What is the TRUE VALUE of Your AV Technology?
So let’s say you’re about to or have just recently made a large investment in audio visual technology for your business or your organization.
Now let me ask you this question “Do you really know exactly the value of that investment?”
Now, it’s amazing how many people I speak to, and I asked that question, and I actually can’t give me a straight answer or an accurate one, at least.
So in this video, what we’re going to do is apply the 80/20 principle to help you get clarity on exactly what the value of that investment could or likely is to your business.
I think you will be surprised at the results.
Let’s start with a really quick explanation of what the 80/20 principle is. It states that 80% of output is derived from 20% of available input. So if we plot that on a curve here, you can see that we’ve got an example of a total output of 10,000 and that’s all of this area that’s shaded underneath that curve.
We’ve got a total input of 100 on the bottom there. If you have a look at this 20%, here what you’ll find is that 20% is actually amounting to 80% of the total output. So that is what the 80/20 principle looks like on this curve when it’s plotted out.
Now, here’s an example scenario we can work with. Let’s take an AV system in a room. It’s a $10,000 investment initial capex cost. Let’s depreciate that over three years. We’ll also add $1,000 for maintenance costs. So we have $11,000 appreciated across three years. And if you do the math, that equates to approximately $70 per week.
Now, the starting assumption is this, on average, that AV system is used in this room and leads to a $1,000 net gain every week for the organization. Now let’s go and have a look at what that looks like on the 820 curve. So here we have a curve plotted out first of all, on the bottom, we have the room use. Okay, so average room use per week in hours, and we’ve got a total of 40 hours. There 40 hours per week here. On the left-hand side, on this axis, we’ve got the total value of the technology investment per week. In our assumption here we have said $1,000 is the net gain.
So what we’re saying here is underneath all this area here underneath the curve adds up to $1,000 in total. The next thing we’ve done is we’ve plotted just across here a straight line the $70 cost per week, which we’ve agreed in the assumption is the appreciated cost per week. Let’s talk about 80 / 20. Now you can see for most of the time during the week, this curve is well below the $70 cost per week. However, there’s a few times on the end over here in that 20% or even 10% area where the return on the investment, the value being derived from using the AV technology is relatively high.
So this might be a 1-hour meeting here and then another 1-hour meeting here, and this one is deriving just over $100 in the hour, and this one is almost $200. So you can see that there’s a couple of times in the week, on average where the AV technology is being utilized extremely well. So what we want to be trying to do is understand when those occasions are happening and find a way to make them happen more often. We want to be ideally using more of these hours and shifting them across in this direction so that we have better utilization of the AV technology.
Let’s have a look at that in another curve. Here is an example of let’s say we have managed to understand where we were getting that high value activity. What were those two or 3 hours per week where we were getting really good use of the AV technology from our people?
And we identified that, and we sort of doubled down and we were able to get more of those situations happening per week on average. Let’s say we doubled that. Now we might be getting to a net gain of $2,000 per week. We haven’t changed our initial investment, but now we’re able to generate $2,000 per week from the same investment just by better understanding how we can optimize the use of that AV technology. So that’s not a big stretch by any imagination. I mean, you could definitely understand that a meeting in one of those rooms could definitely generate you $100 or $200, or in this case, even $400. Definitely not a stretch. That’s not huge money.
But if you’re doing that, on average, you can see the huge gains there and how valuable that AV technology investment getting stronger and stronger when you’re able to understand how it’s being used and how you can optimize it.
So here is a third and final example, same room, same AV technology. But you’ve realized that a specific team or a specific division, maybe a sales Department, is able to generate even more gain net gain for the organization when they’re using the AV technology in an optimal way for their specific use cases. When you take the time to do the research on how the rooms are being used, which teams are getting the most benefit.
If you can measure that, and then you can move those resources across here using the 80/20 curve example and get those teams using that technology more and more often can generate more and more revenue for you or net gains. Whatever happens to be could be savings, which is extremely powerful. I mean, the multipliers just go up and up and up.
The better you measure, the better you can apply the results from your measuring and be optimizing your investment. And in this case, here the total sum of $5,000, which not every division or team might be able to provide that sort of a net gain. But if you could understand which ones can and you can ensure that they always have the AV technology when they need it, that can be extremely powerful for an organization to optimize that return and get the most out of the AV technology investment.
So, in conclusion, what are the key Takeaways?
Well, first and foremost, you must invest in AV technology that your people will actually use.
That’s a given.
However, once you have that in place, you can measure the output from the AV technology and how it’s being used. Who it’s being used by?
The next step is you use the 80/20 principle to optimize that AV technology use. Always trying to move people into that optimal 20% area, getting the most out of your investments that way.
And it’s really that simple.
Hopefully, you can apply this tried and proven principle. The 80/20 principle does apply to pretty much everything you can think of in a business, and it definitely applies to AV technology use and getting the most out of that investment.