Integrator Roundtable: Security Execs Talk Procurement Challenges, Labor Fears & More
Supply chain was top of mind when security leaders met to brainstorm solutions during SSI’s annual roundtable. A host of issues are bandied about as integrators share a sober but never somber outlook.
In clockwise order from top, Christine Lanning, president of Integrated Security Technologies; SSI Editor-in-Chief Scott Goldfine; Trevor Stewart, president of Security Control Integrators; Andrew Lanning, co-founder of Integrated Security Technologies; Jim DeStefano, senior vice president for Unlimited Technology; and Dean Reece, president of REECE Complete Security Solutions.
How does the labor shortage play into your company’s overall dynamic?
Lanning: I worry for sure that, as much as the supply chain and getting parts is an issue, at some point you have all this work you’ve got to get done and perform. Where in the world are we going to find these people? That’s where customers are going to get upset, when they have the equipment, and they can’t get it installed because you don’t have enough people.
Stewart: It comes down to how efficient you are, what you’re going to be able to execute. We’re all going to lose some work due to capacity. You have to look at your A, B, C and D customers and make hard decisions because you can’t do it all. Even for the manufacturers, if they get all the raw materials, it will take them probably six months just to handle what’s already in their backlog. It comes down to who’s going to do it better; who’s going to turn six months into five months or 12 weeks into 11 weeks? That will then be the difference of losing or keeping a customer. Key will be how fast you can mobilize to get things out in a meaningful way. Size matters, but in this case, to me, in this market being smaller and nimble is better.
DeStefano: That’s true. That goes along with the whole hiring piece as well. If you look at some of the bigger companies, they can’t pull the trigger as quickly. If I have somebody who fits my culture, fits the work ethics, fits the profile of somebody I want to have working with us as one of our team members, as one of our colleagues, we’ll find the spot because we know we’re going to use them.
As an industry, we need to start training and developing people from day one. We’ve got a lot of poaching going on. Let’s start looking at tech schools. Let’s start looking at places that are seeking internships so they can send their folks to learn a trade and get something moving so that they move forward in their careers. In security they can have a career to move forward with. We’re looking for those individuals and those types of organizations where we can go for that human capital.
Maybe that prospect doesn’t need to know much because we’re going to put them with an experienced person who’s going to train them on a job and we’re going to send them to classes or train them with an internship program. Those are things are going to move our industry forward and eliminate some of this human capital issue.
Stewart: If you find a good person, I don’t care what their skills are, find this spot for them. It’s not that I don’t care about their knowledge base, but I care more about their attitude and how hungry they are because they’ll learn. They will excel if they’re hungry enough.
Lanning: The labor market is different today than it was 10 years ago. Employees are looking for flexibility. To me, that is their No. 1 requirement. That could be not wanting to come into an office or wanting to bring their dog to the office or wanting to be able to take off in the middle of the day or working when they want to work. A colleague complained to me yesterday that he’s got a really great tech who only wants to work six hours. So what? Let them work six hours. I don’t understand how that’s a problem. But he has this mindset that everybody must work eight hours a day.
It’s different for every employee. Some people want mentorship. Some want training. Some want more money. Some want management positions. Just like customers, you need to create stickiness, so it makes it harder for them to leave. I read that 44% of employees are jobseekers actively looking for another job.
The pandemic, supply chain, inflation, talent, economics and more were on the table as integration leaders shared challenges, experiences, strategies and even good humor.
Let’s shift and close out talking about your split of project vs. service revenue, and your recurring revenue strategies.
Lanning: We’re about 65% DoD, which is a huge continuing recurring revenue service for us in the form of service contracts or personnel services contracts. These are people that are embedded in a DoD facility. An example would be our people in a badging area for the Pacific Air Forces. Our mission is to increase those multiyear contracts. Recurring revenue from a Cloud-based services perspective is not reality for us as DoD is not going to move to the Cloud immediately. I don’t even know if they’re going to move to it over time.
Reece: Some customers love it. Personally, I love it. If I can pay $150, $250 a year and the furnace guy comes out twice a year and does my maintenance, I love that. Then you have corporate customers where you’re talking $300 a month to mitigate the risk on a $250,000 access control system and they say, “No way. We won’t pay that. We’ll just call you if it breaks.” Then when it breaks and it’s $5,000 to fix, they jump down your throat. A lot of it is educating your customer. If you can do that and they see the value, fantastic.
We started with one managed access control system about six years ago and got our feet into it a little bit. It was so different from what we were using in our day to day and was a huge tactical shift to have technicians going back and forth between the two. I had to basically mothball it and now the manufacturer has come out with its own hosted version, which we still can’t get boards for! So I’m moving it to Lenel. I’m waiting for the supply chain to catch up before I can go start selling the crap out of that. Ultimately, it’s going to be different from what I do, which is big contracts. I know how to work in that environment. I’m not as good in the small systems. It’s seems you need a separate storefront to pursue managed services and branding.
DeStefano: We’ve gotten about a third of our revenue to be recurring now. It’s taken time to get there. Our Exero product is agnostic and allows IP monitoring. It works with some of the major VMSs out there to see all the cameras, the servers, make sure they’re up and running. If it has an IP address, we can see it and its status. For us, that has become attractive for our customers to know if the system’s down and be able to get it repaired right away.
Our remote service technicians can look in, see what’s going on, diagnose it and determine if it can be fixed right then or requires a truck roll. When we tell the story right of what the customer is going to gain out of it as opposed to what they have now, it becomes an easy sell. They just have to listen. Once we get in there and prove it, they go, “Wow, this is awesome.”
Stewart: Our mix is about 25% in RMR. During the pandemic our total revenue dropped over 30% in the first year, but our RMR increased 5%. We have been making a push to hosted access and hosted video. It will never be the substantial piece of our business. Most likely it won’t be a substantial piece of our business only because of how mature the company is. You can’t go and turn your DoD or enterprise customers and say they’re all going to flip. I will say that outside of the government, they are all moving to the Cloud.
I believe there’s not a company at $1 billion or less that should really be on premise. There’s too much overhead. And operationally so many things are easier and more efficient in the Cloud. So why wouldn’t they do that? Internally, you have to have people directly focused on selling these service-oriented security solutions. We’ve taught a new salesperson and that’s all they know. They’ll lead with the Cloud every single time. They have become an advocate and a staff expert. But it’s hard for an enterprise salesperson making $300,000 a year to take a step back in order to pitch Cloud services.
DeStefano: We’ve taken our commission plans on the sales side and incentivized for Cloud-based solutions. We also try to sell a maintenance contract right with the install. You’ve got to incentivize to try to drive the behavior. But at the end of the day, if the customer doesn’t want it then that’s all there is to it.
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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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