CAN LARGE MANUFACTURERS RELATE TO SMALL INTEGRATORS?
SDM: Thereâ€™s been a lot of consolidation among security system manufacturers. How has that affected systems integrators and their ability to integrate different types of security systems, such as video surveillance, access control and intrusion protection?
BOZEMAN: Large conglomerates are buying up smaller companies so that they have all the pieces. If a manufacturer is strong in life safety, theyâ€™re buying building management and security. If theyâ€™re strong in security, theyâ€™re buying life safety and building management. Theyâ€™re all trying to be able to provide the entire package and integrate the entire package.
Our members used to deal with multiple manufacturers, but now they need to deal with giant corporations. The relationships that integrators had with companies that were similar to them in revenues â€“ $5, $10 or $20 million a year â€“ are disappearing.
Each of the conglomerates wants the integrator to buy their complete product suite. They give incentives to do so. They may say â€œI will only give you the best discount if you agree to buy access control and video,â€ for example. But if youâ€™re a systems integrator with $8 million a year in total revenues, how many loyalty programs can you be in? You have to make a decision who to go with. And you still have to support multiple lines because you already have multiple lines installed.
SDM: Whatâ€™s your advice to systems integrators dealing with these issues?
BOZEMAN: When you look at a new technology, you have to choose a partner that will provide the best service and support. And working with an organization like PSA can help.
SDM: How has PSA changed in response to these market changes?
BOZEMAN: We had to adapt. This morning I met with the president of one of the large conglomerates. Thatâ€™s a very different meeting from the one you have with someone who is running a $2 million dollar business unit. They have more formalized business processes, theyâ€™re more organized and business is based more on numbers and protocol. It takes a very different skill set to negotiate with a large international conglomerate rather than a small family-owned manufacturer. At one time, frankly, PSA had more clout. But as you deal with these large companies, you realize that you need them as much as hopefully they need you.
SDM: What benefits can PSA provide to these large conglomerates?
BOZEMAN: We represent the finest group of independently owned security systems integrators. We offer access to the 200 best integrators in the United States. Theyâ€™re better trained than average security systems integrators.
PSA also holds paper for the manufacturers. Weâ€™re a small bank and we pay within terms. Itâ€™s difficult for a systems integrator to do that because they pay when they get paid for a job.
We bring a lot to the table. Weâ€™ve improved the efficiency of the large manufacturers. Often manufacturers prefer to deal with us rather than directly with the systems integrator because it means fewer relationships to manage.
SDM: What about any benefits that systems integrators have seen as a result of industry consolidation?
BOZEMAN: Large corporations bring a lot to the table that smaller manufacturers cannot. They provide excellent training opportunities. And they often bring business opportunities and business development opportunities, as well, because of all the connections they have. The financial depth of the large international companies brings the opportunity to provide services that smaller manufacturers cannot, such as a large R&D staff to keep up with the technology advances.