; and one in Chicago. Any time mortgage regulations changed, the owner would go to each office to train the employees to avoid breaking the rules and incurring heavy fines. So what should be a two-hour training instead took four days of his time - one day in the Irvine office to prep and give the training, a second day to go up to Pasadena and back, and two days to fly to Chicago to give the training and get home.
Hard codecs at three locations meant over $40,000 in hardware plus the installs and then bandwidth to feed them.
A proprietary hybrid system, featuring bridge hardware, a codec in one office, and client licenses for BYOD devices came to nearly $30,000 including installation and set up.
The Client’s Response: “Call me When the Price is Half of That”
Why is that? The pundits would say that at $250,000 per year, his time is worth $121 an hour, or three days of time is $2,904. Airfare, hotel and a car in Chicago is $800. Gas to Pasadena is $32. That is $3,750 for one training, and he does that six times a year. That’s $22,500, right? He’ll realize savings at 18 months to two years with either solution. That is a sound investment. Why doesn’t that math (which I employed to try and close the sale) make a compelling case?
Cash is King. Remember?
The real math, for him anyway, is the actual cash outlay. That is $832 for travel and hotel, six times, or just under $5,000. For him as an owner, he needs to see a break-even point at three years to make an investment, and that means a $15,000 solution that covers for all three locations. If he spends the $40,000 and can’t make payroll in a year, I doubt his employees will take the time he saved in lieu of their weekly check.
You also have to consider the “Up in the Air” effect. If you saw the film, they tried to replace Clooney with video conferencing, but found that the handshake of two HD MI sources cannot quite replace the firm grip of a boss or potential business partner. The perceived value of unified communications diminishes some, if the business owner sees their business objective as somewhat personal or social, or enhanced by face-to-face understanding and accountability. It may sound old fashioned, but it is still true for many.
I’m not quite sure who started the rumor about video conferencing and price insulation, probably some great marketing guys at one of the big video conferencing manufacturers, or a coordinated act of misinformation by all of them. All I know is that there is a move to soft codecs; BYOD without licensing is popular, Vaddio’s Easy USB has had success and the MondoPad is gaining steam. There is a movement toward reducing the video conferencing price point to gain market share, and it is either misplaced, or is a well thought out strategy. Your call.
Integrators should explore these solutions as well as financing and equipment leasing options and partnerships to protect their clients’ cash flows and become true partners in their businesses.
A picture is really worth 1,000 words but cash is king, so until the price is right, many businesses will continue to say those words in person.