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The "haves and have-nots of security integration companies"

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Wednesday, May 8, 2013

PSA TEC is in full swing. The action started on Sunday night, but I arrived late on Monday. Yesterday I spent the day (Tuesday) talking to PSA Security integrators and members and attending four different educational sessions.

I attended the State of the Industry panel, moderated by PSA Security CEO Bill Bozeman and featuring a large group of integrators and industry experts; a discussion on Big Data, Business Resiliency and Physical Security moderated by Chris Peckham of Kratos; a session on security finance moderated by Bozeman; and a session on how to adopt managed services, moderated by Sharon Shaw, of Integrators Support.

These folks covered a lot of ground. I’ll be writing more in-depth stories on some of the topics covered, but below are some highlights from the day.

Haves and have-nots

Bozeman started the first session of the day quoting Imperial Capital’s Jeff Kessler, who in a recent report wrote that increasingly the world of systems integration is dominated by the "haves" and the "have-nots." The "have" have an RMR base, are making a good margin on jobs, and are profitable. The have-nots have not moved into managed services and are surviving on installation revenue. Bozeman agreed with Kessler, recommended all read his report, and spent a great deal of time in this session and others talking about how all PSA Security integrators can join the "haves."

Know your verticals
Phil Aronson of Aronson Security Group, Ron Oetjen of Intelligent Access, and Eric Yunag of Dakota Security all said “deep focus” on your vertical markets is key. Yunag, whose Dakota Security is growing rapidly, said that his company made a strategic misstep 7 or 8 years ago when it decided to expand outside of the financial vertical. Banks are something that Dakota had grown to know very very well. The mistake the company made was not the fact that it expanded outside of that vertical, but it did so without the focus and understanding of other verticals.

The message from integrators on the panel was this: Focusing on different verticals is good, but get to know them. And don't delve into too many. How many verticals should an independent integrator focus on? Three, most agreed.

Mad about channel conflict? Look within
Another topic that came up was the problem of channel conflict and manufacturers going direct to end users. Jim Henry of Kratos, said it’s important for systems integrators to remember that manufacturers who go direct to end users fail. However, he noted, “it’s important that and end user sees you as a value, not a middleman making a margin.” Yunag added that if an end user is going direct in your coverage area “that’s your failure as a systems integrator.” You need to know what’s happening in your region, and if this kind of stuff happens take a look at your own organization.

Government Opportunity
Don Erickson, CEO of SIA, was banging the drum about the opportunity for integrators who want to do business with the federal government. Despite sequestration and budget problems, money is in the pipeline for K-12 projects, ports, transportation. “Consider the GSA Schedule program, it’s a very effective contract vehicle for doing business with the federal government.”

How to build an effective business?
During the State of the Industry, Ron Oetjen of Intelligent Access Systems broke it down this way: hire the right people and focus on your strategic plan.  Later, during a finance educational session that got pretty granular about how to make your business attractive to buyers, Kratos’ Jim Henry said that the businesses that he’s attracted to are the ones that are not for sale, the ones with a “clear vision and a mission.”

Boston bombing and video surveillance
In the aftermath of the Newtown gun massacre and the Boston Marathon bombing, Yunag said that now is a “significant watershed for our industry and the services we provide … in the next five to ten years, the way video surveillance is used will change,” he predicted.  The general public has seen, particularly with Boston, how video surveillance can be useful. Jim Henry said that the incident clearly demonstrated how video can be used for “actionable intelligence and business intelligence.” Further, he said, it's important to note that the ability to find the suspect was not because the camera in question was a certain quality or manufacturer,  but because it was a “well positioned camera installed by a professional.” This horrific event showed the world how video can be used, Yunag said, and it's incumbent on integrators now to have those conversations with law enforcement and others about how they can best take advantage of video and other physical security offerings to help prevent and detect situations like these.

There are many more highlights that I’ll report on later, now I need to get to the conference.

Dallmann Systems: Bid work done right is good business

Midwest integrator says the lowest bid doesn't always win
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11/14/2012

JEFFERSONVILLE, Ind.—While the margins on bid-and-spec jobs are typically lower than negotiated security jobs, bid jobs can be an important part of a profitable business, Tom Dallmann, president and CEO of Dallmann Systems, told Security Systems News.

Integrator options at ASIS

A special track geared to the physical security integrator will be included
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08/21/2012

PHILADELPHIA—For the second year in a row, the educational program at the ASIS International Conference will include a special track geared to system integrators. The conference will take place here Sept. 10-13.

Future Security Controls concentrates on margins

Independent integrator looks to sell its managed services offering to other integrators
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07/18/2012

OTTAWA—Future Security Controls is a small independent integrator that is enjoying enviable margins—north of 15 percent—in the past couple of years, according to CEO Sam Shalaby.

Shaw named president of Integrator Support

Former PSA exec leads dealer program that helps integrators design and implement managed services business model
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07/03/2012

LONGMONT, Colo.—Former PSA Security executive Sharon Shaw on July 1 was named president of Integrator Support, a new national dealer program designed to help integrators make money from managed services.

IAS branching out in Charlotte

CEO Oetjen says he's got 'the right person, the right opportunity and the right city'
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06/13/2012

CHARLOTTE, N.C.--Intelligent Access Systems, a PSA Security integrator, is opening its sixth office here this month.
 

M&A and your company

PSA-TEC sessions look at measuring a company's growth and prospects for exiting this year
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05/23/2012

WESTMINSTER, Colo.—Thinking about selling your systems integration company this year? What kind of price can you expect for your business?

Leading an integration company: Tips and stories at PSA-TEC 2012

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Wednesday, May 16, 2012

I arrived late in the afternoon yesterday in Westminster, Colo. for one of my favorite events of the year, PSA-TEC.
 
The conference,  which started on Sunday and runs through Friday, was well underway when I arrived. Lisa Cole Miller, PSA Security Network marketing director said attendance is up about 10 percent over last year with more than 65 integrator companies here. (Some of those companies send up to 10 employees.) In addition, there are consultants, end users, and more than 40 vendors exhibiting on a show floor here.

“When you think about it, it’s a bargain,” Miller said, “For $500, you get breakfast and lunch, four days of classes, a trade show and parties.”

I arrived in time for PSA Security CEO Bill Bozeman’s presentation “What every integrator needs to know about being an effective executive.”

This class is part of the PSA Leadership Institute, which PSA launched in October at the PSA Convention in Puerto Rico. Here’s a story with details about the program.

It was the end of the day and Bozeman spoke for more than an hour about the highlights of the business book “The Effective Executive,” which was written 40 years ago by Peter Drucker.

I’m not one for long presentations—but Bozeman is a good speaker. Ever hear an engaging preacher give a good sermon? He’s got a little bit of a preacher’s cadence, and he tells some pretty funny stories too.

There were about 50 integrators and a few vendors in the room for his presentation. Bozeman’s clearly taken to heart one of Drucker’s tenets: “if you’re going to call a meeting, make if effective.”

Highlights of the talk included:

—“Manage yourself.” To lead you’ve got to show discipline—show up on time, have passion for what you’re doing.” Bozeman told a story about visiting a PSA member who’s business wasn’t going well. Bozeman said he was not surprised that business was bad when he visited the office.

“The shades were drawn, there was no light, the owner was walking around [hunched over, with his hands on his forehead, looking like the sky was falling]. And the employees were doing the same thing—walking around like zombies. It was the most depressing place I’ve ever seen.”

—Drucker said he never, in 45 years, came across a single, natural executive who didn’t have to learn how to be an effective executive. It’s something you need to work on.

—Identify company objectives, how you spend your time, and don’t let people waste your time. Focus on the positive and motivating your people.

Pierre Trapanese, owner, Northland Control Systems, as an example of effective executive. Trapanese (who will be speaking at the conference today and who spoke at TechSec in 2010,  bought a small integration company “that needed  a lot of work” Bozeman said and turned it into a fast growing company.

“Through leadership and vision, he’s grown that company beyond what [anyone] thought was possible,” Bozeman said.  Recently, Trapanese chose an annual goal for the company. “This year we’re going to have fun,” is what he said, according to Bozemen. “He’s got people knocking down his doors wanting to work there, and he doesn’t pay the highest salaries in the areas.”

—Manages to peoples’ strengths, and surround yourself with people who have strengths that you don’t possess.

—Veto hiring anyone with substance abuse problems or who’s dishonest in the least.
  
—Read the fine print, hire legal counsel.
—“Don’t take pride in being King Kong… become more visionary and less the doer.”

Time to head over to the conference. There’s an M&A panel at 8, followed by a panel of successful integrators  and fast-growing integrators, a panel on market drivers, and one on social media. I’ll have more tomorrow.

Integrator insights in Florida

AMAG Technology expands its specifier event to include integrators
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04/09/2012

ST. PETERSBURG, Fla.—Access control and security management systems provider AMAG Technology expanded its annual consultant event this year to include a handful of select integrators.

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