Systems Integration: Hit By Slim Margins? (Pt. 2)

(continued from Pt. 2)

"As an aside I also believe that, correctly managed, this process can be quicker than the traditional turnkey tender process, and so the business benefit can be achieved faster," he continued. "A system integrator's role is to give a balanced innovative design service to their clients, this has never changed. The roles and knowledge to attain this is the challenge: the industry still has an appetite to do things correctly and that's where a good independent SI can make a difference."

The argument here is that if you are building a house you make a decision on a commercial basis on whether you use an architect, surveyor, structural engineer or design it yourself. The broadcast industry is similar. "If media companies have the correct knowledge base and resources then they will adopt the ‘build your own’ principle. If they are looking for something different then that is where we the SI come in," said MacGregor. "We can offer design services through to full turnkey solutions and everything in between."

Turbulence while we wait for 4K and IP
"The evolution of the broadcast market is a fascinating scene to watch from the outside; the challenging commercial arena brings its difficulties to all of us," said Malcolm Robinson, director of media and broadcast solutions with Broadcast Network. "Similar to the customers the manufacturers require partners who completely understand how their products and solutions fit into the everyday working of systems at the end customer. Some manufacturers value that more than others and will bring a commercial aspect to the party, but some don't."

Robinson sees little change in the SI sector over the last year.

"The market is turbulent with a lot of players, some higher quality than others," he said. "We try and differentiate ourselves through quality not price, but it's a difficult sector. This is not complaining, just being realistic. Nobody is sure of when the technology will be ready to truly go 4K across the broadcast chain, and IP is full of nonsense at the moment," he added. "In its basic form it is a point to point transportation method which has been around for a number of years, but as a full blown infrastructure it is full of unknown complications at the moment. But this is steadily becoming a little less hazy; give it time and we will see all of these innovations naturally finding their place."

At this stage, why be the first? "What does it really bring to your day to day job at the moment? Sure it may have commercial and operational benefits in the future, but so far I have not seen this in a viable working scenario," said Robinson. "This said, we are working with the key players to ensure when the solutions are deemed fit for purpose we are ready to offer a professional, unbiased and knowledgeable viewpoint to our customers, enabling them to make informed decisions."

No new breed of IT SI required
Commenting on what Peter White said back at IBC, Tim Felstead, head of sales and marketing at ATG Danmon, said: "What this means is that systems integrators need to change their models of operation. It certainly doesn't mean the market is turning its backs on us.

"The established SI companies will certainly not be replaced wholesale by a new breed of IT SI that knows the right technology better than we do. It is a lot harder for an IT guy to master the intricacies of video and audio media than for a broadcast SI to embrace IT," he added. "We have incorporated the most positive aspects of IT into our systems since ATG was first established 20 years ago. We are fully familiar with the techniques of implementing media systems over IT networks. Baseband signal processing in real time still requires specialist hardware in many areas. Our value-add is in understanding both sides of this equation."

The vendor market has been hit with a mass of consolidation (acquisitions) and the merger of TSL and IPE seems to mirror and react to that situation. The nature of the systems integration business is changing as IT, IP, 4K and 8K, and the cloud come into play. "IT, IP and the cloud are integral parts of the broadcast business today, both in production terms and for the various flavours of catch-up TV. That's the key reason for using external design from independent integrators," said Felstead. "Customers simply have too many non-standard and unproven choices. If you can put your business in the cloud then do it. It is a no-brainer."

Does the SI sector need to create an influx of new and very different talent to those who mastered hardware in the past?

"Yes and no. If you have been implementing successful post suites and networks over the last 10 years then you know more about media storage and processing platforms than any IT startup," said Felstead.

"The key requirement is to learn how to implement for a world of ever changing standards. SD, HD and UHD were just the start. Now the television industry is moving into a phase where broadcasting is essentially resolution independent," he added. "Apple's new 5K iMac viewing platform is an example. Resolution becomes almost academic since the necessary spacial and even temporal conversion is now performed inside the display device. Shifting sands!"

Many companies, particularly the new software based ones, like to use systems integration to get into the market and develop a deeper relationship with their user base. Has this had an impact on the traditional expertise offered by SI outfits?

"No, but it should more and more. Implementing complex software suites and applying them to customer problems is a labour intensive process. The commoditisation of 'rack and stack' jobs means SI companies need opportunities for this type of customer collaboration," said Felstead. "At ATG Danmon we've deliberately taken on the distribution of selected software products. Some software houses are turning to system integrators because they realise that the only way to sell is via a consultancy, specify, test, and implement cycle. The more complex the problem, the more scary it is for users."

Systems integration surely has a design and implementation future, but is it a dead term now? Maybe Software Integration is the right terminology.
"Definitely not," said Felstead. "Large broadcast systems will always be a mix of hardware and dedicated software, even when synchronous real time signal processing can be performed over networks."

Will the changing market attract system integrators that have dominated the bigger markets as they turn totally to IT - those companies that work at the management levels in banking, the military, government, and health, etc?

"Yes it will attract them as they believe barriers to entry of the media market have dropped. However there are still specialisations in media markets that differentiate us from that type of pure IT provider. There will be sufficient 'quirks' in our market to keep further commoditisation at bay for a good 10 years IMHO," said Felstead.

All round IBC were comments that offer encouragement to the SI sector serving the broadcast industry. Another I heard was: "It is not easy to track technology - you have to have real experts and sometimes you get conflicting views. It is a very big problem if you do not have the understanding, with somebody you trust." Does this imply that the skills shortage is at the customer level?

"The fact is that end users are trying to make money from their media, while system integrators are trying to make money in technology consultation, specification, test, supply and implement cycles and are more oriented towards those skills than users are," said Felstead.

The article is also available to read in BFV online.

(IT/JP)