Declining margins are one of the biggest problems for integrators. Nadim Sawaya [link no longer available], the creator of the Certified Security Project Manager program, says he has found a formula for integrators that will both maximize profits and increase success rate. We recently talked with him about this formula and other things such as:
Maximizing Profits
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Project ******** ****** ** ******** ****** *** ***** *******It is important to involve the project manger early on, and the project manager should see their role as more than just oversight of the execution phase, but contributing as needed during the sales process. Project management starts way before a project is sold, he says. From the first lead, to preparing and estimate and the initial site survey, the project manager should be involved. Project managers should have a role along the way to help provide accurate estimates on installation, engineering and making sure a job is going to be the same on paper as it is on site. After the sale, however, he says complete control should go to the project manager.
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My experience, both in telecom and security, was that most project managers were weak. They acted more like secretaries or bureaucrats who would twiddle with gantt charts but not have a clue what was really going on.
However, I do see the value in strong management but I also found the problem in getting strong managers. Typically, either sales or engineering ruled.
Agree/disagree? Thoughts?
Really good article. I think a lot of integrators are struggling with this. We are not as confident as the IT industry to charge for the right services up front like engineering and design because of exactly what you outlined- the fear of losing the job. Death by a thousand cuts is how a lot of integrators continue to lose throughout the entire job. What happens in some cases is an integrator will win a big job or several big jobs and take the profit hit so he can shop the revenue to the banks to extend credit and the viscous cycle continues. I have also seen a lot of integrators fail to close a job and deliver a completion documentation to end user that clearly states that they are transitioning to the service team and will be charged applicable rates.
It's taken awhile to get our company to invest more in documentation. But the biggest has been in prepping equipment before deployment. Before everything was a rush to get it out to the field and setup as we go, which cost a lot of wasted hours in the field when the techs should be concentrating more on installing the equipment. It's been like trying to get an oil tanker to change course but they've finally come around.
Some of the most profitable integrators that I have worked with over the years are the ones that know what they are good at and stick with it. They find one or two profitable market niches and become experts in serving these sectors. They don't try to be everything to everybody.
Along the same lines, they are very strategic in deciding which products to represent and don't take on new products just to meet a spec or to satisfy the needs of a single customer. As a result, they get very good at working with the products that they do choose to represent, and because of their loyalty, often receive preferential treatment from their manufacturers.
For example, I work with one integrator who just does small to medium sized access control systems. He uses one of the second-tier (IMO) brands exclusively, and does tons of work for property managers in the commercial office building environment. Despite requests from his customers and me, he doesn't do video, intercom, or intrusion alarm. His techs just crank out tons and tons of access control projects, month after month and year after year. As a result, they are highly efficient, and deliver excellent quaility work in a unbelieveably short amount of time.
I haven't seen his financials, but by all appearances (and by the prices he charges), this operation has got to be highly profitable.
Michael, good example. How many employees (roughly) does that integrator have? I suspect that a reason many integrators do not stick to niches is that they want to get bigger.
Michael, please don't think I'm doubting what your saying, I'm not, but it just seems like so counter to what we've experianced. We have so many clients with access, alarm and video that would have walked if we only did one because they did not want to deal with a bunch of different companies.
If we did a niche like gate systems or visitor badging or fire detection, that's one thing. But to only do access and be highly profitable in it, unless you service a national chain and you only exist for that client, seems pretty fortunate.
I have only observed this integrator's operations from a distance (we both work for the same national property management company client) so I can't back-up what I am saying 100%. All I know is, when asked to install a fairly simple video system in a parking garage, this company declined on the basis that it was out of their area of expertise. I was very surprised but also impressed.
The point I was trying to make is not that a integrator should only install one category of system, but rather consider finding something that they are very good at and specializing in it. With repetition comes efficiency and with efficiency comes profitibility.
This strategy won't work for everyone, particularly for those who work in rural areas. An integrator I used for a project in rural Minnesota also was the town's copy machine repairman and serviced and installed two way radios.
Micheal, that I would agree with. Thanks for the elaboration.
