The local path to the AV sector

While the education sector can offer channel players lucrative contract opportunities, the tangled web of accreditation and regulations that face VARs can be daunting. Martin Lynch explains how local authorities can offer a good foothold in the market

The education sector is a vast market and has always been a strong buyer of audiovisual (AV) solutions from the channel. The bulk of the products sold comprise interactive whiteboards (IWBs), overhead projectors, audio equipment, displays, networking and a vast range of peripheral add-ons ranging from mounts and trolleys to cabling and security. There is a growing market for interactive presentation software, not to mention the lucrative consultation, installation, managed services, training and maintenance up-sells. It also helps that the sector is very well funded.

The government has committed to increase its spend in education for the coming years, ahead of overall government expenditure and there are a number of national schools improvement initiatives underway that have resulted in improved AV sales. According to public sector researcher Kable, information and communications technology sales to the education sector will be worth £2.9bn by 2009/10, up £470m on 2005/06.

Some of the key areas where the government cash is going include Curriculum Online, which was funded at £100m for the past three years, to sell digital teaching and learning materials through a dedicated web site. Computers For Pupils has a budget of £60m from 2006-08 for local authorities to put computers in the homes of deprived secondary school students. A large proportion of the budget goes into the Learning, Teaching and Managing using IT initiative – formerly known as IT In Schools. Then there is the Building Schools for the Future programme (BSF), an ambitious plan to rebuild or renew every one of the UK’s 3,500 state secondary schools over 15 years. The BSF has a projected budget of £45bn, some of which will be going to the modernising of existing IT and the introduction of technology solutions. The BSF initiative got underway in 2005 and spent £2.2bn in its first year. Already, established education VARs are working on joint bids with construction firms and other partners.

From the few examples above, one can understand why more resellers want to go back to school. And, as long as they are willing to do their homework, there is little standing in their way. The sheer size and spread of the education sector makes it possible for any decent reseller to get a foothold in a sector that always has some money to spend.

However, it is not all plain sailing, since different kinds of VARs will do well in different educational segments. VARs who work on small, local projects will be able to avoid much of the regulatory minefield, overseen by British Educational Communications and Technology Agency (Becta).

Becta is in charge of providing IT guidance for schools and universities and accrediting larger IT suppliers. That accreditation process is sometimes criticised for being technically flawed and elitist, by excluding all but the biggest players from achieving Becta supplier approval. However, lack of accreditation is only a barrier on the biggest projects and there is nothing stopping good resellers from working with those accredited partners. Also, Becta cannot force every school to only buy from accredited suppliers and many schools prefer to deal with local suppliers with whom they are already familiar.

Darren Lewitt, divisional director for AV at distributor Midwich, says: “The education sector is an important AV market. Other segments have become just as important in recent years, but education is still a big one. It’s easier for VARs to get into the education sector now than it used to be. Being Becta-approved used to be very important to succeeding in this sector, but those rules have been relaxed in recent times to make it easier for other resellers to enter the market.

“I think the days of schools only buying certain products from certain resellers are gone – there are a lot of providers now that are not Becta-approved selling into the education sector. A closed shop is not good for competition.”

However, it should be remembered that the education market can be quite confusing, thanks to its sheer size and diversity. Not only are there marked differences in the needs and regulations surrounding the three key markets – primary, secondary and further education – but each council and Local Education Authority (LEA) has its own way of doing things. This is a market where it really does pay to do some research.

Steve Smith, business development director at VAR Ramesys, says: “To really succeed in education, VARs need to be in it for a long time. There are a lot of rules and regulations, so resellers want to get into this space for the long term. Sales cycles can be quite long and expensive. There’s no doubt that it is a very a attractive market where there has been a lot of IT spend in recent years. However, resellers really have to get involved as it’s quite complex. VARs that are niche players tend to prosper more than those just selling general products.

“For instance, there is a significant difference between primary and secondary establishments. In secondary schools there is usually someone on staff with some technical skills whereas in primary schools there is rarely IT support staff. This varies greatly from school to school, but being able to offer more than just shipping boxes is very important. It’s fair to say that schools are among the most complex IT environments around, encompassing several different levels of security and access, many types of technologies and peripherals, and different user skill levels.”

Russell Blackburn, commercial director at AV distributor Steljes, says: “If VARs choose certain parts of the education market carefully, they can get into it. The primary sector has been the focus for most resellers, but there is a still a lot of business in secondary and university sectors that has yet to be tapped into. Resellers will get a lot of support from distributors, if they are planning to target these newer markets.

“A lot of Becta regulations apply to suppliers for the primary schools marke t, but secondary schools and further education customers have their own budgets. The primaries are already well covered by local and national resellers. The secondary and university markets offer more opportunities for newer entrants.”

According to Steve Cowley, commercial director at VAR Azzurri, accreditation plays an important role. “We have been in this sector for the past 10 years, really through two of our acquisitions,” he explains. “One was supplying whiteboards for the government initiative to roll them

out and the other started out supplying local schools. The difficulty facing channel players getting in now is that they really need to be accredited through Becta.

“There will always be space for non-accredited resellers to enter the education sector, but to become a main player they need to have the accreditations – LEAs are now going out looking for approved platforms and telling schools to only pick from the accredited suppliers. However, there will always be space in other education markets. For example, in the secondary school market, schools have their own budgets and can choose who they like, but local authorities tend to tow the line and stick with approved suppliers.”

Cowley admits that getting accredited for larger solutions can be a costly and time-consuming affair. “Take the Learning Platforms [accreditation], for instance,” he says. “We had to do a lot of work with our product to make sure it complied with more than 100 Becta stipulations. If we failed on any one, we were out of the running. We had to do a lot of development work to make it compliant. We have our own developers, which makes this a bit easier for us, but it still took from September last year to Christmas with lots of presentations thrown in. It was very rigorous.”

Smith agrees. “It’s often very difficult to achieve accreditation and the processes are very tough,” he says. “They are multi-staged, with practical and theoretical tests. It’s quite expensive and time-consuming for a supplier to take on. Also, there are lots of local rules that vary from authority to authority.”

Since most resellers will not be starting out bidding for multi-million pound contracts, it is best to start out small with a more local approach. This requires none of the major accreditations, but it does require some research and commitment.

Blackburn says: “If a VAR is already well established in another sector, they will need to start out in education by understanding what they are selling, since those making the purchasing decisions are not necessarily technical. Always start locally with schools and establishments. Talk to education distributors since they know what these customers are looking for. If the product being sold by the reseller is Becta-authorised then it does help. Unlike accreditation, the process is not too long either.

“Just consider the Becta requirements when picking products or creating solutions. Resellers can get approval faster if they choose a product that ticks most, or all, of the Becta boxes from the outset.”

According to Smith: “Go where the money is. That’s in the schools, not the LEAs. The buying decision rests with the schools. Target this space and find a good partner. To get a school to spend more relies on having a very compelling solution or having a relationship. There are something like 27,000 schools out there, but many are small with small spends. Only 7,000 of those are secondary, but those tend to have larger budgets. Be warned though, it’s hard to sell quickly in this space.”

Lewitt says: “Resellers have to choose a strong partner with some experience in the education market. They have to get their products right – there is no point choosing brands that are not already strong and established in the market. There are manufacturers offering better prices for their kit, but these customers need re-assurance and want to stick with the brands they know.”

There is a vast array of AV pro-ducts to choose from and it is important to c hoose ones that are in demand. IWBs and projectors have been the dominant products for some years, but there are other opportunities. In fact, with so many resellers targeting schools with the IWB/projector combo, it makes sense to find new AV opportunities.

Lewitt says: “Becta believes visual presenters [or visualisers] will be a very big market opportunity in the coming two to three years.”

Blackburn comments: “IWB sales [to the primary sector] are peaking now, but secondary schools and universities are still very big market opportunities. IWB sales were initially kick-started by Becta and that made a massive difference. But now, it’s very tough with so many VARs fighting over the same pot of cash – they have to find new markets. Visualisers is a steady market at the moment – resellers selling boards should be looking to add in visualisers, which are a good margin opportunity.”

Smith says: “With visualisers teachers can use a camera to demonstrate things to the whole class and a lot of customers are very excited about these. This is a big opportunity for the coming years, especially in subjects where demonstrations are important, such as science.”

Flat-screen high-definition TVs are fast becoming the dominant TVs sold in the consumer sector, thanks to cut-throat competition and rapidly falling prices.

As a result, schools are starting to take up more plasma displays than ever. With prices in the 40in range as low as £1,200, even small schools with small budgets can afford a plasma display without breaking the bank.

Lewitt agrees that falling prices and better quality have made a huge difference in their take-up.

“Fifty inch plasmas are coming down in price so fast that they are starting to challenge interactive whiteboards,” he says. “They might be 50in versus 70in IWBs, but the resolution is so good that everything is easily read. Also, there are add-on solutions that allow users to move the plasma screen up and down automatically so that no one has to stretch. We are looking at a sub-£2,000 price point for those plasmas now.”

Smith claims: “The acceleration of flat-panel TVs has been a really good development. One of the things that schools can do is put big plasma panels around the school in shared spaces such as canteens and reception areas, and use them for school announcements and other information. If users have the system right it can be a great communications tool.”

Some more adventurous AV sells include ticker-tape technologies in corridors and canteens that display relevant information throughout the day. However, regardless of the type of AV solution, it has to be remembered that the personal touch goes a long way in the non-IT literate education sector. The ability of VARs to handhold schools throughout the installation of even the smallest AV solution can evolve into a profitable relationship.

Blackburn says: “It is critical to ensure that staff are trained – there should be a handover period on any sale. Training is very important. Teachers have to know how to use these things and this is another opportunity for resellers.

“If you want customers to come back and buy more, you have to ensure that they are equipped with the skills to use what you sell them. Doing a technical handover is one thing, but making sure they understand the solution and can use it is the best guarantee that they will come back and do more business in the future.”