CEOs: Services Make Clients Stick Like Glue
Four top integrator executives reveal how they execute highly strategic business plans that provide for practically any contingency. The exclusive roundtable digs into how these companies are adapting to new technologies, services and revenue models that ensure stickiness with customers.
(l-r) Mike Bradley, Jim Henry, Phil Aronson and Curtis Nikel gather to discuss ideas and best business practices.
We’ve been talking about RMR quite a bit and I wanted to specifically delve into managed services because it has generated such a buzz recently. What have been your experiences with it thus far?
Nikel: Our RMR today is in service and maintenance contracts. I believe there is a place for managed service sales, and understanding the model that we have to build internally to support that type of sales activity is where I’m cautiously looking. I think as soon as you commit to a client that you’re going to manage their access — you’re going to provide a help desk and a method to have cards produced, and a system and a process — you be
tter have that infrastructure in place and be able to fulfill that delivery. Exactly what that model should look like isn’t clear to me. It’s very clear, however, in the evolution of our business, that we need to build managed services and sell managed services.
I think it goes beyond managing access, though. A network operations center is what I see in our future. The ability to actually support clients’ hardware and let them know that something has failed because we perhaps are checking to see if power is on or off on devices. We’ve successfully built and implemented for clients SNMP traps in order to manage their devices. We’ve taken that software, which manages it, and given it to our maintenance fellows who, on their BlackBerrys, are able to see the integration and know when a camera dies on a transit system. I believe going forward there’s an opportunity to provide that service to customers for a fee that will fit into our RMR model and managed services.
Bradley: The ideal of recurring revenue is that where you can have hundreds of thousands of customers and you rarely have ever had to do anything for them. Monitoring has traditionally filled that niche. There is tremendous competition, of course, for that. Managed services I think are a way to create stickiness with your customers. Creating stickiness where once they get used to your services and what you’re capable of providing, they wouldn’t consider going anywhere else. Managed services fill that void.
The problem is it takes a mindset and strategy that’s very different for a systems integrator. For us, recurring revenue is in our DNA. It’s fairly simple for us to understand the process of supporting it. We’re a 24/7 facility, always have been. We understand the level of customer service it takes to react quickly to those small needs. So we’re concentrating now on access control, managed video, hosted video and we’re doing some things in the bid market to create stickiness too with services beyond monitoring. We’re hosting more things and doing more things on the customer’s behalf. Energy management is another one of those categories.
I don’t think it’s possible to hand off the concept of managed services and recurring revenue sales successfully to people who are used to swinging at the fence and doing big systems. I think you set up a small group of business solutions with dedicated people where that’s all they go out and get. If they come across the big elephant, they hand it over to the group that handles the big elephant. When they go on the street, they have one offer that simplifies life. There are not a lot of choices for the customer. This is the way we do it. If you want to do business with us and you want to put a small access system in, we manage it for you; this is how it’s done. That mindset is critical to being successful in this business.
Henry: You want to be covering your nut with RMR and everything you do on the construction side goes to the bottom line. What I see is the rate of attrition of those traditional opening and closing monitoring accounts, that attrition rate decreases as you provide more complex managed services to the customer. So, seeing the industry that Mike’s in, looking at where the large systems integrators are and trying to get more of a mix of what we do, I’m not about to reinvent the wheel and try to go after the residential openings and closings. It’s a foreign concept for the DNA of our people. But embedding ourselves in large customers in the vertical markets we have such great knowledge and providing an extended number of services, expertise, guidance and management of operations is where our focus on the RMR is.
We were already doing that prior to our merger [Henry Bros. Electronics was acquired by Kratos Defense & Security Solutions December 2010]. Kratos has a network product called NeuroStar they use to manage networks for mostly their DoD and government clients. So the synergy is obvious. We’re managing and doing health checks and whatnot on all the edge devices. Obviously, the network sits in between but often that wasn’t the domain we also managed. We left that up to IT. Now, we bundle that all together and give a complete dashboard on the functionality of their system. We feel this will really energize even further our ability to provide that higher level of a managed service.
We want to encourage customers to continue to want to do business with us because it simplifies their lives. It enables them to have greater visibility, control and awareness of their systems. Just like what we were talking about with sales; you don’t want surprises, good or bad. Customers don’t want surprises with their systems. If there is a problem, they want to know about it beforehand. Whatever we can do in preventive maintenance, whatever visibility we can give them that we saved downtime because we took preventive action, is excellent validation for them justifying the continued relationship of a maintenance agreement.
Nikel: You become the trusted advisor. You do business in a different place in the corporation.
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About the Author
Scott Goldfine
Scott Goldfine is the marketing director for Elite Interactive Solutions. He is the former editor-in-chief and associate publisher of Security Sales & Integration. He can be reached at [email protected].
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