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Michael Garwood from AV Technology Europe magazine looks at why, despite the Brexit process starting to have an effect on technological investment, AVMI continues to flourish. To read the article, click here.
Brexit means Brexit: even the staunchest of UK citizens who voted to leave the EU in last year’s referendum will likely now concede that these are empty words. The fact is, we still don’t know exactly what Brexit is going to look like, and how this will ultimately shape UK plc. What is certain is that the UK and Eurozone economies are going to hit some bumps in the road as the Brexit process accelerates towards its – possibly transitioned – conclusion.
In the UK, business is already being affected of course, with uncertainty putting the brakes on investment. The tech integration industry continues to boom, but there are growing signs of a slowdown in the specification of technology across most sectors, as businesses look to consolidate existing equipment or lease rather than buy.
“In the UK we’ve had to deal with the effects of Brexit sooner than our European counterparts and we’ve had to be more agile more quickly when it comes to dealing with its potential effects,” explains Mark McAlpine, services and support director at AVMI. “Our European partners are more likely to wait until after the negotiations are concluded before they put plans – good or bad – in place; we don’t have that luxury, as we are situated right at the centre of the storm, as it were."
AVMI, however, is well situated to weather any potential Brexit storm. Its strong service division – just over 40 per cent of AVMI’s overall business – continues to grow, and it has invested significantly in implementing a new cloud-based service management platform to streamline its operations. With many organisations pressing the pause button on infrastructure investment as they await the outcome of the Brexit negotiations, service is becoming king.
“It’s the service side of our business overall that is growing the most rapidly,” says McAlpine. “This is partially as a result of the current market conditions – the Brexit uncertainty – and also the continued convergence of AV and IT, and AVMI’s burgeoning reputation as being the service-focused technology integrator. Service is in our DNA.
“That said, the tech integration side of AV is still booming and AVMI is incredibly busy,” says McAlpine. “Our order book is full and indeed we continue to see all sectors engaging us on project work. Although we might see a short-term impact in the mid-market, purely from a project perspective because there’s not so much cash available; from a service perspective, we’re forecasting quite large growth in the mid-market as companies affected by the perceived Brexit squeeze look at alternative ways of managing their tech resources.”
Brexit is starting to have an impact on the integration of new technology, then – albeit hopefully short term as the Brexit process and its outcome shakes down. McAlpine notes a more cautious approach from clients who, having completed projects in the previous three years, would normally be looking to refresh their technology investment.
"In order to future proof and plan for Brexit, companies are looking at other ways in which they can procure hardware, software, licenses and support,” says McAlpine. “Some of the banks, for instance, are planning for potentially shifting their operations to out of the UK to secure ‘passporting rights’ by reducing back office and infrastructure headcounts in London – being more agile by using companies like AVMI to fulfil their AV and IT requirements.
By moving this headcount to AVMI, such companies are able to retain the required skillsets, procuring them back as a service until they “get a little bit of certainty” post-Brexit and re-recruit internally – if they ever decide to do this, as McAlpine says many are surprised at just how good the external service provision is.
“Our investment in services is second to none,” says McAlpine. “AVMI’s managed on-site team have access to service delivery managers and supporting coordinators, maximising response times to team sickness or peak requirements, and a large cover pool of technicians offers extra resource. Over the years, our ‘Trusted Advisor’ philosophy has resulted in an average client relationship of ten years – and this is only set to lengthen as our service division continues to strengthen.”
Whilst the Brexit process means companies are currently less inclined to invest in replacing or upgrading technology, they do want to invest in ensuring that they maintain the same levels of functionality and efficiency – either by ramping up their service and maintenance contracts and/or turning to leasing companies.
“During the financial crash of 2007 we saw that big-ticket purchases effectively stalled both at a corporate and consumer Level,” says McAlpine. “Businesses whose trading cycles were counter cyclical to the economy saw a large uplift in revenue, specifically if that business was in the services industry. This counter-cyclicality is apparent again as AVMI begins to see more service lead opportunities whilst clients consider holding capex projects into their next fiscal years.”