Before the pandemic, corporate conferencing and collaboration solutions were hit-or-miss. When firing up legacy A/V tools in conference rooms, employees would often encounter significant technical issues—including broken feeds, hardware and software needing upgrades, and support resources that lacked the experience and staff to run systems smoothly.
With the return-to-office movement in high gear, employers must provide fully secure on-site conferencing and collaboration tools that support work requirements as well as or better than the platforms employees have come to rely on at home. These tools are now tightly woven into daily routines and are a significant factor in boosting productivity.
Employees accustomed to collaborating remotely on platforms like Teams and Zoom won’t tolerate taking a digital step back when they return to the office. Today’s hybrid work schedules increase the need for group meetings and presentations that seamlessly blend in-person and remote collaborators and often require A/V installations in multiple small-group meeting rooms.
Those employers who get on-site tech deployment right will reap the benefits of improved collaboration, engagement and productivity from a workforce that’s more comfortable using A/V communication tools than ever before. It's a tall order, but there is good news: Employers have a new option to consider that resolves many of the issues related to outmoded equipment and lack of always-on support.
AVaaS (Professional A/V as a Service) is a subscription-based “as a service” model, or operating expense (OpEx), approach that can be an appealing alternative to the traditional capital expense (CapEx) method of Pro A/V purchasing. Here’s what you need to know when determining if the OpEx, CapEx or hybrid approach will best meet your organization’s Pro A/V needs.
Innovation Out of Crisis Drives Rapid Growth of AVoIP
The transition from locally installed software solutions to online software subscriptions—known as Software as a Service (SaaS)—gained traction in the early 2000s. Nearly 25 years later, the rise of cloud computing has enabled the Everything, or X, as a Service (XaaS) model.
AVaaS is rooted in the long-standing practice of leasing A/V equipment and services for a monthly OpEx fee, which began to evolve and grow with the transition to delivering A/V over internet platforms (AVoIP) in the past decade. To be clear, with the right partner, AVaaS is not just another leasing approach. The right partner is self-funded, meaning AVaaS revenue comes from monthly subscriptions and not reselling commercial paper on a secondary market.
Consuming the Outcome vs. Owning the Asset
AVaaS is no different from any SaaS offering that you may already use. Again, it’s about consuming the outcome (conferencing and collaboration) vs. owning the asset (Pro A/V equipment).
The pandemic supercharged the growth of AVaaS and other technologies that support virtual and hybrid work environments. According to a global study by McKinsey, executives reported accelerated technology adoption by as much as seven years during the first year of the pandemic—and they increased funding for digital projects to make those changes permanent.
The maturation of cloud delivery platforms and increased technology investment will help boost AVoIP spending globally from $3 billion in 2021 to $51 billion in 2027, with a 55% compound annual growth rate, according to a Maia Research report. Maia projects that the corporate, education, and government sectors will drive 85% of the increased growth—more than $45 billion of the $51 billion total Pro AVoIP spend in 2027.
Today, Pro A/V integrators fully embrace the subscription economy. They offer turn-key AVaaS options that include equipment installation, the latest AVoIP software, a regular upgrade schedule to keep customers on the cutting edge of A/V tech, ongoing maintenance and always-on support for a recurring fee paid out of the operations budget. For a growing number of organizations, this OpEx approach has quickly become the most useful tool in their Pro A/V acquisition toolbox.
OpEx, CapEx or Hybrid: What’s the Right Approach?
While the OpEx option of Pro AVaaS is emerging as the best approach for many organizations, the CapEx and hybrid options also have compelling use cases.
Here’s how to determine what will work best for your organization.
The OpEx option of Pro AVaaS may make the most sense for organizations that:
- Look to avoid large, up-front capital expenditures in favor of ongoing payments under service contracts
- See the benefit of a greatly simplified budgeting and accounting process
- Favor projects that require less planning, less working capital intensity, and fewer implementation obstacles
- Want easy access to the latest A/V technology on a regular update schedule
- Need always-on live outside support to service, upgrade and troubleshoot A/V tech issues
- Have more budget flexibility on the operational expense vs. the capital expense side
- Like the ESG benefits of not having to dispose of outmoded technology, as it is upcycled by the vendor when updates are made
Potential issues to consider when evaluating the Pro AVaaS option:
- Eliminates asset equity, as all assets are owned by the third-party service provider
- Removes asset depreciation tax benefits
- For multinationals, cuts potential use tax benefits as well
The CapEx Pro A/V option may be best for organizations that:
- Primarily require large, complex A/V installations such as in auditoriums or conference halls
- Field a large in-house IT team that can handle regular servicing and upgrading of equipment and software support
- Want owned asset equity (typically spanning three to 10 years) that generates depreciation write-offs and other tax benefits
- Are publicly traded and see a positive EBITDA impact from treating Pro A/V as a capital expense
- Look to access improved infrastructure while preserving operational cash flow
- Have more budget flexibility on the capital expense vs. the operational expense side
- Would rather have a fixed, one-time expense than a recurring payment
- Operate under institutional guidelines (as is often the case with educational organizations and government agencies) requiring A/V purchases to stay on the capital budget
Potential issues to consider when evaluating the CapEx Pro A/V option:
- Time-intensive planning, budgeting, and approval processes for capital projects
- Opportunity cost of tying up working capital that could be used for other needed infrastructure
- Increased risk of fielding outmoded or obsolete tech toward the end of the depreciation period as equipment life cycles continue to shrink in this era of accelerating change
- Disposal headaches when obsolete owned equipment must be sold or recycled during the next upgrade cycle
- Needing to handle servicing and support in-house
A hybrid OpEx and CapEx Pro A/V option tends to be best for organizations that:
- Have a multinational or other geographic footprint that requires different expense approaches for A/V in different regions
- Use Pro AVaaS to meet their needs in conference rooms (high volume-low complexity) but require capital expenditures for larger, more complicated buildouts in auditoriums or other big facilities (low volume-high complexity)
- Need to split hardware acquisition and software/support solutions between capital and operational budgets, typically in a case where equipment is purchased as CapEx and the software and support aspects are recurring operational subscriptions
As options for acquiring conferencing and collaboration solutions continue to evolve, it’s crucial to find an integrator that provides as much flexibility as possible for subscription-based Pro AVaaS, capital expense, and hybrid offerings. A technology partner with a full array of budgeting and deployment choices will help organizations make the best decisions to meet their current conferencing needs—while enabling any rapid A/V strategy shifts needed to meet changing market and workplace demands.
When it comes to conferencing and collaboration, it’s a brave new world out there. Having access to the right tools, in the way that best meets your finance needs, makes all the difference.