Subscription Services See Explosive Growth

Published: October 10, 2023
As-a-service can neutralize the costs and risks associated with purchasing hardware, as well as managing AV equipment and services in house. Tierney/

This morning, I was sitting in front of my dueling 32-inch desktop monitors, embarking on my next article for the commercial integration community. As I began to write, I received an email notification. (Big shock, right?) At any rate, I was distracted by the notification, so I went ahead and opened it. What I saw was somewhat of a shock to me! 

The email was from one of the research companies I follow, and the introductory paragraph read as follows: “According to a new market research report, the IT and AV business related hardware (e.g., desktops, laptops, notebooks, tablets, smartphones & peripherals) Device-as-a-Service Market is expected to grow from $50.3 billion USD in 2021 to $303.6 billion USD by 2026; it is expected to grow at a CAGR of 43.2% during the forecast period.” 

That kind of growth number begged for a deeper dive into the concept of (and rationale behind) subscription services for devices, as well as how this might be the harbinger of the future for AV (and IT) as a service. 

Subscriptions in Ascendance 

Subscription services of one type or another are clearly in ascendance. But, contrary to recent industry hype, subscription business models are not new. They date all the way to the 1600s, tracing back to newspapers and book publishers. Subscription business models are based on the idea of selling a product or service to receive monthly or yearly recurring subscription revenue from a customer — rather than seeking a large, upfront, one-time outlay. The economy is generally trending toward more subscriptions instead of personal ownership; we see this with software, entertainment and more. As one expert adds, “This increases the lifetime value (LTV) of the customer.” As you read this article, keep LTV and perceived value for both commercial integrators and end users at the forefront of your mind. 

Listen: Podcast: Recurring Monthly Revenue Can Be a Reality

Subscription models can include a variety of companies and industries. For consumers, the subscription revolution includes things like cable television, streaming media, gaming, satellite radio and more. For those of us in the AV, IT and digital signage industries, subscriptionization might include office and productivity suites (e.g., Office 365, Adobe Creative Cloud), UC&C tools (e.g., Zoom, Teams and Webex), IP telephony, digital signage CMSes and device-management services — even AV or IT as a full service. 

The core of the rising demand for subscription-based business models and institutions resides in the areas of accounting and futureproofing. On the accounting side, subscriptionization helps businesses convert the high cost of acquiring new technology from a capital expenditure (CapEx) to an operating expense (OpEx). The “bucket” that these costs come out of is important to the overall financial health of an enterprise. With technology evolving as rapidly as it is, it’s tough even for large companies to keep up. Subscription models provide the ability to use the latest hardware and software, and they facilitate access to customized services, including device configuration, installation, data migration, onsite support and even technology recycling. 

Businesses and Institutions Have Evolved 

Our businesses and institutions have evolved. We have left behind standalone communications and entered the age of unified communication and collaboration (UC&C). Just think for a moment about big data and all the information that is available to us at any time. Now, think about the internet of things (IoT) and the connectivity between and among devices. Next, think about the emerging virtual meeting world. At one level or another, we embrace information and communication at any time, from any place, on any device. We expect it — even demand it — and have come to rely on it. At the heart of this lives our AV and IT solutions. These solutions have become essential and, in many cases, mission critical. This means that the level of importance within most organizations is extremely high. 

Since we understand the importance and essential nature of these technologies that informationally unite us, we also understand the need to protect that investment. The concept is multifaceted: We must select the best technologies for a given application, ensure proper AV system design and integration, and have deployment methods that ensure maximum uptime and minimum downtime. Last, but not least, we must stay abreast of technological advances. This is where a highly qualified AV integrator becomes indispensable. 

Suffice it to say that investments in audiovisual technologies can be significant. Stop for a minute and think of every place that a business has a display, mount, videoconferencing setup, etc. Today, these are rarely limited to a single space within a company facility. The tasks and investments add up quickly. And this is not a “one-and-done” investment for organizations. All AV technologies require maintenance and have an effective life cycle; this might mean replacing something when it literally wears out, or it might mean replacing it when the maintenance costs exceed the value. That’s not even to mention replacing existing technologies to benefit from new advances that existing technology does not have. 

Related: Futureproofing Technology Investments

Technologies Evolve, Too 

The fact is that technologies also evolve. This invites the question of whether a company’s current complement of technology is capable of handling new requirements. The “easy” response is simply to buy new and replace the old. However, this can have obvious negative financial implications. Yes, a company could do this, but should they do this? One naturally wonders if there is a solution that is both economically sound and protects the company by providing what it needs, when it needs it. This is where AV-as-a-Service (AVaaS) factors in. 

The organization’s AV and IT managers are familiar with Software-as-a-Service (SaaS), which allows companies to buy subscriptions to software, while constantly keeping up to date with the latest versions. AVaaS works in much the same way. Instead of a large, upfront capital outlay to buy expensive AV hardware, users can engage in an AVaaS subscription from a qualified AV integrator. For a predictable monthly fee, they get all their AV equipment and service needs handled. 

AVaaS is turning the purchase and maintenance of AV infrastructure into an operating expense for many companies. It allows a company to use and access technology while it is useful, and it provides added flexibility and scalability when the company grows or its needs change. That equipment can include single solutions, such as a videoconferencing system, or it can encompass entire AV systems, inclusive of all the necessary components and services under one umbrella. In short, AVaaS can neutralize the costs and risks associated with purchasing hardware, as well as managing AV equipment and services in house. 

AVaaS is a way for a company to outsource AV and consume the positive outcome as a service. With a predictable, upfront startup cost and continuing maintenance agreement, a company can hire an expert AV integrator and avail itself of several advantages. 

Decision Drivers for AVaaS 

The following are front and center in driving the decision to embrace AVaaS: 

OpEx, not CapEx. How money is allocated and spent is critical in all companies. AVaaS jettisons capital investments in AV equipment and software from the balance sheet, instead making them an operating expense. In the process, it can reduce the head count needed to maintain, update and upgrade these systems. AVaaS provides predictable expense allocations and makes long-term budgeting easier. 

Managing equipment and system lifecycles. With an outright technology purchase, you must plan for equipment obsolescence and replacement, as well as interim upgrades. By contrast, your AVaaS integrator becomes responsible for the lifecycle of the technology. This means that you don’t have to spend valuable time — and money — stuck in the endless buy-replace-buy-replace loop. When it’s time to upgrade your AV equipment, the integrator will take the lead, recommending the next solution and ensuring that it meets your needs. They’ll also ensure that it’s compatible with the technologies you already have.  

Knowing what you need. AVaaS integrators have systems that monitor equipment usage. The benefit is that you can have systems that provide what you actually need and use, rather than what you don’t. Think in terms of percentage of AV system time in use and plan for maximum utilization. This allows you to optimize your AV investments. 

Consider uptime and service response. Proactive monitoring can ensure uptime, with the AVaaS provider addressing potential issues before they cause a major disruption. Many companies lack adequate internal resources and utilize outsourcing to improve support. However, much of what organizations do with respect to AV is mission critical. If there isn’t support within a few minutes, there might be lost opportunities and many hours wasted. AVaaS provides quick and efficient support — both remote and onsite, when necessary. Providers of AVaaS are incentivized to provide excellent service to maintain the relationship, and they can be bound to service level agreements (SLAs) to deliver guaranteed outcomes, suffering penalties in the event of non-conformance. 

Accelerated Need to Monitor 

The sheer amount of data and information that confronts all of us, coupled with rapid technological advancement, means the need for companies to monitor their technology and upgrade obsolete systems more frequently has become extremely pressing. AVaaS is becoming the preferred way for organizations to budget for their AV solutions and systems. AVaaS offers better budget management and more streamlined operations. AVaaS provides AV solutions and support services in such a way that businesses never have to think about system operation again. No more prolonged downtime; no more hardware reviews; no more tied-up team resources. 

Shifting to AVaaS moves those burdens from the company onto their service provider. That partner manages program details to keep systems current and meet the client’s business needs. Ultimately, this empowers an organization to stay competitive and agile in the marketplace. 

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