Editor's Angle: Integrators Urged to Launch Managed Services
I had been looking forward to reading the applications sent to SDM by systems integrators for our Top Systems Integrators Report, but I was anxious about how they had survived 2009. Their applications showed that some integrators were better able to capitalize on opportunities than others â€” but that all integrators struggled tremendously to not feel the pain of the recession.
Their greatest accomplishment last year, many integrators said, was not having to lay off any employees. I was glad to read that! So many security businesses â€” even if they’re not family-owned â€” operate like families nonetheless, so the loss of one key person can have a terrible effect on morale.
Competition is intense among systems integrators as spending in some markets has nearly come to a halt and too many integrators are regrouping around the too few sectors where the money still flows: education, healthcare, government and utilities.
Only one in five integrators thinks business will be better this year compared with last. Experts are stressing managed services to take up the slack, but how can integrators successfully shift their business models?
In his economic outlook for the security industry at PSA-TEC 2010, Jeff Kessler, managing director, Institutional Sales and Trading at Imperial Capital, told integrators they need to cut their dependence on installation and product margins. “The economy will recover; gross margins in product and installation will not,” he said. The IT model of 15 years ago is coming to the security industry; in the IT world, product margins of 7 to 9 percent are common. “Security will not go that low or it will be a disaster,” Kessler stressed.
Managed services and enhanced monitoring â€” recurring revenue based services â€” are what will bring back profit margins and keep customers “sticky” with long-term contracts, Kessler said. He presented examples of 10 such services, including:
• project planning and advisory,
• third-party enhanced monitoring,
• managed access control and video,
• managed alarm verification,
• managed business services (training, configuration and programming),
• maintenance contracts (annual inspections, preventative maintenance),
• software licensing, and
• non-security services such as remote business management, supply chain, and people counting.
It will take a focused effort and a great amount of preplanning to launch a suite of services that will be successfully received by clients. But integrators are starting to catch on. One told me at PSA-TEC that every company he’s seen that offers remote-managed services has done well with it.
Siemens Security Solutions reported to SDM that it launched two new business segments in 2009: Integrated Security Solutions (ISS) and Managed Security Systems to address demand for high-end command-and-control applications and intelligent response solutions; and remote managed services and cloud computing value propositions, respectively.
Kastle Systems Int’l, the company that pioneered the concept of remotely managed and monitored access control systems â€” fully decades ago â€” reported that it now offers remote video monitoring services. MidCo Inc. said it had developed a rollout of managed services.
What integrators need are resources and best practices. They need to know which third-party monitoring companies specialize in remote video monitoring. They need to hear about successful rollouts by their peers. With success stories and benchmarks available to integrators as resources, I think 2011 will be the year of managed services.