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CEOs Promote New Paths to Prosperity

With the economy limping along and margins ever slimmer, four CEOs are leading the transformation of security integrators into solutions-focused service providers. In a frank roundtable, these operators discuss favoring recurring revenue and billable hours over selling boxes, supply chain conflicts, and much more.

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Are the vendors doing enough to help you get where you need to be?

Feury: There are the older vendors that basically everyone bought from, but now you see a bunch of new vendors. I think there’s going to be a shakeout in that lineup. I don’t know that the big guys 10 years ago are going to be the big guys 10 years from now. I think everybody’s kind of getting onboard with the migration to the network side, but I still think they face the same challenges we do. I think analog cameras are still selling more than IP cameras. They’ve been predicting a swing over, maybe in a year or two. I don’t know when that’s going to happen. There’s a lot of, especially on the access control side, resistance to an open standard. When we get to the open standard and everyone’s on the same playing field you’ll see more of a product to service focus.

Henry: I’ve never seen this much chaos on the manufacturing and supply side. There has never been this amount of channel conflict. The manufacturers don’t know what to do. The old guys don’t know how to compete with the new guys, and you have a lot of people acting like sheep. They are following other big companies that are getting into the channel conflict of being on the manufacturing side, the integration side, the consulting side and whatnot. They do it because they see someone else doing it and if they don’t do it maybe they’ll be left behind. That thinking got Wall Street into the position it’s in.

At the end of the day, I think there is going to be a shakeout. I think we have much more of an eye on the ball as solutions providers and as integrators than the manufacturers. They feel they have to be more than they are, but I don’t think they really understand why. They don’t understand the metrics of how that’s going to pay off. As for the multinational corporations building all sorts of things outside the realm of security, no matter how much money or brains they throw at it they just don’t seem to be as successful as those purely focused on security solutions.

They need to forget about pushing products to customers and just focus on being solutions providers. As integrators, we’re the ones that have to process all the information and make the right selections and guide the customer, or work with the consultants on a larger project to come up with a solution. As soon as they start talking to your client about products and models and this and that, you’re on a bad track because eventually your prices are going to erode.

Lesnewski: The biggest challenge for us as an integrator is finding stuff that plays well together. We’ve got a lot of vendors out there providing products. When we put together our product line card, the main concern we have is what’s going to play with what. Everybody we talk to would be more than happy to give us an SDK and let us figure out how to make it work. We’ve got a guy who writes software for us just for those types of situations. The easiest situation to get into even in a down economy is stuff just doesn’t work together, and you get called in to make it work.

I also think we will see a shakeout with the vendors. In my opinion we just have too many vendors trying to make a profit out of one piece of pie. The vendor thing really got complicated back in the days of consolidation. It used to be there were enough big independents out there where a vendor could select a target and sell to that specific target, and there was another audience for another vendor. As soon as consolidation took place that evaporated. Now we’ve got a situation where convergence has convoluted the vendor environment. You see vendors partnering up that you never saw partner up together trying to understand the solution piece to put that together for us. But I think the onus for success and the bonus for having that solution that differentiates ourselves still lies in us, in selecting our process and our vendors.

Venable: Vendors lack the desire to be partners. Their definition of partner includes gas stations and roadside vegetable stands. One of our desires, with our customers, is to be their partner, to help them solve their problems. There are just a few manufacturers that have that attitude. Part of it is they’ve begun to become integrators and they’ve begun to get into all these other areas where they are essentially competing with you. So you know when they have opportunities they’re going to take them.

Partnering is a two-way street. If someone’s going to partner with you, you have to be loyal to them, but through rep firms and all sorts of different sales strategies and different attitudes, it’s just not prevalent among the security manufacturers at this point. They’ve got so many channels. They don’t differentiate their products for the high-end integrators or the low-end integrators. So they all look the same and have the same names on them, and the customer can’t tell the difference. When the customer can’t tell then you can’t show the customer the differentiation in your skills. While manufacturers harp about the skills of the integrator, the skills they themselves bring to the table are often grossly lacking.

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Business Management · Cover Story · Economic Recovery · Growth Challenges · All Topics

About the Author
Scott Goldfine
Scott joined SECURITY SALES & INTEGRATION in October 1998 and has distinguished himself by producing award-winning, exemplary work. His editorial achievements have included blockbuster articles featuring major industry executives, such as Tyco Electronic Products Group Managing Director Gerry Head; Protection One President/CEO Richard Ginsburg; former Brink’s Home Security President/CEO Peter Michel; GE Interlogix President/CEO Ken Boyda; Bosch Security Systems President/CEO Peter Ribinski; and former SecurityLink President/CEO Jim Covert. Scott, who is an NTS Certified alarm technician, has become a respected and in-demand speaker at security industry events, including presentations at the Central Station Alarm Association (CSAA) Annual Meeting; California Alarm Association (CAA) Summer and Winter Conferences; PSA Security Network Conference; International Security Conference and Exhibition (ISC); and Security Industry Association (SIA) Forum. Scott often acts as an ambassador to mainstream media and is a participant in several industry associations. His previous experience as a cable-TV technician/installer and running his own audio company -- along with a lifelong fascination with electronics and computers -- prepared Scott well for his current position. Since graduating in 1986 with honors from California State University, Northridge with a degree in Radio-Television- Film, his professional endeavors have encompassed magazines, radio, TV, film, records, teletext, books, the Internet and more. In 2005, Scott captured the prestigious Western Publisher Maggie Award for Best Interview/Profile Trade for "9/11 Hero Tells Tale of Loses, Lessons," his October 2004 interview with former FDNY Commander Richard Picciotto, the last man to escape the Ground Zero destruction alive.
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Cover Story, Economic Recovery, Growth Challenges