DALLAS — In case you haven’t noticed, things are moving pretty quickly these days in the security industry.
Mergers and acquisitions are moving at a breakneck pace and every time you turn around, manufacturers are releasing new products they claim will revolutionize the security industry forever. It’s not easy to keep up with what seems like a constantly changing sector, let alone continue to understand the changes and thrive.
PSA Network recently rounded up four integrators who’ve been able to do just that and had them talk exclusively to SSI about the latest happenings in the security industry and what’s ahead for them and space in which they work.
What follows are the highlights of the conversation with Shaun Castillo, president of Preferred Technologies; John Nemerofsky, chief operating officer at SAGE Integration; Shawn Ruddo, chief technology officer at Tech Systems, Inc. (TSi); and Brent Van Haren, president at SecurAlarm.
RMR in the Security Industry
SAGE Integration launched a managed services program dubbed Einstein five years ago, featuring a menu of services, and have seen the offering grow from about $200,000 a month to about $800,000 a month since its inception.
“Now we provide hosted services for clients,” says Nemerofsky. “It just makes good business sense.”
Ruddo’s former company offers a recurring monthly revenue program called Shield, which has gone from a tack-on to existing contracts to something company leaders look to include when customers sign their contracts.
“In the business model shift to be service-led, we’re trying to grow our service five times,” says Van Haren. “Our install rate is at about 70-30 now. We want to walk the walk with our clients.”
For Castillo, though, “the temptation to increase RMR isn’t there. Many of our customers want to buy subscriptions and we have the obligation to do that for those customers.
“Customers desire deeper relationships with us to do the things they haven’t done. That allows us to get in deeper with the customers,” he says.
Hottest Trends
Nemerofsky sees the security industry as being “at the infancy of AI. We’re stretching what that is.”
Ruddo notes that “other areas of the business are looking at AI but it’s so early for us. It could hurt our reputation if it doesn’t work out.” The same is true when it comes to weapons detection technology, she says.
“Everybody wants [AI], but they don’t know the cost and the price to install it and use it,” says Ruddo.
“We’re also seeing software companies coming into the [security] business and trying to sell directly to customers,” says Nemerofsky. He notes that SAGE is getting more requests for a predictive data solution, saying, “Everyone wants to do something with the data they’ve collected.” That includes using it for occupancy statistics, for example.
“We’re using data as more of an asset,” says Castillo.
Van Haren sees a “feature adaptation gap” among his customers, meaning “it feels like there’s a lot of opportunity there” for security integrators to help them get what they needed added to their current technological offerings.
SAGE Integration reviews 10 to 15 types of new technology every month, says Nemerofsky.
“It’s definitely challenging with how fast technology is coming at us,” he says. “Too many products impact your margin.”
Castillo agrees, adding, “It’s way more important to understand whether a new technology works the way it should and whether it applies to our customers.”
SecurAlarm listens to clients when it comes to incorporating new technology into its offerings and leans on its peers for feedback on their experience, says Van Haren.
“It keeps you busy reviewing new products alone,” says Ruddo.
State of the Security Industry
Preferred Technologies has been ahead of its budget and forecast for the past three years, says Castillo.
“Our goal is to sock away as much cash and decrease as much debt as possible by the end of the decade,” he says.
SAGE Integration made its first two acquisitions seven years ago and haven’t made another one since then, says Nemerofsky. That’s a function of company leaders seeking what it calls the ideal client profile. They have 42 total clients, each of which spend between $2 million and $3 million per year.
Bold Predictions and Hot Takes
Nemerofsky expects cloud security offerings and cybersecurity to “force companies into different compliances and going to drive a lot of business going forward. It’s going to change the entire model. We keep increasing our cloud business.”
One thing that’s caught Castillo’s attention, he says, is how many large manufacturers in the security sector are “moving closer to end users by acquiring a service arm.”
“Integrators have brought that on themselves because we haven’t done a good enough job of developing talent,” he says. “The number of people who can deliver a good experience is diminishing.”
“The biggest struggle in our industry is workforce development,” says Nemerofsky. He touts the virtues of the Foundation for Advancing Security Talent (FAST), an initiative started by the Security Industry Association and Electronic Security Association to foster security workforce development.
“There’s a lot of support for what FAST is doing,” he says. “We need more high school students to be involved in and aware of the security industry. We need to start calling it security technology rather than security integration to increase their awareness.”
Van Haren notices many of his competitors taking the wrong approach to their security integration work.
“A lot of integrators are out there selling products,” he says. “You have to be pain-seeking and understand the problem the client is trying to solve, not be so up front with a particular solution. Part of our vision is to help our customers be more proactive with their security solutions.”
Castillo agrees.
“If we’re peddling stuff they don’t need, it’s pointless,” he says.
“It’s about understanding their business,” says Ruddo. “They lack a lot of practical knowledge. The first time something happens to them, they see our value.”
Van Haren has “no animosity” with his peers in the AV industry, but Nemerofsky sees the security and AV business models as “so different.”
One example of when the two sides work together to solve a common problem is in global security operations centers, which include large screens and stadium seating.
Castillo has connected with an AV partner through Edge, an audiovisual-focused consortium of integrators that’s under the PSA Network umbrella.
“We each bring different skill sets,” says Ruddo. “You have to partner with someone.”
