Integrators Charge More Than They Should. We Know It, They Know It, Of Course We Try To Cut Them Out As Much As Possible.

As a very large end user it just boils down to dealing with integrators. My team manages the day to day operations of Genetec, we design solutions for our customers, and are very capable of configuring the software, we maintain certifications, have regular meetings with Genetec staff including sales and engineering. Buying direct for us is more about avoiding the hassle of integrators than saving a few pennies. We can get the work done faster without involving others. Unfortunately, this does not sit well with integrators so in an effort to protect their partners Genetec will not sell direct to us even if we purchase more than some of their partners in our region. We have since negotiated and worked with a partner that sells to us for 2% above their cost so we are able to save the money and get rapid response, partly due to our fully outlining the quoted items to them upon request including part numbers.

This is not an agreement we could get even with the largest of integrators. Note that the larger they are the more bonkers their pricing seems to be. We can spend weeks going back and forth over quotes because they want to charge at or above MSRP for everything and then still want, real numbers here $17,740 to install 5 cameras. Note that cable is to be ran by our electricians and the cameras are being 3 put up on 20' poles and 2 on buildings. Integrators know that we cannot buy direct from software and hardware manufacturers, they see our name, and then they charge tremendous amounts thinking we will not check the price and not knowing that we have internal team of 10 people, previous integrator installers, integrator sales, security engineers, project managers, etc that work to ensure it will be spec'd appropriately and at a reasonable cost.

Long rant. TLDR Integrators charge more than they should. We know it, they know it, of course we try to cut them out as much as possible.

NOTICE: This comment was moved from an existing discussion: Genetec Wins Panama Canal With Direct Low-Bid

Reactions:

(8)

(9)

(5)

John Honovich

IPVM

#1, thanks for sharing that. I made it it's own item because it's important for integrators to hear feedback like this.

Note that the larger they are the more bonkers their pricing seems to be.

Funny because it's true...

It's a hard situation, overall, because integrators certainly can provide value but some can also take advantage of product sales restrictions.

Reactions:

(2)

Undisclosed Integrator #2

I'm not sure what my company does, but they manage to pick up contractors from other provinces, who will do much the same as you. Give us the product we want with a very low profit margin. Because it's just ordering parts and having them sent to us. It's not like it costs them anything.

As for your comment about the bigger companies charging more, you are right. More overhead, and just thinking they can get away with it. It sucks, though I no longer work for an integrator, like you we do all our own stuff in house. Some we can purchase direct, through wholesaler, others as I mentioned above. When I did I worked for a larger local one, and then a national integrator. The local guy when I worked there actually lowered a lot of their install labour rates, and profit margins, as they were losing jobs. Mind you this is in the small-medium market.

But the big guy? Oh we didn't get the job? Oh well, we'll get another. Lots of customers even just pushed aside in a way, because they decided to jack up the margins. Had a good thing going, were still making money, but not enough money.

I do understand manufacturers wanting to protect their channels, but you'd think at a certain point it makes little sense. Oh you spend $10,000 a year, yeah maybe you should go to one of our partners. But if you are buying more product than anyone else in your area, you should be able to go direct. You would think some of those folks would see the value in maybe lowering their margins a bit to get the work, but some people don't see it that way.

Reactions:

(2)

Undisclosed Integrator #3

$17k for 5 cameras (A little over 3k a camera) might not be too crazy depending on camera type and the infrastructure required. Was it a multi-sensor camera? Ptz?

Was the integrator installing NEMA enclosures at the base of the pole? Bringing fiber in with a media converter or switch/48v power supply? SFP module with fiber jumper? Surge protection and grounding? Installing conduit inside the pole to avoid conflict with 120v? Trenching? Adding camera licenses? Engineering time to draw this up in CAD? Project management? TAX/Freight?

Reactions:

(20)

(1)

(3)

(1)

Undisclosed Integrator #1

In reply to Undisclosed Integrator #3

Note that was just labor cameras were called out to us at MSRP. All electrical and cabling will be done by on site electricians.

Reactions:

(1)

(8)

(1)

Undisclosed Integrator #13

Are there coordination meetings with the electrician, your IT staff, and others or are they just hanging the camera and going home? Do you expect a project manager to be involved? How much documentation is necessary? What does the billing process look like? Are terms horrific?

There are many things that add to the cost. For difficult customers the cost of related items may be greater than the cost of actually performing the work.

Reactions:

(6)

(1)

Jay Hobdy

•May 26, 2018

IPVMU Certified

Ohh where can I sign up for this 2% markup...

So your staff attends meetings, training etc with Genetec. Well, your integrator probably attends training as well. That costs money. If I remember Genetec required hands-on training. I think my last company flew a guy out to their office for a couple days.

BTW, how did you find your integrator? Google? Website? Did you call them? All these things cost money. It's called overhead.

Remember when you were an integrator making 20-30 an hour, you cost your employer 50-100 an hour after truck, insurance, benefits etc. The boss would like to make a profit off that investment

How much time have you spent with various integrators planning and designing before actually buying something? Or not buying something at all?

Then there is that pesky warranty matter.

Great, you may have a very skilled team that can DIY, but most companies don't. They require a lot of support in design, training and post-sales support, which costs money.

Reactions:

(31)

(1)

Undisclosed Integrator #1

Great, you may have a very skilled team that can DIY, but most companies don't. They require a lot of support in design, training and post-sales support, which costs money.

Correct I am aware that most companies are not in the situation we are in. However, I was here when we were not and can assure you that had it not been for large greedy integrators selling what they could not provide in the end and selling it for more than MSRP we would not be in this spot. We started out relying very heavily on one national integrator as we were under the impression this would show the best results. They promised x off MSRP, national assistance, program manager on site, etc. It wasn't until years later we realized they were over charging not just oops only 10% under MSRP instead of 15% but charging 5-10% over MSRP, making jokes about how bad they were taking advantage of us during their internal meetings, providing poor service to the level of we tell you its 20' up and you will need a 20' in the work order request and on the phone before dispatch and you show up with only a 10' ladder, etc.

We then thought okay lets not put all of our eggs in one basket lets use 3 national integrators and just work on a more localized level. This approach was okay for a year or two but we saw the same things happening only instead of a ladder it was do not show up without calling us first and instead getting a call of "Hey I went out rang the buzzer knocked on door no one answered so I left."

The biggest came when we performed a massive project and chose a national integrator to scope, sell, and install. Had multiple bids all from very large integrators all with different hardware all around the same price. We decided on one based upon their relationship to the hardware manufacturer. One year after install we were still having issues with the hardware installed causing damage to vehicles, this started one week after install, and not performing as designed and got told we will no longer be supporting this installation here is a company that may be able to help you out.

The driver has never been cost but value. The decision was made that having the expertise internal even if more expensive was more valuable to the company than rolling trucks from integrator every time a camera went down and waiting up to a week for resolution.

Reactions:

(4)

Michael Miller

They promised x off MSRP, national assistance, program manager on site, etc. It wasn't until years later we realized they were over charging not just oops only 10% under MSRP instead of 15% but charging 5-10% over MSRP, making jokes about how bad they were taking advantage of us during their internal meetings, providing poor service to the level of we tell you its 20' up and you will need a 20' in the work order request and on the phone before dispatch and you show up with only a 10' ladder, etc

This drives me nuts and is the reason I quit my job 11+ years ago. I have met way too many shysters in the security industry so I don't blame you for wanting to purchase directly though it shouldn't have to be this way if people cared more about making the customer happy then putting money in their pocket. You will have customers for life if you work this way.

Reactions:

(11)

(3)

Undisclosed Integrator #13

Ohh where can I sign up for this 2% markup..

We'll cut you a break on the terms. Net90 instead of our usual Net180.

Reactions:

(1)

(5)

Undisclosed #14

In reply to Undisclosed Integrator #13

Sounds like someone's been working for Boeing.

Reactions:

Undisclosed Manufacturer #4

The goal of any buyer is to get the most amount of stuff for the least amount of money. The goal of any seller is to provide the least amount of stuff for the most amount of money. There's no reason anybody should take this personally.

If you aren't happy with the price quoted and can get it for cheaper elsewhere, go for it.

If the seller can convince somebody to pay the price they want, more power to them.

Taking money matters personally is a good way to lose your business.

Reactions:

(10)

(3)

John Honovich

In reply to Undisclosed Manufacturer #4

IPVM

The goal of any seller is to provide the least amount of stuff for the most amount of money.

Do you really believe that? I am sure that some do but I don't think that's a healthy way to approach business over the long term.

And I can certainly see how people, even if they did not take it 'personally', would grow tired of having to deal with that, yes/no?

Reactions:

(5)

(1)

Undisclosed Manufacturer #4

In reply to John Honovich

I mean, within reason, of course.

But, yes, sales ultimately comes down to trying to charge the highest amount that the customer will agree to while spending the least amount of money possible on parts and labor (obviously underspending on labor is good in the short run but very bad in the long run, but that's the difference between a professional and a trunkslammer).

This is more art than science. If you regularly try and charge $17,740 to install 5 cameras, you're probably going to piss people off and not get too many takers. Undercharging for installs is just as bad, you can have a very healthy sales pipeline but an anemic cash flow and then your company deathspirals out.

Buying security products- buying anything- is the mirror image of selling. You want to get the best price you can for the best quality product and service you can. Again, you have to be reasonable; if you try and nickle-and-dime your provider, nobody will want to deal with you, just like nobody will want to deal with an integrator that tries to nickle-and-dime them to death.

Some people do get tired of it. That's Carmax's entire business model, a no fuss car sale with no bargaining. Which is fine if you understand that you might be paying slightly more for your new car and you might be getting less for your old car than you would otherwise. If you aren't good at bargaining, or you simply don't want to waste your entire day haggling with a used car salesman, Carmax is hassle free way of ensuring you don't get taken advantage of.

But it is much easier to determine the "fair" (ie baseline) price of a vehicle, because there are so many of them being bought and sold all the time and because they are so similar. Nothing like that exists with large security projects, which means that it's up to the buyer and the seller to hash it out between themselves.

Reactions:

(3)

Undisclosed #5

In reply to John Honovich

IPVMU Certified

Do you really believe that [the goal of any seller is to provide the least amount of stuff for the most amount of money]? I don't think that's a healthy way to approach business over the long term.

Reactions:

(13)

(1)

(2)

(13)

Sean Patton

At some point an end user can become so large that they have outgrown the need for an integrator. This does not mean that all or even most integrators are charging more than they should.

As Jay alluded to your 2% deal, that is an integrator who is desperate and will be out of business soon. I worked at different Genetec dealers over the last 10 years, with the amount of processing and paperwork required to order licensing from Genetec (or any major VMS), you're losing money at 2%. The staff time to receive the order, process the paperwork with Genetec, email you back looking for payment (because most customers buying at 2% will not be paid within agreed terms), processing payment to Genetec, etc, it just doesn't work. For a $5,000 licensing order that's $100 in markup, or $102 if they're getting 2% margin. Maybe you make up money elsewhere, and you're just looking for cash flow, but it's not a successful formula for any integrator.

Buying direct for us is more about avoiding the hassle of integrators than saving a few pennies

Stop attempting to pay in pennies and you will find integrators who make more cents.

The sentiment of the larger the integrator, the higher the bill is definitely true, as the large overhead of a multi-national corporation must be covered somewhere.

You mention being a large end user, designing solutions for your customers... have you tried registering as a Genetec dealer?

I would also guess in your marketplace, given the fact you have an in-house security integration team, many people have the opinion that you overcharge your customers, or are more expensive than the small mom and pop business down the street. There's no free lunch.

Reactions:

(14)

(1)

Sean Nelson

Nelly's Security

As Jay alluded to your 2% deal, that is an integrator who is desperate and will be out of business soon. I worked at different Genetec dealers over the last 10 years, with the amount of processing and paperwork required to order licensing from Genetec (or any major VMS), you're losing money at 2%

I dont believe it, or I would have to see it to believe it. This integrator probably agreed to simply act as buying agent to the end user with basically no service being performed at all. This cant be the integrators normal margin. 2% is a fair margin to be a simple buying agent.

I have never purchased a license from genetec but i cant imagine it takes a full staff to process the orders. If what you say is correct, then thats ridiculous and way convuluted, especially for a software company.

As far as payment terms, hopefully the integrator agreed to make payment in advance instead of dealing with terms.

In a way I feel for the end user, especially if he does more volume than the local integrators in his hometown. But on a global scale, Genetec stands to lose more if the story got out that they sold to an end user. Hopefully the OP can see Genetecs side of the equation.

Reactions:

(5)

(1)

Jay Hobdy

IPVMU Certified

2% is a fair margin to be a simple buying agent.

Sean, I know you own Nelly's so it is hard for me to believe you could actually believe that. Surely you would like to see a larger return on your $5,000 investment. If they take a credit card, they lose money. If they give terms, they take a risk of not getting paid.

And it cost them money to become a Genetec dealer. Surely that is worth more than 2%.

The electrician doesn't get $100/hour because it costs him $95/hour. He gets that because he spent several years working to get that license.

Who wants to lend me money for 2%?

And buying licenses can be a PITA. Sometimes it is very smooth, but right now I have been waiting 3 weeks for some care pack licenses because the distributor is trying to figure out how to link the quotes I got from Milestone to an order. The issue is the order has to link back to specific existing licenses for annual care package.

You are right, that it is a ridiculous method.

The OP should just buy the licenses and hang the cameras themselves. They have electricians and cable pullers, surely they can mount the camera. It seems the OP has the skill to program, etc.

Reactions:

(5)

Sean Nelson

Nelly's Security

You got a great point about credit card fee's but I'm talking about after fee's, 2% is still a fair margin for basically buying the software and forwarding the license key's. I mean if he is doing nothing else and basically wont hear from him again, no tech support, no warranty, etc, I think that is a very fair margin. And I would not do the deal under 30 day terms. I myself would require immediate payment for something like this until I built up a great relationship with the client. But on another note, as far as risk not getting paid, you are still losing the same amount regardless if you marked it up 2% or 150%.

That sounds like a wierd issue with your milestone thing. Sounds like is a particular instance where it takes some human interaction to get things done and someone is being a duh-huh along the lines and doesnt have a clue what they are doing. Probably the distributor.

But I cant imagine a regular purchase being that difficult. I assume with Genetec and Milestone being a software company, that they have figured out to streamline their purchasing process as much as possible. If not, then thats Ghetto.

Reactions:

(1)

(4)

Ty Mullen

COR Security, Inc.

2% on anything is absurd. Your insurance, in a lot of cases, is tied to your gross income not your net. So that is going to go up as a result. Then there is your building, phone, computers, maintenance, on and on and on.

I don't think that there is any business in any industry that can sustain 2%. Cash flow alone would eat you up.

I know some companies make these kinds of deals usually when the manufacture has end of the year rebates based on sales volume. Or they are trying to get to the next tier in discounts with the manufacture. But I would argue that's short sided and won't be a winning strategy in the long term. Of course there is cases were you charge more here and less there. But 2%?

There are companies, especially in the last 15 years, that subsidize losing parts of their business with profits from other. Google comes to mind. Gmail is free (to consumers) and is funded from other aspects of their business. But by in large this is not the norm.

Reactions:

(5)

Undisclosed #5

In reply to Undisclosed #5

IPVMU Certified

In reply to Ty Mullen

2% on anything is absurd.

Not a believer in the theory of Golden Crumbs, eh?

Reactions:

(1)

Rob Dunham

•Jun 01, 2018

Tailored IT Solutions

That's not a fair representation. Integrators have a finite number of projects they can supply in a given year. The Golden Crumbs theory relies on the fact that there is no finite number of opportunities.

MSRPs are in place for a reason. They dictate a fair market value for a given product. Anyone willing to sell for less than fair market value (regardless of product) is the very reason that profitability ever comes into question.

I want you to go to work tomorrow for 2% of your current salary. Your company deserves a break. Would you do it or would you demand fair value for your services? How would you feel if your job was sent overseas and given to someone willing to work for that amount? Or does this vein of thought only apply when it works in your favor?

Reactions:

(4)

(2)

(1)

Undisclosed #5

•Jun 01, 2018

IPVMU Certified

In reply to Rob Dunham

MSRPs are in place for a reason. They dictate a fair market value for a given product.

MSRPs have no relationship to a product’s “fair market value”.

MSRP’s only impact is in an “unfair market”, one where partners are successfully constrained from setting price.

Reactions:

(2)

David Coughlin

Protection One / ADT

In reply to Rob Dunham

The theory of volume making small margins make sense ("golden crumbs") is applicable to manufacturing and some simple installation markets where there is a fixed cost factor. However, systems integration has variable costs for each transaction, which includes box sale jobs.

In order to make sure we're on the same page, a true "security integrator" is a company that employees

1 Project Manager per $2M - $3M of revenue,

1 Engineering Technician that holds Cisco and other certifications and is qualified in CAD, and has significant security industry experience for each incremental $5M - $8M in revenue,

3 Licensed low voltage Installation Technicians with significant industry experience and capable of programming servers, network switches, etc...and each with a fully stocked vehicle per $2M - $3M of revenue.

1 Administrator for purchasing, shipping, etc. per each $5M of revenue.

Sales and marketing efforts (businesses don't survive with an admin staring at the phone waiting for it to ring).

1 highly qualified and licensed Service Technician per $5M to $10M of revenue.

Now you have to rent your building, buy office equipment such as plotters, software, furniture, turn the lights on, buy insurance, etc.

So, let's say this integrator is bringing in $5M of revenue and earning a "fair margin" of 2%, ask yourself, could you pay for everything you need to pay for and make a decent return on investment for $100K? If you think you can, I'll sell you a bridge...at 2%.

Any business school, from Harvard to the school of common sense (which isn't common) and to the school of hard knocks will prove that the break-even/hurdle rate in industries such as security integration is 18-25% above costs.

Again, this model is based on what most would consider true security integration. If you're talking about paying "Two Chucks and a Truck" Security Alarm Co 2%, then you will get exactly what you pay for.

Reactions:

(6)

(3)

Undisclosed #5

•Jun 01, 2018

IPVMU Certified

In reply to Ty Mullen

I don't think that there is any business in any industry that can sustain 2%.

What about 1%?

Reactions:

(2)

Undisclosed #5

IPVMU Certified

If they take a credit card, they lose money. If they give terms, they take a risk of not getting paid.

Use a wire transfer, or eft thru same bank.

Get paid on order.

Take 2%/N 30 discount from Genetec, if possible.

Reactions:

(2)

(1)

David Coughlin

In reply to Undisclosed #5

Protection One / ADT

Most if not all banks have a charge for a wire transfer...even within the same bank. They have to pay their employees, pay for their building, etc.

And paying 2%/N30 for an advantage assumes that you are getting the product to your customer and they are paying in less than 30 days from your receipt of the material invoice.

Reactions:

(2)

Undisclosed Integrator #15

Yes, your analysis is right on the money- this reminds me of the fools who march in to car dealerships and demand they be sold the car at or near "invoice price".

Usually when a consumer that is uninformed as to the realities of business overhead is able to find out what the retailer ( in this case the security integrator) pays wholesale for the subassembly or subproducts that comprise the integration, they start talking the nonsense that the OP of this thread is talking - although it is an understandable reaction to believe you are being "ripped off" when you are only seeing a piece of the puzzle

Reactions:

Undisclosed #5

•Jun 06, 2018

IPVMU Certified

Most if not all banks have a charge for a wire transfer...even within the same bank.

Within the same bank it’s not a wire, it’s an ACH transaction. Often free, at worst $2 or $3 per transaction. Wires cost more because they’re quicker.

And paying 2%/N30 for an advantage assumes that you are getting the product to your customer and they are paying in less than 30 days from your receipt of the material invoice.

Require net COD terms from customer, but get 2% terms from Genetec, if possible. I agree it’s not worth it if you are carrying a receivable.

This is assuming that the customer is a large end-user who has as much specific product experience as the integrator, if not more, so they’re doing everything for themselves to the fullest extent possible.

I don’t think it’s a situation that comes along everyday in any case.

Reactions:

Sean Patton

I dont believe it, or I would have to see it to believe it. This integrator probably agreed to simply act as buying agent to the end user with basically no service being performed at all. This cant be the integrators normal margin. 2% is a fair margin to be a simple buying agent.

At standard inflation rates if a customer fails to pay you within 3 months, they money you will be receiving is practically worth less than what you pay Genetec.

The only situation I could forsee agreeing with you would be a pay in advance or COD type of system, but even if you were only accepting credit card payments, the typical processing fee of 1.5 - 3.5% would mean you could literally be losing money at 2% markup.

I'm not saying it needs to be at a 25-35% margin for just processing paperwork, but less than 5-7% is losing money territory.

You might not need a "full staff", but you need at least part of a day of one person's time, even if its an hour total, what's the loaded cost of that person with benefits, a building for them to work in, etc. My example was for a $5,000 order, for $100 profit; what about a 4 camera license order for $800? $16 dollars profit. Good luck.

Reactions:

(3)

Sean Nelson

Nelly's Security

You could be right, but holy smokes, does it really take an hour to order some licenses from Genetec. There are either 2 things wrong with the equation:

#1) Genetec's purchasing system is super ineffecient
#2) The person buying the licenses from Genetec is super inefficient.

I guess in my mind I was thinking of an integrator who is fairly knowledgeable in the Genetec buying process. They have done it before, already have an establised account with Genetec, blah blah blah. In my mind, I was thinking of a total work time for the integrator in this scenario of being about 15 minutes.

The standard inflation rate argument is hilarious by the way.

Reactions:

(1)

Sean Patton

You're right about the inflation rate, it was a bad exaggeration.

It's not that it takes an hour to simply place the order in their web portal, it's the entire process of the sale.

Reactions:

(3)

Cody McCormick

What does take time is the ordering through procurement, processing of invoice through accounting, and then processing of payment whether its EFT or check or whatever you pay with). If each person takes 15 minutes of time (we all know if you get working on something and get it done, you take another 5 minutes or so to get to the next task) that is 45 minutes. If they were only spending $800 at 2% or $16 profit, then that was gone with the first person doing their job...

Reactions:

(5)

(1)

Undisclosed Integrator #1

So to take a swing at some of these points.

As Jay alluded to your 2% deal, that is an integrator who is desperate and will be out of business soon.

We did not seek this vendor out for as large of a discount as they provided. We simply sought them out as a way to improve the way we purchase from Genetec. Before due to the large integrators not giving consistent numbers we would have to reach out regularly for a what would this cost quote and then provide that to the customer to get told nope way too much. We sought a company willing to tell us in writing, your price will be x amount below MSRP. This allows me to accurately provide a quote to our customer and not waste the integrators time or money. Once I have approval I can only reach out for a quote on systems we know we will be buying so no time is wasted. Additionally given the familiarity with Genetec licensing structure, part numbers, SMAs, system IDs, etc I am able to provide all of this upfront to reduce work load.

Stop attempting to pay in pennies and you will find integrators who make more cents.

Again the initial intention was not cost cutting but process optimization. It is no good for me or an integrator to reach out wait two weeks for a quote just to have to say never mind. Makes me feel bad makes you mad just no need.

You mention being a large end user, designing solutions for your customers... have you tried registering as a Genetec dealer?

We attempted this. Genetec would not allow us to be registered as a dealer because we have purchased through large national integrators and they did not want to hurt that relationship or their image. Completely understandable and we are fine with that. This is what lead us down the path mentioned above.

I would also guess in your marketplace, given the fact you have an in-house security integration team, many people have the opinion that you overcharge your customers, or are more expensive than the small mom and pop business down the street. There's no free lunch.

This is possible. However, we only do business with companies owned by the same parent company. We provide our services to them at cost it would be similar to asset protection at Target or Walmart. We perform risk assessments, design, configure, and deploy solutions at cost because our business as a whole would gain nothing from us charging above cost as the money flows from one entity to another.

Reactions:

(2)

Undisclosed Integrator #6

I just dealt with this on a project (I work for the US Gov't). I reviewed the security submittals and it was way out of whack with what I estimated the project cost to be. It was 14 cameras and 23 access control doors plus a complete backend (server, NVR, etc.).

The locking hardware, conduit and cabling was being provided and installed by the construction contractor and the wiring was being pulled to each location by the electrical contractor.

This integrator then wanted to charge me 250k for basically parts and labor to terminate the wire and set it all up, and they wanted 22 weeks to make it all happen... NO!!!

I asked for an itemized breakdown of the quote and the labor was reasonable, but the parts were 50% or more over MSRP. It would have been cheaper to pay a trusted integrator from out of state to come in and do the job, so I threatened them with doing just that and all of the sudden the price dropped by 75k.

It gets really freaking annoying dealing with this project after project.

Reactions:

(4)

(1)

(2)

Undisclosed End User #7

Definitely sleazier than trading and buying a car. Hidden profit shell game.

Reactions:

(1)

Sean Patton

The key there is the "22 weeks to make it all happen".

They priced the job at the point where they didn't want the work, but if they ended up getting it, they could look to hire or subcontract it out to someone else. Almost every enterprise integrator has done this thing before, we called it the "I Dont' Want This Job Price". I wouldn't do this with every customer, especially not ones with a long standing relationship, but if an electrical contractor or oddball gov't agency reached out for a quote, and we didn't have time in our schedule for it, why not throw a crazy price out there and see what sticks? If someone says "no, sharpen your pencil" then at least you know there's a chance and you can put more time into it.

Most end users can't imagine the amount of no-budget, no intention to order-but-covering-my-ass quote requests the average security integrator receives on a daily basis.

Reactions:

(17)

(2)

Undisclosed Integrator #6

Having worked as an integrator that primarily supported federal clients, I fully understand just how much "stuff" is requested that goes nowhere, and yes we made up for it in other areas frequently.

In this case, they were included on the project at the recommendation of the GC (prior relationship) and when compared to the other two quotes they were the only one even close to technically competent.

They were also told there is a specific (and accelerated) timeline on this project that should not have been an issue, but they insisted on this 22 week thing. Unless they are sending one poor schmuck out there by himself with one screwdriver and some bubble gum this is a 6 to 8 week project at the very maximum. I wonder if they were just trying to build in slack time for typical construction delays?

Reactions:

Undisclosed #14

I would suggest that end users consider hiring a technology consultant to create a bid package. It is immensely clarifying to have a few competitive apples to apples proposals on your desk.

Reactions:

(1)

(2)

Undisclosed Integrator #16

Most "Technology Consultants" rely on integrators to for their information. That or who took them to lunch last...End customer rarely gets what they want in this case.

Reactions:

(4)

(2)

David Coughlin

In reply to Undisclosed Integrator #16

Protection One / ADT

Most "Technology Consultants" rely on integrators to for their information. That or who took them to lunch last...End customer rarely gets what they want in this case.

This is the exception rather than the rule. Having been in the integration business for over 20 years, I can quickly estimate the costs of a project within 10% after coming up with a design.

Consider that it takes business skill to do anything well, including hiring consultants.

Reactions:

(1)

David Coughlin

Protection One / ADT

There's not enough memory on this server to list the number of companies that have gone bankrupt doing business with the US Gov't.

I would estimate this project at between $110K to $150K based on standard material. If you're looking for ultra-high resolution cameras, FIPS access control standards, explosion proof materials, installation in remote and/or extreme environmental conditions, then that estimate might be double or more.

That said, there is a lot of unscrupulous businesses in the security systems industry. Working with the restraint of a "low bid" system as most gov't purchasing requires, opens the door for low quality and other ugly business practices.

Reactions:

Jay Hobdy

IPVMU Certified

Most end users can't imagine the amount of no-budget, no intention to order-but-covering-my-ass quote requests the average security integrator receives on a daily basis.

Where is the "Buy this man a beer button" ?

Reactions:

(13)

(1)

(9)

Undisclosed #8

UD1 mentions they have an internal team of 10 people, all stated to have security industry experience. How much does that team cost? A large integrator will have 100 accounts your size along with 10,000 accounts medium size and 50,000 accounts new, existing and re-signs all trickling in that RMR. Larger integrators are large integrators for a reason, their dynamics have become complex so you can expect more points of failure in a system that has grown to a chaotic re-occurring fragile state. Now put yourself in the shows of the small integrator, does they even have the staff that you have? or experience?

If you want to break-off and become your own country, go for it. Seems like you already have. Keep in mind if the entire system migrated to direct procurement from the manufacturers there is still a cost to be paid. You may get your 2% for now but it is not sustainable forever nor will you ever get it all for free.

Yes $17,740 is a lot of money. If you had to sell your entire existing system at MSRP along with installation to put it in, test it with full functionality using your team of 10 how much would that lump sum be and what margin would you apply to it so everyone at the table can eat?

Reactions:

(4)

Undisclosed Integrator #9

The 2% might be a strategic play. They are selling to this dealer at basically their cost but it strengthens their volumes and position with Genetec, if they go to compete on other work they will be in a much better position than their local competitors.

Reactions:

(3)

(1)

Undisclosed Integrator #10

In reply to Undisclosed Integrator #9

It must rack up some sweet air miles as well

Reactions:

(3)

Undisclosed Integrator #11

Sorry, I would like to go back to the original topic...

”Integrators charge more than they should. We know it, they know it, of course we try to cut them out as much as possible.”

Okay, I’ll bite. As an integrator, how much “should” I charge? A 35% gross margin? A 15% GM? 2% and not a penny more? You work for a company large enough to employ their own electronic security team, so may I ask, would your company agree to a 2% GM? How about if I simply buy your raw product at 2% over cost and put it together myself? I’m pretty sure your CFO would respond in a less-than-positive manner. Does your company take the same approach with plumbers? Probably not.

If the integrators that you’re working with really are ripping you off (hard to determine without knowing what you spec’d), why not get competitive bids? I suppose by keeping the same one or two known suspects in your stable, you can always ensure that you receive bids that your bosses would consider to be predatory. Sounds like nice job security to me.

Reactions:

(11)

Undisclosed #5

IPVMU Certified

“Integrators charge more than they should. We know it, they know it, of course we try to cut them out as much as possible.”

Some people make stuff that other people use.

Everyone else in the middle is under constant threat of disintermediation because of the natural attraction of those groups.

The constant but necessary evolution of the value proposition causes no end of strife for middlemen.

I don’t begrudge them a penny of what they earn.

Reactions:

Undisclosed End User #12

Thanks for sharing. This is largely true other than very very few exceptions.

Trust is something an integrator will have to build which will ensure that customer will treat him as partner.

Below are few things I observed while dealing with integrator:

1. Integrator try not to educate customers in correct way. They do not understand that customer will eventually know about the things integrator is hiding. Ultimately customer do not trust integrator.

2. The sole objective of integrator/vendor is to make money. I learnt it hard way (very hard way). They may not tell you what you should do unless they have vested interest. I wish my integrator would have informed me something wrong I was doing in front of him. But he purposely decided to keep silent.

3. Integrator try to by-pass customer representative who is not not convinced and try to go up or down to get the things done in their way.

4. I noticed many a times that if integrator is not associated with the vendor we are looking for, he shall start criticizing the product. Same integrator may start selling the criticized product after few months and will change tone.

5. The cost element changes drastically and depends upon the knowledge plus negotiation skills of customer.

Reactions:

(2)

Mark Jones

Interesting thread.

I wonder a few things out loud.

Respectfully, how many here who are Integrators have at least some undergraduate study in business and/or management? I don't mean it as a critique, just an observation.

I wonder, out loud, what industry the OP is in? What would your upper management say if your customers wanted to just cut you out and deal directly with the manufacturer?

Reactions:

Undisclosed Manufacturer #4

In reply to Mark Jones

What would your upper management say if your customers wanted to just cut you out and deal directly with the manufacturer?

If upper management haven't already thought of that possibility and figured out how to offer value in excess of the price charged, then your company is not long for this world.

Nobody owes us their business. We have to earn it, every day.

Reactions:

Undisclosed Integrator #1

In reply to Mark Jones

OP- Not an integrator. Have only a bachelors in business with PM Certificate.

We are in many industries Oil, Technology, and consumer products to name a few. We are the manufacturer and do deal direct to customers where applicable. However, the benefits of selling to retailers for the manufacturer is shelf space without having to foot that bill. The challenge is that if you the re-seller are charging more than the competition without providing more service in return then your business will fail in time. Ask Toys-R-Us, Blockbuster, and others you have to create value in order to not become obsolete.

Reactions:

(1)

Undisclosed #14

Toys R Us and Blockbuster were raped by private equity firms in acquisition deals.

Reactions:

(1)

Undisclosed Integrator #1

While I would agree the initial blow was dealt in Toys R Us was a bad acquisition and going private. The refusal to even be competitive in pricing and service offerings was the reason they were not able to remain a power house in their respective industries. During this time Wal-Mart's market share in toys was exploding and provided parents with a better alternative even if prices were the same as Toys-R-Us I need groceries too so I'll just get Timmy a toy while I am here much easier than going across town. Also this is when people began shopping online for cheaper prices, although not yet at the time as powerful as it is today this is where those looking to save some money or not leave home turned.

http://money.cnn.com/2018/03/15/news/companies/toys-r-us-closing-blame/index.html

Blockbuster, to my understanding, was not crippled by a bad acquisition and failed because a large amount of their profit was garnered through charging late fees to customers. Additionally they decided that as the king of the video rental hill they did not really need to innovate in order to stay relevant because no one is going to want to order a DVD in the mail when they can stop on the way home and browse our selection. Finally, while losing business to Netflix who offered no more late fees Redbox was able to come in and offer budget rentals through partnerships with retail locations allowing them to locate their kiosks outside.

https://www.forbes.com/sites/gregsatell/2014/09/05/a-look-back-at-why-blockbuster-really-failed-and-why-it-didnt-have-to/#7a6314ec1d64

When competition comes and offers better pricing or better service its best to be ready to make the needed changes quickly in order to stay afloat. Best Buy is a good example of rapidly changing to ensure continued success. Implementing price matching while also providing better services, cell phone booth for all carriers, apple section, microsoft section, etc. and bringing in staff that know those products and can help the shopper make the right decision. With better service than Amazon and Walmart plus the willingness to price match both of those competitors Best Buy has been able to rebound even while others continue to fail.

Reactions:

David Coughlin

Protection One / ADT

Both of these companies managed themselves out of business. Blockbuster could have been Netflicks, Toys R Us could have been Amazon...but they chose to hold on to a failing business model.

IMHO

Reactions:

(2)

Undisclosed Integrator #15

there is a ( mostly fallacious) view these days that retail stores fail due to tech rather than their own incompetence.

Blockbuster, to my memory, was a poorly run operation. there were always long lines at the check-out, there were never enough copies of the latest DVDs, they engaged in gotcha punitive fines for getting the thing back to them late. They would have likely failed with or without adopting the Netflix model because they couldn't even competently execute their own model.

And then Amazon gets flak for being the catalyst that destroys retail because it sells based on price only, putting value-add retail at a disadvantage. This is another falsehood. Amazon's primary reason for success is the service- the service is the value add - they have built a system that allows the consumer to within seconds be put into contact with sellers of even the most obscure merchandise, and then ensures that the purchasing and delivery process is a simple and reliable as possible.

if the day comes that Amazon decides to cut back on their processes and leave customers dissatisfied, they will end up failing. By their own hand.

Reactions:

(1)

Mark Jones

The challenge is that if you the re-seller are charging more than the competition without providing more service in return then your business will fail in time.

Clearly, your hypothesis is not entirely correct. If we were only reselling pieces and parts I would agree, but we are not. We are not Toys-R-Us nor Blockbuster. Not to denigrate those people, but it does not require a lot of product training to work there. Just as clearly, there is value in knowledge. You may disagree with the amount of value, but there is value. Reasonable people can disagree.

To improve your own outcome, your company hired your own technical staff; you train them and get them certified. So do we. That has value. If it didn't I assure you we would not be here. The market would naturally eliminate us over time, and that has been predicted, here on these boards. There are those that actually wish it so (I honestly can't imagine why anyone would wish another harm), but it just has not happened.

In addition to stocking, we too hire and train; not just on the one or two products you want, we train and certify on several and to be sure, some do it better than others. We provide more than a living wage, put vehicles on the road, insurance, offer benefits, State licensing and a host of things you don't have to do. We also work with customers that don't see the value in any of that when it is their turn to support it; as well as the slow-payers and no-payers. We do all of that and a ton more without the benefit of the mother-ship paying our bills for us. My staff is not a line item on a conglomerated budget.

By and large, most customers are really good people and so are the integrators. If you are in business and in particular, a business owner, you are in the people business whether you ever thought you would be or not. You have to look for and find the good in people or you will have a miserable life.

Few if any integrators will ever have Bill Gates wealth. We hopefully do provide our families with a comfortable living, have at least a small voice in our own direction and we get to give back. One of the very few things we ask is in return is to be treated with a modicum of consideration and respect. This ain't easy, if it were, everybody would be doing it.

I am sorry your experience has been largely negative. There are some bad actors out there and there are a lot of them in larger companies. It is easier to hide in a large group. Smaller firms would not have them. We would not tolerate the kinds of attitudes and practices you describe. Not for a second. I hope you get the chance in the future to work with someone who will deliver a better experience because we are out here. Good luck to you.

Reactions:

(4)

(1)

Mike Rose

Wrong integrator. One size does not fit all.

Maybe wrong software vendor.

Maybe their pricing is in response to your attitude

my experience, End User supporting their own system is finite, Corp always sees physical security as an expense and continually cuts their budgets

Reactions:

(1)

(2)

Bob Brislin

IPVMU Certified

In reply to Mike Rose

You know there is a PITA factor in pricing to certain customers. Especially, as OP said, "We can spend weeks going back and forth over quotes". Extra markups to make up for the designer having to redo and redo again a design/quote. Yup -- that will put you above MSRP.

Reactions:

Kevin White

IPVMU Certified

I find this thread interesting with a lot great points and lessons. I personally think 2% is nuts. You lose money as a business - unless you are getting paid in cash (or transfer) with no fees AND you are getting 30 to 60 out of the manufacturer. Even the government gets 10% of every retail purchase with taxes. (unless you live in state that has no sales taxes). Heaven forbid they want to pay with a credit card.....

Reactions:

(1)

Kevin White

IPVMU Certified

There are a lot of business models out there for VAR's, so it hard to lump them all together and say all VAR's overcharge.

I think it is great that your company has the overhead to be able to manage, design, project manage, specify, staff electricians, certify personnel, etc. I usually don't see that extensive of business model from an end user.

Why not just agree on a markup from a VAR (2% is just too low), payment terms and go T&M. Everything is itemized and you get the best of both worlds. Maybe 5% on 10% on software and licenses. Getting a decent margin, they can provide a better service to the end user. The only company making a lot of money in this scenario is Genetec. Bet they get a decent margin.

OR Create / Hire a full time embedded technician position from the VAR and you will have a great team. You never are without a technician, the VAR will provide replacement on sick days, vacations, certification days, training days, OHSA training days, etc. etc. With an employee you lose them for at least 10% of the time. You get approximately 225 to 230 work days out of the available 255 work days in a year. Look out if they are a seasoned technician with 3 or 4 weeks vacation.

AND You won't get affected with stock price changes, when corporate asks you for RIF (reduction in force).

Reactions:

(1)

Dan Pearson

It sounds like you, as a customer, have a developed a great deal of overhead in taking this in-house. Training, tech downtime, etc very much like an integrator.

If the CFO adds up the permanent staffing, training costs, etc of that full time infrastructure it may actually be costing your company a lot more money that using even the large integrators. Do they plan on firing all but a few after the big project is over? Probably.

We like to hold on to our technicians, develop their skills, and provide a place for them to get the most out of their career.

Hiring techs to fire them after your project is a race to the bottom and exploitative. Hiring them and holding on to them to support 1 or 2 product lines actually costs more than hiring an integrator, limits your company's exposure to new products, and stunts the development of techs.

Its a good idea for a company to retain a few security managers that have real know how but rarely does it pay to retain an integration team after the project.

MHO

Reactions:

(6)

(1)

Undisclosed Integrator #1

In reply to Dan Pearson

Do they plan on firing all but a few after the big project is over?

This is quite possible however, the team was not hired for a big project for that we use contractors. The team is in place to support and maintain the day to day of the system, implement new systems, upgrade systems with older software, replace failed/failing units, ensure regulatory compliance, etc. Your statement is very true for a large business in that our team of 5 support staff and 4/5 project staff would be overkill. However, our business has over 120,000 employees with locations and manufacturing facilities all over the world generating over $100 Billion a year in revenue. Before the team was formed we did have in house contractual resources from a national integrator and it was decided that this was not worth the value due to many issues caused by this company, price gauging, lack of integrity, lack of support from leadership, etc.

In addition to this allowing an integrator to have access to our network after hours that lacked integrity enough to take parts from our stock for "temporary use" at another customers location is not a risk we were willing to continue to maintain.

Its a good idea for a company to retain a few security managers that have real know how but rarely does it pay to retain an integration team after the project.

Note we do not maintain an integration team as we do not physically install the devices. We have IT and electricians on site at locations perform the physical install we just provide and configure hardware and software as well as maintenance and support post install.

I am aware that we are not a standard organization and that this model does not fit all. The comment was more about the integrators we have had experience with choosing to not provide adequate value by charging more and providing less support than when dealing direct with the manufacturer, only on support again they would not sell direct. Instead we found a vendor that acts as a buying agent allowing us to be happy and them to be happy.

Reactions:

(4)

Rob Dunham

Tailored IT Solutions

Find a different integrator. Not all are like that. While it's true that some integrators abuse their position in the supply chain, it's also true that many end users refuse to pay fair prices for equipment or labor and expect everything at or near cost. My point is that the problem goes both ways. There are good and bad suppliers and their are good and bad customers. The trick is matching up the good ones. Good luck finding a better integrator. They do exist.

Reactions:

(6)

Undisclosed Integrator #15

Curious - Since you are an end user, how do assume to know what a security integrator “should” be charging?

liability insurance alone is a significant expenditure for security companies. Legal expense for security-specific contracts as well.

have you ever purchased and maintained and insured a fleet of equipped service vehicles? Well it aint cheap.

Security integrators generally deal with numerous products and incur significant cost in becoming competent.

maintaining a labor force of technicians, engineers, project managers, salespeople, clerical is an enormous expenditure.

And the larger the customer, the more process-intensive the project will be. If there is one thing that large corporations love it is bureaucratic process. This bureacracy often requires the security integrator to be able to accomodate their processes which - yeah, costs money.

In closing, I dont buy any of your arguments that attempt to justify bypassing industry business models.

Reactions:

(7)

Cody McCormick

Maybe the root problem is companies are trying to utilize a National integrator. When you choose corporate you get corporate overhead. Many "SMALL" integrators do work nationally for some very LARGE fortune 50 companies and there doesn't seem to be the problem. Maybe its more of an End-user problem thinking that the only way to go is the "NATIONAL" integrators.

Reactions:

(3)

Undisclosed Integrator #2

In reply to Cody McCormick

Having worked for a large national integrator, I agree. You don't even get the same level of service across the country. A lot of sub contractors still in the lesser populated areas where there is no branch. Huge turn over of techs in one branch, less skill in another. I never understood the appeal from the point of view of the end user.

One bill to pay I guess, instead of several? Slightly cheaper over some small integrator charging travel to come to do work. It's weird, you don't really see it so much in other service based industries, like electrical, plumbing, HVACR, or networking (cabling side, anyway).

Reactions:

(1)

Undisclosed Integrator #17

As an integrator, I took offense to this at first. Then I remembered that we are a different type of business model. Price fairly, quality products we can stand behind and service to take care of our customers. We even charge well below MSRP at times due to a set markup on our cost.

Even with all this, we still get backlash from quotes as if we are overcharging customers. Frustrating at times, while we try to survive as a small company.

Good job to you for being able to handle it in-house. We dont mind selling to businesses like yours, maybe with a bit more profit though. Got to put food on the table...

Reactions:

(2)

Undisclosed Integrator #18

Interesting that you have such a large staff. I wonder who does the bean counting to determine what your total cost per installed camera is compared to your integrator? You may have an integrator that is gouging you or you may have an integrator that is covering all of the costs inherent with doing business with your organization. The bigger the customer, the more meetings and changes in a project. These costs have to be covered for the integrator to stay in business.

Although non-direct costs at the integrator are included in their price to you. You are only paying a portion of that cost, a slice if you will, every time they quote you. Your company is paying the total overhead burden for each of your team members all the time. This includes vacations, sick time, training, etc.. Do you factor that in when comparing costs or just the direct cost of purchased items?

I am with one of those Large Integrators and I only work with global customers. Several have tried your model, taking all of the work in house to cut out the integrator. But every one of them has come back to using outside integration contractors to do their work because in the long run, the big picture shows that they are getting a great deal of value from the outside integrator at a lower cost than they spent for in-house teams.

Reactions:

(2)

(1)

Undisclosed Integrator #2

In reply to Undisclosed Integrator #18

See, I don't think global customers are the ones that could benefit from in house. I think it's more the big localized businesses. Maybe they only operate in one state/province (that is the case with the end user I now work for as an in house integrator), or just a very small geographical area. Those are the types of businesses that could get value out of in house, depending on the amount of work there is.

I'm not saying every end user should, or will go in house, but I think there is a case for end users out there to have in house technicians.

I've worked for a smaller regional integrator, and a large national integrator and in my area turn over rate was very high for skilled techs. A lot gave up on the industry, moved to another province for more money, or even just another company. Some end users got very frustrated with this. They'd get used to a tech, the guy that knew their site and knew their system. Some of them did not have enough work to justify having an in house tech. But some of them did.

I don't know what level within his organization the original poster is, but speaking as a technician for an in house group of integrators, some one high up there is constantly monitoring the pros/cons of having in house. I can only speak for ourselves, but it's been five years now of fully contractor free, and several years before that where it was a mix. The uppers keep approving the budgets, so obviously there is cost savings.

Reactions:

David Coughlin

Protection One / ADT

I've posted some replies below but, I have a question...Is price a factor in a true and effective partnership with an integrator? In answering this question, bear in mind that all business have the purpose of maximizing their profits.

Also, what are the key factors for end-users using integrators?

Reactions:

Undisclosed #14

•Jun 06, 2018

In my role as a consultant, we advise clients through the bid process to award, then through construction administration all the way to our own final punch. I would say that it is 50/50 whether the low bid gets the project. There are plenty of other factors when it comes to selecting an integrator, and every interaction we and the client have with bidders (and integrators we've previously worked with) builds a picture of how the rest of the project will go. Price is part of it, but if we've done our job well the bids will come in fairly close. Many times our clients have chosen the high bidder because they felt most comfortable with that integrator.

Reactions:

(2)

(3)

David Coughlin

•Jun 07, 2018

Protection One / ADT