Global business: On top of the world

• Features

• 13/02/2018

Anna Mitchell explores some of the models AV service providers and installers are pursuing to meet rising demand for global delivery and asks if these approaches are setting the stage for the formation of huge, global integration firms.

More businesses than ever now run global organisations; operating offices and premises in locations scattered around the world. This approach is being spurred in no small part by the growth of Asia. As the region comes into its own, local presence in Asia is becoming more essential.

Naturally these companies want their facilities to meet certain specifi cations and deliver standardised experiences for the staff that use them. If you are a worker in the New York offi ce, the argument goes that you should be able to walk in and seamlessly make use of presentation and communication technology in your Rio, Berlin, Jakarta and Sydney branches.

Matthew Deayton, global business development director for Vega, says: “Multinational companies put a high demand of conformity and consistency in their solutions across their facilities to ensure all users are experiencing the same tools and that managing the facilities from remote locations is simplified.”

Sujith Sivaram, executive director for Esco, says: “The key word in global contracts is standards and therefore an infrastructure that delivers to standards is critical.”

But what does this mean for the integrators tasked with designing, installing and supporting those technology deployments?

It is a question that most integration companies have now faced and - if they have wanted to win what are often very lucrative, global contracts - have had to act in a number of ways.

One approach would be to set up offi ces around the world. It means the integrator isn’t losing parts of the contract to other companies and it retains control and the cash. But, this comes with its own risks. Remote premises cost money, require local knowledge and - to remain profitable - need a stream of work to justify their presence.

However, sometimes just one contract can warrant a remote office and allow the company to use that facility to gain further work in the area. That is where UK headquartered integrator AVMI found itself when it made the decision to set up offices in New York and Hong Kong, initially to serve a major global banking customer.

Terry Wilson, commercial director at AVMI, explains: “We’re using our global capability to service customers we’ve forged global relationships with from a UK engagement. Our first steps are not to sell to local customers, but to enable delivery in local regions of global sales made in the UK. The next step will be to advance into the countries themselves.”

AVMI also engages with around 80 partners to cover more than 50 countries enabling it to have local presence and knowledge across the world. While AVMI is very much heading up its own network of partners there are other organisations in operation that allow a group of integrators to act under the banner of a single alliance; sharing work, ideas and expertise.

In Asia Pacific, the single vendor model does have significant merits. Smaller sections of the region, like Southeast Asia for example, can be managed centrally with local presence in each of the countries.

Deayton from Vega says: “Vega is not a member of any alliance like GPA and we are strategically structured to support clients as a single vendor across multiple territories. Leveraging broader, dedicated and skilled labour pools as well as having significant liquidity to finance larger and more complex projects allows us to work with the largest multinational clients.”

Vega’s approach has served it well in Asia Pacific and Deayton says: “The advantages significantly outweigh the disadvantages. Having the scale in terms of geographic reach, skilled labour, and financial resources to support multinational clients in the diverse landscape of Asia is clearly a significant advantage. The only real disadvantage we face is really centred around what any multinational business has to deal with when working with teams in different locations but that is nothing that can’t be overcome especially with the collaboration tools we have at out fingertips these days.”

One of the more recent entrants to the global arena is the PSNI Global Alliance. The PSNI was actually formed back in 1986 but was concentrated on the North American market. In June 2017 it announced its first 31 approved global offices with global licensed offices hitting 109 by January 2018.

Chris Miller, executive director of the PSNI, argues against many of the routes that integrators outside of alliances take to handling global contracts.

He says: “Traditional multi-country deployment is a reactive, time consuming, high- risk tactical undertaking by an integrator. It often starts with the end-user or consultant driving an opportunity and the integrator scrambling to patchwork companies and personnel together to make it happen.

“The other option is to do it all internally and risk the ‘I don’t know what I don’t know’ business model. The ROI can be low and the risk can be high, especially with key customers where dropping the ball could be relationship ending.”

Outlining how the PSNI operates, Miller says: “PSNI [vets] integrators and service partners to be a part of the network. PSNI has developed a searchable software database of offices, contacts and skills available to support members during the initial proposal phase. All of these services help members be more efficient, approach larger enterprise projects with less risk and help the member stay relevant with their customers.

“Equally important to country-to-country integration projects is an enterprise managed service offering, available through the network to the members. In the early phase of deployment, the remote monitoring service program provides members with an extended service and support offering to enterprise customers. Our global members are now coming online with this service offering. A global help desk with a ‘follow the sun’ type support is under development.”

The Global Presence Alliance is one of the most formalised and mature groups in this space and has a defining attribute: it carefully selects members to avoid regional crossover. Members bid for work in their own regions and pass over contracts to other partners to enable global delivery. The members also work together to create standardised specifications for certain room types and even have a vendor accreditation scheme.

Esco is a member of the Global Presence Alliance and Sivaram says regarding membership: “As in any business alliance, the membership comes with equal expectations as the benefits that they confer. Integrators should evaluate their ability to meet these expectations before considering joining them. They should also be able to sustain their membership, by constantly upping their game, in accordance with the changes in the industry and demands of the global customers and their alliance partners.”

Philip Holtum, CEO Pro AV Solutions Australia and current president of GPA, explains: “A critical piece of the GPA is the non-competitive reach of members.”

He continues: “The other critical piece to GPA membership is the trust and knowledge-share that goes on between each member to share their best practices, ideas and experiences. Ultimately that helps everyone else build their experience. We have to ensure that the trust exists between all the members so they feel comfortable sitting in member summits and sharing intimate details of their business.”

Like Miller, Holtum argues that the alliance model offers advantages to setting up a physical presence in other countries. “You’re either looking at an acquisition strategy, which is expensive, or an organic growth strategy, which might ignore cultural differences. There’s a cost and a risk factor that should be considered.

It’s also very difficult to set up the global footprint the GPA offers of 40 or 50 countries so you’d tend to set up a couple of key hubs and you still rely heavily on a sub-contract model. The core premise to the way the GPA was set up was really to work contrary to that sub-contract model.”

Regardless of the approach there are certain challenges to delivering standard systems in any corner of the world.

Sivaram says: “Every market is unique and needs to be handled taking into account the culture and traditions of the land. The ability to embrace the regional market is the obvious advantage that expands more avenues for growth. The preponderance of the resources and management oversight required to generate dollar notes from a regional ensemble is the key challenge.”

To mitigate problems AVMI has a standard design and room specification process. Wilson outlines: “When you have an organisation that is aligned globally or has a central design and service function and wants to standardise, we have a model that can support that.

“We can create a service catalogue and a product catalogue. So if you know you want a four person huddle space, we have options for that. If you want a ten person formalised meeting room, we have options for that as well; plus the service wrap-around.”

While standardised systems are desirable for head offices, it is not always possible to implement them. Local integrators operate in different environments with huge variations on infrastructure and regulations. Even when those barriers are overcome, very often cultural considerations remain that are specific to the company, or the country.

Wilson says: “Import duties in certain areas make it prohibitive for us to build something here, ship it out there and just install it. The model we’ve created we believe does allow a level of local flexibility.”

Whether it’s AVMI’s partner network, or alliances like the GPA or PSNI, it’s clear that the industry will see more and more approaches to servicing global contracts. However, as these groups become closer, more structured and formalised, how far are we away from seeing an alliance become a company?

If it happens then, according to Criostoir McLaughlin, director of PSNI member Meritec, acquisition would be a better route than a single integrator setting up additional locations from scratch.

AVMI’s Wilson adds: “I think consolidation will occur. We’ve looked at alliances between us and partners that are slightly more structured than a partner relationship and we’ve seriously considered buying companies in certain geographies to accelerate our presence there. That’s still on the agenda for us.”

If consolidation is on the cards then would a good starting point be one of the alliances already in existence? GPA’s Holtum doesn’t rule it out but does point out that companies are generally drawn to alliances because they don’t have the goal of individualised global domination and stresses that this has never been the core intent of the GPA.

He does suggest that a brand licensing model – akin to a franchising scenario – would be more likely and says, when it comes to the GPA, in future the brand could become more dominant but the ownership model would remain.

The alliance model seems successful and in all likelihood these groups will increase in importance and membership. They might also become essential if, in the future, we start to see the formation of huge global integrators that look a lot more like the international behemoths they’re serving.