Where’d All The Money Go?
Joe Way, PhD, CTS
So let’s all be honest, since the start of the pandemic, how many of us in higher education can say we know exactly what our budgets are and where they stand at this very moment? At the same time, our institutions have implemented spending freezes, they have also funneled us hundreds of thousands—or even millions—of dollars for hybrid classroom upgrades. At the same time we hear about possible layoffs, furloughs, and fiscal doom-and-gloom, we’re sending off endless streams of POs to our vendors and maxing out our p-cards. At no other time in our academic histories have these two dichotomies lived in poetic cohesion.
The numbers seem to bear out this reality as Sean Wargo, Senior Director of Market Intelligence at AVIXA recently shared in a RISE Spotlight, hosted by Integrated Systems Europe. There were a couple of key takeaways: global AV spend in 2020 dropped from $22.9B to $22.4B, yet is expected to increase to $23.4B in 2021 and $27.6B by 2025. In the United States, the numbers bear this out nearly identically: with $8.5B in spend in 2019, $8.3B in 2020, and an anticipated $8.6B in 2021.
This begs the question, how does the education market spend decrease when we’re all spending so much money? While the article does not explain, Sean correctly answers the question, “did education decline in terms of net spending,” by stating “that’ll depend on what you include in the mix.” Bingo.
What AVIXA has not yet been able to account for is in-house integration costs. For example, if I were to upgrade a number of spaces in a “traditional” way by hiring an outside integrator, paying them say $1M for equipment and $1M for labor, then AVIXA would report $2M in net spending in the education vertical. However, if I use an in-house team for the labor, that “savings” is not recorded, and thus the same project is viewed as $1M in AV spend as opposed to $2M. This is why we see a decline in 2020 spending. Large “traditional” projects came to a halt, while in-house teams scrambled to acquire gear, often hacking their current systems to add cameras, microphones, Zoom, and LMS integrations in their spaces. This is how we can talk to our camera and mic manufacturers who tell us that they are booming in the education market, while our integrators are turning to us and begging for work and our in-house teams are completely tapped out with new projects. Likewise, because of the mad rush to acquire gear and supply-chain issues that ensued from this (both due to the increase in orders and the border closing), schools may have gone around their traditional channels in order to acquire anything they could (dare I say OEM Chinese knock-offs?).
So my first question is: Did higher ed AV spend actually decrease in 2020? Obviously not, the industry just has not been able to account for in-house teams performing the installation, programming, configuration, etc. Just because we don’t spend that $1M in third-party labor doesn’t mean that we don’t spend it at all. We still pay for our staff, just not theirs. We still pay for our own supplies, tools, insurance, etc., just not theirs. The “profit” becomes savings to our financially strapped institutions.
My second question is: Will we actually see the uptick in 2021 spending as is projected or will it remain flat because the value of investing in an in-house team has been realized? Yes and yes. We will see larger projects pick back up as campuses continue to open; we will see regular budget-planning return; we will begin to get back to how things were. Sorta. We will also realize the value of in-house installation and support; we will be able to justify more hires and increasing our team sizes in order to save on third-party outsourcing; we will be able to improve our customer experience because of the unique relationships and trust we all built with our faculty and upper administrations over the course of the COVID-19 pandemic.
As I have stated in the past, if USC’s AV spend was judged alongside the other traditional integrators, we would have placed right around #40 in SCN’s Top 50 Systems Integrators of 2020. And we’re not even the largest higher ed institution doing some sort of in-house design, installation, and support. Likewise, large corporations that also have in-house teams (like Disney, Apple, and Universal) are also not accounted for. Just imagine what the list would look like if end users (*cough* in-house integrators *cough*) were included.
So when we see the market analysis, let’s remember that higher ed is an anomaly. We drive such a large spend within the AV industry, but at the same time, it’s a changing spend. How we do business is different. We know that in the past five years we have moved from back seat passengers to AV pros in driving the ship. We see it when we arrive at InfoComm. The little “education” stripe on our badge used to mean we could not get anyone to talk to us; now, there isn’t enough time in the day for all the meetings vendors want to schedule. So kudos to all of us in higher ed. This also wouldn’t have happened if we didn’t prove to be capable professionals in our own right. There’s still work to do, but we can do it. This is also exactly why BC Hatchett and I founded the HETMA (Higher Education Technology Managers Alliance, HETMA.org).
With over $20B in AV spend globally, it’s important that we have a voice to advocate for our needs and also to hold ourselves accountable to the greater industry. I encourage everyone in higher ed to join HETMA and attend the Spring 21 Virtual Conference on February 9-11. Keep up the great work everyone!
About the Column
The higher ed AV vertical is over a five-billion-dollar sector of the commercial AV integrations industry. Add in the live events, and higher ed accounts for over ten-billion-dollars annually. That’s significant, and why tech managers in our vertical must treat our departments like big business. Every month, Joe Way, PhD, CTS, explores important aspects of business operations, sales, negotiation, finance, and strategy based on over 25 years’ experience in business development, founding and managing several multimillion-dollar companies in the entertainment industry.
The Author: Joe Way, PhD, CTS
Joe Way, PhD, CTS, is the Director of Learning Environments at the University of Southern California, in Los Angeles, CA and AV Nation 2019 AV Professional of the Year. He is the host of the Higher Ed AV podcast and co-founder of the Higher Education Technology Managers Alliance (HETMA.org), aimed at connecting the higher ed tech manager community and advocating for their common audiovisual needs. He is the author of the bestselling book, Producing Worship: A Theology of Church Technical Arts, is a regular contributor to leading AV-industry media outlets and podcasts, and serves on the AVIXA Tech Managers and Diversity Councils. Joe is an Orange County, CA, native with over 25 years’ experience in education, technical production and the arts, and organizational leadership and management. Over his career, Dr. Way has received diverse awards in the areas of education, the arts, and business, and is a regular keynote speaker and writer for AV-industry and higher ed conferences and media outlets.
