Article

Friction in digital signage buying and supply

The maturation of digital signage as an enabling technology has brought challenges in the sourcing and supply proposition. Both the end-user/buyer of digital signage and the supplier want the same thing: a solution that works and is priced in a way that is fair, reasonable and that everybody can afford.

August 28, 2015

By Lyle Bunn, BUNN Co.

The maturation of digital signage as an enabling technology has brought challenges in the sourcing and supply proposition. Both the end-user/buyer of digital signage and the supplier want the same thing: a solution that works and is priced in a way that is fair, reasonable and that everybody can afford.

But the road to this destination is filled with curves, potholes and uncertain bridges.

It is complex because one size of digital signage does not fit all. Many vendor and sourcing options are available, and the way in which the business and communications benefits are achieved varies as widely as the words, images, video and animations that are applied to achieve the return on investment.

The project approach must be well defined. Similar to every other process of technology or communications acquisition, objectives and intentions are defined, and then the "content" that will achieve these goals, following which the technology is selected to present the content that will achieve the objectives.

But challenges occur. End-users should ask themselves this question related to vendors, "Are they here for my benefit or for theirs?" Definitely the answer should be "both," but too often the end-user is not prepared and the sales process and ongoing supply are distorted by vendor interests or incapability.

The unhappy result is delayed decision-making about vendor selection, higher supply administration costs and under-performance of the system, which robs the end-user of benefits and causes organizational frustration.

What happens that causes this breakdown?

End-users

End users don't know what they don't know. Their business is not digital signage but retail, banking, food services, transportation, entertainment, health care, human resources or education. It is understandable that they would not know what digital signage can deliver for them or what to do to maximize benefits while minimizing costs to their organization.

The goals of different business units that may be involved add complexity. Purchasing wants to minimize the capital outlay, information technologies want a solution that is RAS-able (reliable, available and scalable), facilities seek digital signage that will deliver improved performance of the location and a better visitor experience, and marketing wants better branding and merchandising at lower ongoing communications cost.

The biases of the department that is taking the lead on the project can minimize the goals of other stakeholders, and coordinating this range of interests can be like herding cats.

The sourcing agent (IT, facilities, purchasing, etc.) often see their role as concluding at vendor selection and contracting, whereas the end-user department (e.g., marketing, human resources, student communications) must live with the solution and vendor that are selected.

Digital signage can deliver a wide range of benefits, but too often end-users do themselves a disservice in not defining the benefits they seek, in particular over the life of the investment where their growing application of the media can change as they become more familiar with its use.

This lack of future-proofing leads to increased operating costs and frustrations as the way in which the medium is used becomes wider and deeper, as always occurs with digital signage.

In not articulating the goals to be achieved — and how business value will be measured — the end-user hampers their own ability to suitably resource the requirement and the selection of the sourcing approach and solution that will best meet their needs.

"Learning while sourcing" delays project advancement and vendor selection with the natural result of eroding the credibility and momentum that is needed by every corporate pursuit and upgrade.

Vendors

Vendors are sometimes more a part of the problem rather than the solution.

Initial selling by the supplier is aimed at gaining the sanction to supply. Vendors want to win the business or at least make it to the sourcing short list, through which they might be selected and close the sale. Vendors often see the sourcing process as the opportunity to engage with the end-user to offer input to the planning and resources process, through which they can position the merits of what they want to supply. The ever-changing requirement is one of the greatest causes of project delay, and changing budgetary requirements can erode the credibility of the project.

As the medium has matured over the past 15 years in particular, some vendors have become skilled at bidding on opportunities. For some but not all, these skills can include:

• Lies of omission or under-specification. Even though the author of the vendor proposal in response to the requirement is aware that the request for proposal elements are incomplete, will not be an operational or optimal solution, a lower cost option will be proposed while including caveats and assumptions that can later lead to a more complete or suitable solution.
• Under-specification of materials occurs when a less-suitable and lower-cost version of a digital signage element is proposed by the vendor.
• The Bill of Materials as proposed may not be complete, resulting in purchase requirements that go beyond what has been requested and proposed.
• The supplier's ability to point to other suppliers as the cause of a problem is a big headache for end-users.
• Creative misrepresentation of the functionality of the solution where a certain function can be performed but requiring additional steps or expense hurts the end-user experience with the medium. For example, a certain media format may be able to be played, but only after it has been ingested in an alternate format. Or mass notification could be possible, but only when a feed from the Alerts/Notification system is provided.
• Change order upsell is a too-common tactic of vendors. When the requirement is not adequately defined, vendors expect change orders and the premium pricing and profits that can come with it. This occurs in flat panels, media players and content management software in particular. In the vendors' defense, this may be due to the changing way in which the system is used, but few vendors indicate during the proposal process how this will impact product/service pricing.
• "Do-it-yourself," plug and play, ease of use and scalability. By under-stating training needs and operational resourcing, vendors can paint too rosy a picture of what is actually involved and what the impact on the organization will be.
• Free isn't free. Every supplier is in business to benefit their shareholders, and their inability to generate profits will render the supplier bankrupt. Every aspect of supply that requires resourcing must be paid for in some way by their customer. Vendors that offer "free" expect to make profit in ways other than what is being immediately provided. By not disclosing the costs of customization, version upgrade and other hidden or downstream elements, the vendor puts project success, growth and credibility at risk.

Vendors that have experience are aware of what changes in use and need will exist going forward. They know that during that honeymoon phase of those first 100 days of use, the digital signage, like a new babe, will have enjoyed lots of preparation. It will get lots of attention, there is lots of acceptance of little mistakes and tolerance of the extra efforts that are required, and victory will be declared in applause to all who contribute.

Insufficient concern for total cost of ownership is too common among supply organizations. Operating costs can quickly eliminate the apparent advantage of a lower cost at acquisition. This is not always the fault of the vendor, but can be the result of multiple lines of responsibility on the part of the end-user, where the system design or purchasing authority differs from the department that will own and use the digital signage system.

The role of sales typically ends at contract award, at which time other business units and people within the supply organization take over the supply of products and services. It is not uncommon for these people to be rewarded for upselling the client.

It is a "caveat emptor" (let the buyer beware) world. Where digital signage planning, design, sourcing and application are new to end-users, and vendors have lots of bidding experience, the responsibility lies with the end-user organization. Not all, or even most, vendors are inclined toward such deception, and those that bid and supply in honorable ways are rewarded with strong client relationships and business growth.

End-users benefit when business objectives are well articulated along with how these will be achieved through the use of digital signage — preferably over phases of project investment. This arms the buyer to go shopping for a solution and vendors. Internal homework or using a vendor-neutral, unbiased subject matter expert can help.  An independent consultant can help by making sure project objectives and approach are clear; identifying suitable vendors and facilitating quality responses; defining the evaluation scoring and selection approach; assuring that vendor capabilities and limitations are clear; and contributing to vendor contracting to minimize supply and pricing surprises.

Buyers should get proposals from reputable suppliers, placing considerable weight on their corporate strength, experience in similar situations and the strength of supply partnerships where multiple vendors will be required.

Be very cautious about the lowest cost proposal as this often signals limited functionality, the future need for change orders and a higher cost of ownership over time. Some buyers prefer to disqualify proposals that are far below the pricing of other vendors. The old adage "if it looks too good to be true, it probably isn't" tends to apply, in particular in solutions such as digital signage, which has a wide range of investment considerations and where risk must be mitigated and managed.

Lyle Bunn is a veteran of the digital signage sector providing industry analysis, consulting services and education. He has worked with more than 300 organizations, published many articles and guides, and helped to train more than 10,000 end-user and supply professionals. He can be reached at Lyle@LyleBunn.com.

(Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net.)