Concerning improving service and maintenance revenue, “we are continually recruiting staff that best meets the demands of rapidly changing technologies which defines our industry,” says Tom Clancy, chief technical officer at AcreeDaily Integrated Systems of Columbus, Ohio.
You don’t have to beat yourself up over making more money on the service and maintenance (S&M) side of the business. This slice of the total pie is growing. “It makes up roughly 40 percent of our total revenue,” says Darryl Keeler of Tech Systems, the Duluth, Ga., enterprise electronic security systems integrator. Some other firms say they pull in 70 to 80 percent of revenue from S&M.
There are typical ways to generate revenue from service and maintenance, depending on the strength of sales of hardware and software, the state of the economy, and the reliability and complexity of the technology installed. There are also expanding and emerging service and maintenance offerings that — with some investment and refocus — can positively impact the bottom line. “We have seen a slight increase in general service and maintenance. However, we have seen a significant increase in services as we add new offerings such as compliance testing in healthcare and strategic planning programs,” says Tom Clancy, chief technical officer at AcreeDaily Integrated Systems of Columbus, Ohio.
No doubt, there is a lot to say for selling products and installing them. But there also is money to be made in the S&M afterglow.
Let’s follow seven pathways used by integrators with diverse client bases, business missions, and size of their operation. Still, they all share a commitment to a longer and deeper relationship with their customers.
Path 1: Savoring the Strategy
“We have expanded our services and engaged our large clients in strategic planning programs which we bring all the stakeholders together in a structured planning process based on an iterative model, which we have developed specifically for the security industry,” says Clancy. “We have also expanded our design services for those clients to offer more of a turnkey service.”
Simply put, strategic planning determines where an organization or its security operation is going over the next year or more, how it’s going to get there and how it’ll know if it got there or not. The focus of a strategic plan is usually on the entire organization, while the focus of a business plan is usually on a particular product, service or program. There are a variety of perspectives, models and approaches used in strategic planning. The way that a strategic plan is developed depends on the nature of the organization’s leadership, culture of the organization, complexity of the organization’s environment, size of the organization and expertise of planners.
“As a high end service and systems provider, we focus on large clients with complex issues to solve. These clients often need help migrating technology platforms and need to deploy and integrate numerous systems and location at a predictable cost,” adds Clancy. “Most often we have success at the executive level who have typically seen our types of technology as an afterthought and been burnt by poor deployments or poor integration strategies.”
Path 2: Embrace the Service Side
“In essence we are a service industry and not just an installer of products. Clients are looking for the people to provide these services,” says Richard Haig Jr., president and CEO of Haig Service Corporation, Green Brook, N.J. In the past, “there was leasing of security systems just like computer systems,” says Haig. With a shift to sale and installation of hardware and the licensing of software, that has been an understandable shift to systems and the necessary need for service and maintenance.
While some integrators see an additional move to outsourcing of additional services, Haig warns that, in some instances, end users are enabling in-house staff to conduct multiple duties. “For example, there may be school districts that, to hold onto their own people, add security and fire service and maintenance to in-house electronics staff.” Still, there is a case to be made as code and licensing dictates the need for service and maintenance from outside certified sources.
Path 3: Go with Agreements Instead of Contracts
“We see value in agreements, not necessarily contracts, that meet the expectations of the client. We provide one number at the beginning of the year and hold to it,” says Keeler.
His firm has branded what it calls a “Focus Support Services” program, value added solutions that minimize the client’s risk and exposure to loss, liability, and labor costs. “We have personnel strategically located to support ongoing service operations to our clients with a 4-hour service response window.” Sometimes, it can go beyond the expected. “In some places, we run the help desk for the client. System administration. Badging. Long term service relationships. It is a matter of a long term service relationship.”
Path 4: Staff Up
“It is best to have a specific and concerted effort to retool and build up this area of the business. Apply resources and hire staff,” says Shawn Mullen, president and chief energy officer of Protex Central, Inc., Hastings, Neb.
“You have to have a focus on it. Have a dedicated individual or individuals. Consolidate services, bundle services. When it comes to fire alarms, we will inspect fire extinguishers and hoods. It’s a matter of getting deeper into the client.”
Path 5: Work the Codes
“Focus on code drive agreements as well as central monitoring and fire alarm testing,” says Bradford Caron, president, Signet Electronic Systems of Norwell, Mass. He adds that integrators should sell an agreement as an insurance policy and try to sell multi-year agreements.
Clancy agrees and comments on the evolution of the industry. “We are continually recruiting staff that best meets the demands of rapidly changing technologies which defines our industry. Our systems are all networked based and globally deployed and, therefore, the staff to design, deploy, maintain and service these systems is vastly different from the CCTV and fire technicians of even five to seven years ago.”
Path 6: Think about Preventive Maintenance
“Many companies have underfunded their facilities. The systems are failing and they cannot afford to throw away to buy new,” says Larry Folsom, president and owner of American Video and Security Ltd., Las Vegas. In an article in the September 2011 SDM Magazine, Folsom points out that preventive maintenance agreements help companies work with the old systems for a cost they can afford.” Go to http://digital.bnpmedia.com/publication/?i=80978
He warns, however, that integrators should use common sense. “Walk the site, and make detailed maps” before reaching a conclusion on service and maintenance.
Path 7: Disaster Control
Have plans in place for emergency repair of critical equipment. Either have a technician who is trained to do repairs on staff or make arrangements with someone who has ready access to the site when repair work is needed. Once you’ve set up a contract or agreement, be sure that information is kept readily available for the end user.
A warranty covers a period of time after acceptance of an installed security system and can include parts, labor and workmanship included in the initial installation.
Maintenance agreements cover the original contractor, or any combination of other service providers.
Preventive maintenance is a more regular checkup of the system.