Forget Boxes, Embrace Services Say 4 CEOs

I recently had the pleasure of spending about 90 minutes knocking around some ideas and discussing the latest industry and business trends and challenges with the CEOs of four leading systems integration companies. Tim Feury of Altec Systems in Marietta, Ga., Jim Henry of Henry Bros. Electronics in Fair Lawn, N.J., Chuck Lesnewski of Cam Connections in Lakeland, Fla., and Gary Venable of All Systems in Kansas City, Kan., discussed favoring recurring revenue and billable hours over selling boxes, supply chain conflicts, and much more.

You can read a lot of the roundtable discussion in the pages of SSI‘s August issue in the article titled, “CEOs Promote New Paths to Prosperity,” but I made sure to save some of the juicy bits, as well as some basics, for this bonus material. So, enjoy the rest of our talk below.

Can you please tell me about yourself and your business?

Gary Venable: I am CEO of All Systems of Kansas City. I’ve been in the business 30-plus years, almost 40, in systems integration. Our biggest single market is health care. And we do a lot of communications and integrations over networks, with internal medical alarms, along with security and access in hospitals. Second biggest would be our commercial industrial business. We sell video and access and then we do a little bit of work with fire alarms in the bid market. It’s roughly 10 percent of our business. Service department is roughly 25 percent of our business.

Chuck Lesnewski: I am CEO of Cam Connections. Our footprint is the Southeast. We’re headquartered out of Lakeland, Fla., with offices in Miami and Atlanta. We have two separate profit centers within our business, one that deals exclusively with the retail segments, and another one that deals, much as Gary and everybody else, on the integration systems side of the business. We predominantly do video and access control. We’re beginning to expand into some areas that we never thought we’d be in, but the market is taking us that way. We’re back in the fire business a little bit and we’re getting into the sound business. I’ve been in the business 15 years.

Jim Henry: I am chairman and CEO of Henry Bros. I’ve been in the business full-time since 1978, I guess that’s 31 years, and part-time for another 10-15 years beyond that, without getting my dad in trouble for child labor laws, back in the earlier generation of the business. We are a pretty focused electronic security systems integrator, but our thrust is systems that involve as many technologies as possible, to help differentiate ourselves from the more construction-oriented competition. So it’s the projects that involve perimeter protection, detection, situational awareness, video, networks, fiber, radar systems and whatnot. The more potpourri in that, the better off we are because generally you get closer and closer to the top of the pyramid there when you get all those disciplines that you need to be literate in. We try and leverage our scale going after those projects rather than chasing other opportunities. And I’d say we’re pretty much 50-50 between public sector and private sector. Private sector for us being also the transportation agencies, ports, airports, seaports, what have you, and the private sector verticals, like Gary mentioned, health care, education, real estate, management, etc.

Tim Feury: I am president of Altec of Atlanta. We cover Georgia, some parts of the Carolinas and Tennessee. Most of our markets are involving video and access control. We don’t really get into fire. We do health care and manufacturing. That’s probably our primary markets. And again, that’s just a lot of video and cameras and card readers, primarily. I’ve been in the industry about 30 years; I started right after Jim!

Gary Venable makes a point as Chuck Lesnewski looks on.

Gary, in your position and role within PSA, what kind of feedback have you been getting from members related to the recession? Are some of them hurting or are they for the most part doing OK?

Venable: I think business is down and with the exception of Chuck I have not talked to anyone who isn’t bumping headwind. PSA has radically revised its methodologies and we have a very rock-solid financial foundation in place, so the organization is prepared to go through this storm. As a group, our sales are down and we know there’ll be more of that because we’re kind of a lagging group. We’re coming into the effects of the recession later than most. Many of us were still selling pretty strongly the previous fall and winter.

What about your own business? Seems like a lot of purchasing of systems is on hold.

Venable: I would affirm that. But knowing business is being delayed rather than lost is very encouraging to me. The problem is we’re getting too much help from the government. The new administration has been spending a lot of money but they’re not spending it correctly. It’s kind of like you go to a garage and it’s $75 an hour and $150 if you help. I think the government’s actions may be more negative for us than positive. The American economy is very strong. I’m confident it’ll get itself well pretty quick, and I remain optimistic about next year in particular.

Henry: This is opposed to all the wannabes that jump in with the bubble of the economic stimulus expectation. The best thing that could happen is for the stimulus money to take a while to get, which we know it will, because then all the ones that jump in, like they did post-9/11, figuring they’re going to jump into security and catch all this low-hanging fruit, and practice how to be a systems integrator at the customer’s expense, will be very disappointed when that bubble of money doesn’t materialize very quickly.

Jim Henry (right) had me captivated throughout the discussion with his frankness and keen insight.

Have any of you had to do anything internally to get over the hump?

Lesnewski: Operationally, we’re a very good company. We watch everything we do. We perform well, but we’ve done a very poor job of marketing ourselves. A service manager for us was more of a dispatch and put-out-the-fires guy. We recently hired a sales manager who is that but who also came from a company where he had very good results building their business through marketing techniques. So we’re building and marketing the service department. If we’ve done anything at all internally, it is we’ve taken some technicians in an area of our business that has softened a little bit and cross-trained them into the service piece. We began cross-training people a couple of years ago. We have installation technicians who are capable of performing service. So if we get that emergency service call, and because of the geography that we cover it’s the most available guy, we’ve done a good job of training them all where we don’t have to go through the matrix. It’s just a question of popping on the GPS to see w

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