State of Commercial Security 2019: Rapid Growth Comes With Drawbacks
A hot economy has business and market opportunities humming, however, attracting and retaining talent remains an issue for commercial security integrators.
Security systems integrators have seemingly more opportunities than ever to show how that “integrator” portion of their job description enhances their value to customers of all sizes and commercial market segments.
Between Big Data, open platform solutions, evolving system infrastructure, cyber concerns and more, SMB and enterprise customers seek more than siloed security offerings but rather systems that play nicely together and beyond asset protection also deliver greater goods to their organizations.
Enter today’s systems integrator, armed with an enormous amount of resources to provide solutions that meet and exceed customer expectations … but facing increasing perils like a lack of qualified talent to hire; privacy and liability risks generated by reliance on network-backboned systems; and evermore competition from various angles, to name a few. How does one not just survive but thrive?
During the recent CONNECT 2018 co-hosted by Resideo and Honeywell in Marco Island, Fla., SSI gathered four seasoned security pros to chat about the state of integration, Cloud, open platforms, cybersecurity and other areas impacting today’s challenges and opportunities.
Seated at the table were Jim Muncey, president of Dover Plains, N.Y.-based Structure Works; John Cerasuolo, president and CEO of ADS Security in Nashville, Tenn.; Joseph Menke, president, Electronic Security Concepts in Scottsdale, Ariz.; and Michael Thomas, founder and CEO of Hamilton, N.J.-based Integrated Security & Communications.
Read on for veteran insights into what lies ahead in the commercial security sector for 2019, what worked well in 2018, what current and prospective customers are clamoring for, what new endeavors are being explored and much more.
What has really put a pep in your step and has worked out very nicely for you in 2018?
JOSEPH MENKE: Obviously the economy coming back. Sales are much, much easier. It seems like you’re not looking and trying to create work. Work is there readily happening. Las Vegas [where ESC has an office] is back. It’s booming, there are cranes back up. It’s very exciting.
JOHN CERASUOLO: Certainly the economic conditions, particularly in the Southeast, have been really strong. That’s given us a nice wind in our sails. Our fire business has really boomed and seen a lot of success and we’ve expanded that across a lot of our markets that we previously hadn’t done a lot of fire work in. We’ve acquired a number of businesses that do significant fire work, which helped us to expand out of a few locations that we previously had done most of our fire business in. We’ve completed eight acquisitions this year.
JIM MUNCEY: Our highlight for the past 18 months has been doing a global expansion. The demand by U.S.-based customers has allowed us to hire plenty of those people around the world and get companies off the ground. It’s very exciting looking forward to the next two years and growing that base as well. U.S.-wide, we’ve just expanded. We’ve hired 30 people in the past couple of months just based on just the opportunities out there.
MICHAEL THOMAS: I’d say some of the spend going into some of the regulated spaces like critical infrastructure has certainly helped. Some of the regulations that are coming around from GDPR [Europe’s General Data Protection Regulation] have also provided some challenges but certainly some areas of interest as well. Particularly in the airport space, there’s a lot of money being spent in retrofitting, so we’ve had a lot of opportunity there and continue to do so.
On the flip side, what would you say in 2018 has been a couple of your biggest challenges, maybe something that you expected or maybe something that you didn’t quite expect?
THOMAS: I think the year on a whole was a little bit odd for us where typically your peaks and highs came at different points. We started the year off very strong, which is uncharacteristic as the year-end spends are spent and new budgets are being allocated. We had a strong first quarter, dipped a bit in the second quarter and then the third quarter, which is traditionally slow in those summer months. The year as it’s laid out from a revenue perspective has been odd. We’re also seeing a shift by a lot of the corporate customers more to an MSA/GSA model, really wanting a program management in place and even utilizing options for local delivery of installation and service work. We have a very high IT IQ, so we’re very savvy in infrastructure design and implementation from a software perspective, so that’s aided our growth.
MUNCEY: Just growth. When you’re growing 20%, 30% a year, you have to just backfill your processes and plan up your processes along the way, especially when you’re adding people and people you don’t know. Everybody hires people they know. That’s the easy part. When you start hiring unknown people and bringing them into your queue, you have to build trust, and you have to have a strong back office. This year we’ve just been building that up. One of the things, we’re all regional people here [at the roundtable], we’re not anybody just working locally. Our competition’s all been getting bigger and bigger and bigger … we can maneuver through the minefields much better at a smaller, regional level. We’ve proven that we pick up a lot of that business.
CERASUOLO: I think two things. One that we expected was going to be the challenge of finding good people. There’s probably not a person in this industry you can talk to that wouldn’t list that as one of the top challenges. We’re all growing. Business is strong. It’s just hard to attract good talent. It’s hard to keep good talent. The other one that I think about a lot is being very careful about not over-building the infrastructure of the company expecting this kind of growth to continue forever. We’re really thoughtful about not getting ahead of ourselves too far. It’s really easy to see immediate forecasts for growth, to invest a lot of money to build that in infrastructure and then having to deal with that extra fixed cost when inevitably things start to slow down.
MENKE: Keeping your employees going to other companies. It’s really hard, especially with technicians, field people. That’s been the biggest challenge with us. Then finding new people is virtually impossible, so we’ve decided to train new people, so that brings on a whole new problem. It takes time. I would say another thing is just having more to choose from. We used to go out try to find more business. Now the business is there. So you’ve got all this business and you’ve been working with this customer that’s a long-time customer, but it may not have been that profitable. Now you have to choose. I have customer A over here, which is much more profitable, and customer B, which we’ve had forever but was really not making that much money.
The term ‘integration’ has evolved over the years — what does it mean to you and your organization today?
THOMAS: I think ‘integration’ is thrown around, but the folks at this table are probably more pure integration companies. What I mean by that is coupling of other systems like adjacent solutions that complement each other. The ability to integrate electronic data interfaces or engineering at a component level that help tie solutions together, we are very strong at that, but the term ‘integration’ tends to become a stratification of the market. The integrators are working on the larger projects and then there’s a commercial entity group that’s more intrusion access, SMB to enterprise. It’s the stratification that’s occurring, but to me the integration is purely that, the ability to integrate dissimilar or alike systems into an overall.
MUNCEY: Today in our world, the networking, the level of networking, we’re dealing more with IT departments now than we ever have. In the past we dealt with physical security, the electronic security department and all that. Now the IT people are making the decisions both on picking a product and then on running a product. You’ve got to have people and trained people that can handle the high-level networking.
CERASUOLO: We’re traditionally an RMR-based business. We’ve gone from a significant residential business … we really historically have been more of an SMB commercial vendor. We’ve grown into integration work from that direction, which is a little bit nontraditional. It’s a different approach that takes different talent and different skills. We still like to leverage some of the important strengths that we have. Our focus is to do that effectively and to generate significant recurring revenue from the new customers that as we’ve made this transition we’ve been doing a lot of business with.
MENKE: I know it’s a little bit aggravating when you get these cabling companies and they’re ‘integrators’ and in fact they pull cables, and that’s it. They’re all jumping in the business now. We’ve been a Honeywell partner for a long time, one of the real reasons is because their stuff does integrate. It’s good stuff. That’s what we are.
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