Custom integration buying group meetings often provide business benchmarks on the current health of the industry and offer insights into current and developing technology and business trends. HTSA’s 2023 Fall Conference was no exception.
During the meeting, held Oct. 23-25 in Dallas, TX, HTSA members learned that their purchases with their group’s vendors appeared flat year over year despite a relatively strong economy. It was a statistic, however, less indicative of industry health and more to do with the idiosyncrasies of supply chain delays last year.
HTSA 2023 Fall Conference attendees also were treated to extensive educational sessions on how artificial intelligence (AI) and large language model (LLM) tools will impact their businesses and encouraged to find ways to elevate the perception and visibility of the industry.
More on Those ‘Flat’ Growth Numbers
HTSA, which consists of just over 100 integration companies, has experienced just a 1.07 percent increase in group vendor purchases from January to September 2023 versus the same stretch of time last year. While it’s tempting to take that flat statistic at face value, the group’s executive director Jon Robbins was quick to note that dealer response to supply chain shortages in 2022 likely made these 2023 sales figures less reflective of actual industry health. Robbins surmised that integrator members had scrambled to stock up on orders in 2022 to avoid project delays, which artificially inflated numbers in 2022. Sales in 2022 were 17.9 percent higher than a hyper-inflated 29.6 percent Covid-related spike the prior year.
“Our members were elevating their purchases to make sure they would have products when they were needed, and then spent a good part of this year selling off their inventory and buying less,” Robbins surmised. “They were buying insurance policies to make sure they had the product to finish projects. They escalated their purchasing in 2022 and, as a result, they didn’t need to purchase [as much] in 2023. This is our exhale year. It’s pretty good. We’re pretty proud of it. There’s going to be a rebound, and when the time comes, we’re going to be ready to inhale again.”
Lighting Still Leading the Way
Led by the technical guidance of industry veteran Tom Doherty, HTSA was an early leader within the CI channel when it came to embracing the lighting fixture category. It may be no surprise then that lighting is a category where the group’s sales numbers have been the strongest in 2023. Those sales numbers are certainly a boon for HTSA lighting vendors, but increases dealer revenue was always just a side benefit to the group’s increasing focus on the category, Robbins noted.
“The aim was not just to create more business,” he said. “The goal was that if we can get people in the lighting category, then they would be in the conversation with clients and their designers earlier on projects — becoming part of the design team.”
Robbins reiterated that HTSA’s lighting initiative has been a major undertaking. “Let me tell you, the category requires a lot of education,” Robbins pointed out. But that effort is starting to pay off, he added. “For the first time, at the spring conference, we heard multiple members say, that they are now getting called into projects sometimes prior to the GC,” he added. “People are thinking about lighting with their architects before even hiring a general contractor. They’re working out details on their project, and after discussing the lighting part, what happens is an organic progression into all of the other technologies that we sell, if we present them properly.”
Robbins estimated that nearly 75% of HTSA member companies are “purchasing something” from the group’s 10 lighting vendors and that 30% of their membership are doing “very sophisticated projects” in lighting.
That adds up to a lot of revenue, Robbins said. “And these projects keep getting bigger as people get more comfortable with what our members are offering,” he noted.
Lighting, while remaining a major initiative for HTSA, took just a bit of a backseat at this most recent conference as two other areas of focus were brought into the foreground for the group’s leadership team. Robbins emphasized the need to elevate the perception and visibility of the CI industry, in general, and the importance of staying on top of the growing opportunities in AI and LLMs, offering presentations on both during the Fall Conference.
Elevating the Industry’s Image
When it comes to industry unity, Robbins and HTSA’s Keith Esterly both referenced the Mondavi Effect, which they say was the impact that California winery owner Robert Mondavi’s initiatives in the 1970s had on elevating the perception of U.S. winemaking throughout the world. The Guild, a professional development group of CI firms, correlated this initiative with the need for the CI channel to stop tearing down their competitors and to instead elevate the perception and visibility of the industry. Putting their money where their mouth is, The Guild self-produced a highly polished video promoting the industry, which they are making available for anyone in the industry to use. It’s a concept that HTSA leadership fully embraces. Check in out here.
“People don’t understand what we do as an industry,” Robbins noted. “We’ve been addressing it the last couple of years, but we have to bring up the level of the industry, so people feel better about what we do, including with design partners.”
Robbins noted that HTSA’s involvement in creating the Lightapalooza lighting technology conference and its inclusion of competing buying groups and others not in HTSA, as well as their successful AI Symposium partnership CEDIA at CEDIA Expo in September, were prime examples of this inclusive attitude. Robbins also referenced HTSA’s evolving partnership with CEDIA on common goals and shared resources and cooperation with service providers like VITAL, EOS, and the professional development groups The Guild and Synergy.
Robbins acknowledged that the perception of AV integrators is “not good out in the community” and that “people don’t generally like technology.” That’s why, he said, the industry has to “do a really good job of making sure that we’re delivering professionalism and that we’re capable. The bad feeling is only exacerbated if we do a poor job as an integrator. We need to step up the level and perception of the whole industry from a professionalism standpoint. We need to build each other up rather than beat each other down.”
Addressing AI in the Early Stages
As for the influence of AI, HTSA invited AI expert and “Leveraging AI” podcast host, Isar Meitis (CEO of MI Square Consulting), to lead three different sessions focused on AI and LLM opportunities and threats, as well as specific use case scenarios for CI businesses and manufacturers. Meitis was a key participant in the aforementioned AI Symposium at CEDIA Expo, and his sessions at the HTSA Fall Conference apparently went much further and were more specific.
Meitis noted, for example, how integration companies can fine-tune their marketing through AI design tools. He explained, for example, that an integrator with a specific client who is passionate about the environment could finetune their marketing materials to focus on energy savings and power management themes, by using inexpensive AI design tools. While it wouldn’t make financial sense to hire someone to redesign a brochure for one client, he said, AI makes that targeted example relatively easy to do.
He also noted that LLMs can be used as tactical tools by analyzing and researching sales performance, sales calls, and customer feedback data. AI tools, he showed, can more make it easier to assess why are people are buying from you, based on analysis of client reviews collected over many years, for example. You could, Meitis explained, ask your AI tool of choice to analyze five years of sales data, asking “What’s the most common positive thing that people are saying about their experience with my company?” Those results, in turn, could be used by the integrator’s marketing person to promote the company’s strengths to client prospects.
“LLMs are great at qualitative data analysis, whereas we’ve mostly been doing quantitative research (what happened, not why it happened…). Why it happened is qualitative and can be so much more useful,” Meitis said.
LLMs also can help can integrators create client proposals, RFPs for suppliers, and internal project reviews faster, more accurately, and more efficiently, Meitis pointed out.
The reactions to the AI sessions were overwhelmingly positive, which was not surprising considering HTSA progressive attitude toward previous new initiatives and technology opportunities. The point was made that while the world is changing fast with AI and LLMs, we are all in the very early days of this evolution. It’s not too late to start taking small steps in learning how to use these new tools.
Matt Grant, CEO of Eyehear Technology Group, in Whitefish, MT, shared his thoughts on the sessions, noting that he prefers technology that “works for” him to enhance his life rather than just using technology for technology sake. Grant acknowledged that it’s not wise to wait and just see what happens with AI tools but that he hopes to use it to help his employees and clients lead better lives.
“If we think that it will just take care of itself, we (as companies) will fall behind,” Grant said. “I can look at what we can do responsibly within our company where we can use the tool to enhance our client’s experience and our employees’ experience. How can we enhance their lives and make things more efficient? For me it’s definitely not how can I replace people with AI. It’s, ‘How can I make them more efficient so that they can enjoy their lives more, and they can give a better experience to our clients?’”
David Warfel, founding designer of CI-focused lighting design firm Light Can Help You, anticipates a very positive impact that AI will have on his company. “I started using AI five years ago and then quit because it wasn’t there yet,” he said. “Now it’s time to do it again. I think what AI is going to do for our business in completely transformative. What I’ve realized over the past four or five years as we’ve done hundreds of homes for custom integrators, is that we’ve actually been building the data set that will train the AI to do what we do. I don’t think we’ll ever be in the position where we’ll fire anyone because what we’ll be able to do it make lighting design faster and more affordable, which means that instead of doing a couple hundred homes in a year, we’ll do a couple thousand homes in a year. At that point, I’ll need twice as many staff as I have now to check the AI, to talk to the clients, to work with the integrators.”
