WHAT IS AV AS A SERVICE
1.) Access To & Use Of
access to or use of some AV product, service, or solution. There is no ownership of the technology and no ownership responsibilities.
2.) Monthly Payment
significant, upfront expense. It is intended to be a service provided for a predictable, manageable, monthly payment.
The “WHY” behind AV as a service
4 Important Factors to help understand how as-a-service became popular and why it makes the most sense in today’s environment
1.) ECONOMICS OF OWNERSHIP
AV solutions are non revenue generating assets because they rapidly depreciate the day after they are installed. Paying cash with after-tax dollars on non revenue generating assets defies basic economics. Importance vs. Economics: AV solutions are essential use, but there’s a big difference between the two.
Why do AV solutions rapidly depreciate the day after install?
In every bill of materials you have a high level of non-recoverable costs (i.e. −Manufacturer margin, distributor margin, integrator margin, licensing, installation and sometimes comprehensive with extensive labor, programming, software, design, warranty, training etc.). This can make up 30-50%of a solution. These costs are non-recoverable because after install none of it can be returned.
2.) RAPID ADVANCEMENT OF TECHNOLOGY
AV technology continues to change rapidly, for the better, with no sign of it slowing down. Just look at these major manufacturer’s R&D budgets:
Customers are recognizing the challenges to staying at the forefront of technology and having to request higher CAPEX budgets. This is why they are embracing and giving more value to use/access versus ownership.
3.) INSURING ESSENTIAL USE TECHNOLOGY
AV technology has replaced the phone system for internal and external collaboration and communication. How can you NOT insure this type of technology with a complete service & maintenance plan beyond the warranty period? You can’t! It’s too much of a risk. Our assets are more essential than the technology.
Economic downturn has placed pressure on budgets. In a recent survey of national retail chains, 89% stated their 2020 and 2021 budgets have been greatly impacted. Continued economic uncertainty places pressure to preserve cash flow.
Questions to Ask
Any As-A-Service Provider
Not all as-a-service offerings are created equal. When considering a AV as a Service Solution for your technology it’s important to do your research and be aware of what you are receiving. Below are suggested questions to inquire about with your solution provider when considering an as a service solution.
What Is & What Is Not Included?
Ask about the different elements that are included in the solution. Will hardware and software be included separately? Will items like licensing, install, warranty, maintenance, etc. be a part of the as-a-service monthly price? A true as-a-service should be a low monthly price with everything bundled in. There should be no need for large upfront à la carte costs.
What Are You Responsible For?
Make sure you are fully aware of your responsibilities and what the solution provider will manage for you. What’s the protocol if something malfunctions in one, two, three years time? Who is responsible for keeping the equipment in good repair? A true as-a-service solution will include things like support services for the entire term and the ability to scale if your needs change or the technology becomes obsolete, without major financial implications.
What Are The Financial Implications & Ownership Outcomes?
A true as-a-service will be an operating expense opposed to a capital expense, make sure you ask which one your as-a-service offering is. Be clear on all expenses. Will there be upfront expenses and what is the total monthly payment. While some small fess maybe possible an as-a-service solution should not have any large upfront expenses. If your as-a-service solution results in you owning the technology you do not have an as-a-service, but a traditional lease in disguise. If as-a-service subscription model is what you are after make sure you inquire about this detail.