Gearing up to check out the latest in digital signage, video walls and content creation at InfoComm 2017, CI spoke to Mike Kilian, senior director of business development at Mvix, a Va.-based company providing content-rich digital signage solutions about how to maximize profit selling these products and services.
As a Digital Signage Certified Expert (DSCE), Mike has worked closely with VARs, MSPs and end users, playing a key role in the ideation, design and deployment of digital signage projects. He has over five years of experience in digital communication technologies including hosting an annual digital signage workshop for VARs, MSPs and integrators in the Washington, DC metro region.
CI: In video wall projects, what are the biggest profit drivers for systems integrators?
Kilian: The approach digital signage providers should take is maximizing synergies for their system integrators. This is a topic we’ll be exploring heavily at InfoComm in our presentation Out of the Fire and into the Project: Growing Profits with Digital Signage.
At Mvix, we focus on the following aspects when working with our strategic partners:
- Installation. I think this one is pretty obvious. There is not much to say here – we all know installation is one of the biggest revenue drivers for integrators. Later on we’ll talk about how integrators can turn this installation service into a recurring revenue service.
- Software implementation, coding and configuration. A lot of our strategic partners already have a tech-savvy guy who handles programming and software setup. For reference, think of how Crestron and AMX programming is being provided by AV and system integrators. This is a billable service for the integrators and such model can be extended to video wall setups.
- Recurring profits from software adoption. This is an underexplored revenue source that system integrators tend to shy away from. They view software licensing as a hurdle to the sale. On the other hand, we work with a ton of MSP partners who crave ongoing software licensing and see it as a default revenue source for them. In our experience, integrators are the first line of support when it comes to video wall installations so they should leverage this and charge a license fee for ongoing support.
- Recurring profits from ongoing network management. To put it simply, be like an MSP. Not only does this model provide ongoing revenue, in our experience, when signage networks are managed professionally, they are a great source of referrals.
Let’s talk a bit more about ongoing management for video wall networks? How can this make money for system integrators?
Professionally managed video walls with fresh content is now becoming a defacto standard. Audiences have little patience for stale content.
Now I’m not saying that system integrators should get involved in content design. In fact, we believe that content alone is NOT king. The overall communication strategy is king. That’s the difference between successful video wall projects and those that will die within a few months.
Video wall software such as ours has evolved to include creatives and designs that are pre-created/embedded so creating content is not as big a hurdle as it was before. The trick is crafting the right communication strategy and content programming. When integrators are pitching video wall projects, the need for a communication strategy should be a significant part of the pitch. That’s how they remain a part of the project and get recurring revenue after the install has been completed.
Talk to us about the recurring revenue sources? A lot of system integrators will tell you that clients do not like recurring costs.
Clients are not apprehensive about recurring cost, especially not video wall clients. I’m even going to say that they in fact expect that there’s going to be some recurring. The issue is, the client’s perception of the solution offering is very dependent on how it is presented to them by the system integrator. What I mean by this is, if an integrator is not confident in the value of the video wall solution and the need for ongoing support and management for success, this lack of confidence will be reflected in the quote or estimate to the client.
Video wall hardware/software constitutes about 30-40 percent of the overall project budget. Reselling the hardware/software may not yield anything more than 15-20 percent profit, however, the remaining 60 percent of the project is made up of heavily profit-centric services. Mike Kilian, Mvix
Our industry has commoditized the fundamental value of our solutions to suggest that we sell hardware, which has historically been sold as a standard transaction. This is a mistake.
Video wall projects are a service. They should not be commoditized to mere transactional line items. Commoditized screens, video wall controllers, mounting hardware, software (to some extent) are a very insignificant part of a video wall project. The real project starts when hardware has been installed and software has been configured.
Tell us about some pitfalls that you have seen in video wall implementations.
One of the challenges we have noticed with a lot of projects is the tendency to internalize all tasks of a video wall ecosystem. Specifically, we see integrators new to the industry trying to manage the entire project lifecycle in house without much regard to the depth of project scope.
A video wall project is an amalgamation of multiple skillsets, some of which are more specialized in nature, requiring significant experience/training.
We’ve also seen video wall networks that are not future-proofed. If you look at other IT fields – server setups, VOIP, video conferencing – you’ll notice system integrators plan adequately (rather overcompensate) with a 2 to 4 year plan.
On the contrary, we come across many video wall networks that are short-sighted. Some of this is driven by the commoditized/transactional culture of our industry which prioritizes short-term cost savings over long term project success.
So if you are a system integrator and interested in getting started with video wall projects, what are some barriers to entry?
I like to call them myths and misconceptions rather than barriers to entry.
There is a general misconception that video wall projects are not profitable. This is simply not true.
Those holding this opinion are evaluating projects via the traditional selling model of commoditized hardware. Video wall hardware/software constitutes about 30-40 percent of the overall project budget. Reselling the hardware/software may not yield anything more than 15-20 percent profit, however, the remaining 60 percent of the project is made up of heavily profit-centric services. Most, if not all of these services are within the wheelhouse of most system integrators. Also, if done right the first time, almost all digital signage projects scale over a period of time i.e. guaranteed repeat business.
The second big issue that we have noticed is that system integrators’ lack of knowledge/experience in video walls makes them hesitate to take on new projects. As with any new technology there is a learning curve, however with video walls the learning curve is not that steep. There are also quite a number of small digital signage projects integrators can start with to get their feet wet before fully diving into a video wall project.
The third phenomenon is not knowing how to start, how to find clients, projects or prospects. The answer here is simple. Most video wall projects are simple extensions of the work integrators are already doing at their client locations. The clients are already there so starting a conversation about video walls is much easier. Think of it as merely cross-selling your services. Digital signage providers are also helping integrators get starting by offering incentives such as lead sharing with their channel programs.