One of my favorite subjects to discuss is the wide-open market for recurring revenue and monitoring that integrated systems can offer.
First off, I have to share my experience in working with systems integrators. It is a known fact that makes little sense that most of them are borderline snobs where it concerns recurring monthly revenue (RMR). I have experienced this firsthand while interviewing integrators across the country at various trade events. Many of them stay focused on design and construction. In most cases, they allow their competition to come in and secure monitoring and other related low-voltage system contracts with their customers. Insanity!
Integrated systems have several points that scream the necessity for professional monitoring. Elements from wellness of a system to emergency events always require professional central station monitoring. Moreover, many additional elements can offer enhanced value by providing clients with automated self-monitoring via E-mails and text messages.
Hybrid Dealer Model Explained
Integrators are usually good when it comes to securing maintenance and service contracts. However, it puzzles me why most of them don’t make the effort to increase their annual revenues and equity with monitoring. This creates an opportunity on a few fronts. Many of these systems need a professional who can explain and provide monitoring. What I see in the market, and personally have had the benefit to participate in, is the creation of a hybrid dealer model.
This hybrid model combines the talents and focus of a true systems integrator and traditional alarm dealer. This type of company offers the competencies of integration, intrusion and fire systems. Why allow your competition the opportunity to win over a client who is otherwise satisfied with your services? A true hybrid company that produces profitable installations on all levels while building RMR is also a company that attracts the greatest valuation when it comes time to cash in the chips.
This segment of providing services as well as earning additional — and meaningful — RMR is huge. The opportunities to offer monitoring of system power, battery backup, processing, network communications, recording space, etc., are endless. Note, these functions represent the wellness of a system, which is essential to a user, and can command significant revenue. In addition, most systems include certain emergency monitoring opportunities such as intrusion, ambush and other related activity.
Simply put this is low-hanging fruit. This is the business and revenue that existing integrators or dealers who want to migrate to integration can offer and support immediately. For those who have the ambition and wherewithal to really step it up and keep the competition away from their clients, the formation of a fire division is a serious step that will take an organization full circle.
Maintain Aggressive Posture
As I mentioned earlier, allowing a competitor to contract with your client because you don’t offer a particular service such as fire is very dangerous to your bottom line. Companies are expanding; therefore, you need to proactively maintain a full portfolio of service offerings.
Why should you work hard to earn an intrusion, video and access system installation only to allow a direct competitor to enjoy the revenue from the fire system installation, monitoring and service? It makes you vulnerable to the competition, especially should anything uneasy happen, leaving them in the perfect position to take over your accounts at any given time.
Business owners need to look deep and hard at what they expect to gain from operating their businesses. The competition is getting tougher and much more sophisticated than it has ever been. Companies that were comfortable in the past can become particularly vulnerable seemingly overnight. It is almost a case of eat or be eaten.
It appears the industry is now made up of two business types. Companies that are growing and companies that are shrinking — maintaining a status quo either way is becoming the exception. My advice, be the company that is growing and eating a healthy lunch on a daily basis.
Peter Giacalone is President of Giacalone Associates, an independent security consulting firm.