I have the dubious distinction of summing up the integration industry’s struggle to earn revenue through service (as opposed to products) with one awkward on-stage exchange.
During the 2014 NSCA Business & Leadership Conference I was moderating a panel discussion on how to spur recurring revenue. Two excellent panelists—Joe Siderowicz of AfterMarket Consulting , which advises companies on operational support for a service business model , and BroadSuite’s Daniel Newman, who writes extensively on the topic—were discussing how to tweak infrastructure and sales approaches.
I had asked the panel and the 300 folks in the audience for real-world examples of services for which integrators can earn recurring revenue. My question didn’t elicit any concrete concepts, but I eventually moved on. As the panel batted around a subsequent question I glanced at Twitter on my phone to see if audience members had comments or questions.
The omission wasn’t lost on the crowd of integrators. After all, integrators have been hyper-aware for several years that product margins are dwindling and have read and watched pundits proclaim that shifting revenue models are essential for sustained success.
They get it. What they don’t get are solid examples of how exactly they can do this—and it’s probably starting to feel like a whole lot of lip service.
A tweet from Westbury National’s Brock McGinnis pushed for more insight:
RMR & service contracts. The new mantra for AV integrators. But what is the customer actually willing to pay for? #NSCABLC
— Brock McGinnis (@brockmcginnis) March 1, 2014
Kourtney Kovro of All Systems requested success stories:
I would like to see a few integrators who do it right up on stage for a panel – what are people really selling. #NSCAblc
— Kourtney Govro (@Sphere3CEO) March 1, 2014
So I asked again, but—again—nobody on the panel or in the audience offered what I would call an example. It doesn’t matter that the presentation and that awkward exchange are over; I still want the question answered.
The recent buzz has been that by establishing themselves as “business partners” with clients and providing data and metrics to help organizations save money, improve productivity and spur profits, integrators can be better positioned to sell service contracts.
I called Bin Guan, CTO of Eatontown, N.J.-based Yorktel because, according to him, about half of the firm’s $100 million plus revenue is recurring versus one-time. Granted, with 430 employees globally and a vast array of other video and cloud managed services, Yorktel is structured differently than most integrators and benefits from a help desk.
Another difference between Yorktel and many other firms is that it saw the writing on the wall a decade ago and began restructuring to offer the managed support it saw video conferencing clients demanding, according to Guan.
Source: CI Research