Reitman Reveals How to Rally Against Revenue, Competitive Challenges
SSI Editorial Advisory Board Council member and well-known industry financial expert addresses top integrator challenges.
My April issue editorial discusses security integrators’ top 10 challenges as indicated in SSI‘s annual Systems Integration Study. I consulted with a handful of trusted colleagues and contributors to the publication for ways integrators can best overcome these challenges, perhaps even turning them to their full advantage. In one of several posts, here are several comments from Mitch Reitman of Reitman Consulting Group.
No. 1 Eroding Gross Margins
Generating RMR is important, but companies should not give up too much install margin in the pursuit of RMR. As installations become more complicated and extensive, profitability gets complicated. Equipment costs are not going to get any lower. Labor costs will increase. Profitability is dynamic, and so timely and relevant cost information is critical.
No. 2 Technician Shortage
As the economy improves labor will be scarce and more expensive. Companies must place more focus on recruiting, and look for nontraditional sources for technicians and administrative personnel.
No. 3 Competition From Other Security Integration Companies
Companies should carve out their niche and stick with it. Quality providers will survive. Low cost providers will constantly be exposed to even lower-priced providers.
No. 4 Cybersecurity Threats
As security integrators become more dependent on the cloud, data integrity will be a critical issue. Integrators have a great deal of sensitive data that they need to be able to safeguard. Cybersecurity also presents some opportunities as integrators are in a unique position to sell these services to their clients.
No. 5 Direct Competition From Manufacturers
Integrators that provide “value-added” service will be able to stave off competition from manufactures, many of whom will be focused on DIY product.
No. 6 Lack of Technical Training
The industry provides a considerable amount of training through its associations and manufacturers. Integrators should see the time that employees spend in training as an investment as opposed to a cost or lost labor dollars.
No. 7 Lack of Sales Training
Professional, competent, salespeople are a great asset. Many integrators are realizing that they cannot take their customers for granted. As home automation products become more popular, it will be important to be able to sell these products to existing customers, and to sell them to prospects.
No. 8 Current Economic Conditions
As the economy improves, security budgets will increase. This will provide opportunities for integrators. It is important to remember that a stronger economy will result in a tighter labor market.
No. 10 Competition From Network/IT Companies
Telecommunication and cable companies will enter the industry in the short term. Their challenges will be the level of service necessary and the heavy negative cash flows that a mass-market business model creates. Publicly held companies have a hard time with the negative cash flows as investors may not understand the “investment” component of forgoing upfront margins for long-term RMR.
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