'Solution' Manufacturers Threaten Integrators

By: John Honovich, Published on Dec 09, 2016

The race to the bottom has driven manufacturers to become 'solution' providers, threatening integrators.

Axis shift to 'solution' sales might be the most surprising given their size and historic focus on open platforms, but we see it everywhere. In our discussions with manufacturer executives over the past year, easily a dozen have recently turned to solution sales, including companies that used to be well known for selling 'just' cameras or recorders.

The motivation is clear.

*** **** ** *** bottom *** ****** ************* to ****** '********' *********, threatening ***********.

**** ***** ** '********' sales***** ** *** **** surprising ***** ***** **** and ******** ***** ** **** platforms, *** ** *** it **********. ** *** discussions **** ************ ********** **** the **** ****, ****** a ***** **** ******** turned ** ******** *****, including ********* **** **** to ** **** ***** for ******* '****' ******* or *********.

*** ********** ** *****.

[***************]

Driven To '*********'

**** ************* **** ************ depended ** '**** ******' or '*** ******' *****, where **** ******** **** (or ** ***** **********) products *** ******* ***** 'magically' *** **** (*.*., without *** ************ ***** much ********) *** **-**** them ** ** *** users. **** *** **** disrupted.

**** *** ***** ************ manufacturers ****** **** ******* mass ****** ******** (*********, to * ****** ****** Hanwha *** ***** *** a *** ******). **** such *** ******* *** the **** ****** ** included *********, ***** *** support (*.*., *********), *** rest ** **** ****** compete.

** **** *******?

Enterprise ************ ****

***** ********* ************* *** increasingly ******* ***** ******** ***** teams **** *********** *** end *****. *** ******** certainly ***** **** ****** as **** ** *** sales ******* *** ** conducted **-**** *** **** is **** *** ****.

************* **** **** ***** are ****** *** ***** prospects *** **** ** win *** (***** **** here *** *** **** applies ** *****, *****, Panasonic / ** *** many ***** **** **** known *************). *** ** you **** ** *** it? **** **** ** the ***** ****** ** prospects you ****. ** *** used ** ** **** cameras, *** **** *******, VMS ********, *********, ****** control, *********, ***. *** may *** **** **** the ****** ** *********, but *** ***** *** double *** ****** ** revenue *** ********.

***** **** *** ************* are ********* ******** *********** labor, **** *** ************ including '******' (******* *********, design, ************, *************) ** win **** '*****' ** the ********.

*** ***** ******* *** 'solution' ************* ** *** potentially ********* ***** ********** as *** ***** **** of ** ******* *** be ****** **** * larger ********** ******.

Threat ** ***********

*** ******** *** ******** *** integrators - ********* ************ direct ********, *** ********* integrator **** ** ******, optimization *** *************.

**** *********** ** *** like ************ ***** ****** working ******* **** *** users. ************* *** ****, the ***** '********' ************ sale ******** *** ************ sales ****** ** ** so ******** ******* **** need ** ******** *** end **** *** ***** '********' (including *** ********** ****** parts) ** *** **** offering.

********, ** *** ************ sales ****** ** **** involved in ******* ********* (*.*., the ************'* ***-**-*** ****) and ****** ****** (** the ************ ******* ****** their ***), ** **** in ** *** **** of *** ********** ** a ******* ******* *** designer. ** *** ****** that *** '********' ************ is **********, *** ********** is ******* ** **** of * ****-***** / install / ******* ****.

*******, **** ** *** post-sales ****, *** '********' manufacturer ******. **** ** end-to-end ****** ****** ********, the ************ *** ******* their *** ********* ** optimize / ************ *** deployed ******, ** **** with ********** ****************. ****, the '********' ************ *** use ***** *** ******** developers ** ********* *** system *** *** ***-****. Indeed, ***** *** *** accidents *** **** ******* points *** *** ******* solution ************.

********** To '********' *************

*********, *********** ***** **** strengths, ********* ***** *****, installation *********, ********** **** multiple ************'* ********, *** freedom ** ****** *** best **********, ** **** just * ***. *** many *** ***** ********* the ***** ** *** being **** **** * single ********. *** ***** *** users **** ****** *** be *** ****** ** warrant the ********** ** ************ effort. *** ***** **** is *** **** ************* will ****** *** **** integrators.

*** ************* **** ********* of ***** *** - including************* *****, ************* ***** people, ****** ******** *********** staff, ***. *** **** of **** ************ ***** not **** ** ****** **** 'solution' ******** *** ** they *** ***** ******* shrink, **** *** **** as *** **** *** to *******, ******* ** creating ******* *********** **** their *********** ********** ********.

Vote - ****

Comments (29)

John, right on the money!

This sounds to me that this would work on paper but IMHO manufacturers don't have the resources to make this happen in the real world. I could see a couple of key accounts but beyond that without hiring a lot more field support people I think this would turn into a big mess.

IMHO manufacturers don't have the resources to make this happen in the real world.

It depends how far they go. If they try to do the whole project, including install, it would be hard at best, disastrous at worst.

But what I see manufacturers most often do is have their sales people work the deal from beginning to end, making sure all (or as many) of their products are specified. An integrator is brought in but typically with less responsibility / value since the manufacturer has done so much work (even if technically they let the integrator sell the project).

Of course, this varies across manufacturers how much they are doing this. But there are a lot of manufacturers who definitely want and are trying to do this now as a 'pivot' from their old models.

But what I see manufacturers most often do is have their sales people work the deal from beginning to end, making sure all (or as many) of their products are specified. An integrator is brought in but typically with less responsibility / value since the manufacturer has done so much work (even if technically they let the integrator sell the project).

I have seen this too and it works in the integrators favor IF the integrator does a good job and can install the system properly.

can install the system properly.

In that case, is the 'integrator' an integrator or an installer? It makes a difference in terms of the role and value the integrator provides.

This is a great write up as it is soo accurate. From my perspective we definitely want to work directly with the end user so we can increase the chance of selling our brand and also put forward what we believe is the best solution for the client. With the integrators we would want to push these jobs to those who are loyal to our brand.

You can definition put a good solution together by using parts from different vendors however sometimes this will result in a Frankenstein style system and other times a beautifully integrated system. With single vendor solutions you lower the risk of getting a Frankenstein.

There is obviously a lot of variability in the market, but in my experience the most savvy integrators embrace and own this, and use it to their advantage.

They bring the manufacturer into the process very early, and their ability to get someone from 'the factory' to visit the customer personally as a show of their pull with the manufacturer.

If the integrator did the design completely on their own, they might use a wider mix of products, but that also takes up time from their own staff, so they let the manufacturers SE's do the design, and push back only if the design has obvious flaws.

Then they present that design to the customer as an "officially sanctioned" system, which reduces their risk if there are support issues. They can lean on the manufacturer to send a tech out to fix things, and also save face with the customer, as it was the manufacturers own design/spec. There is still risk to the integrator if the design totally blows up, and that is why the integrators still have to review and understand things to ensure there are no massive holes.

This method does run the risk to the integrator of reducing their perceived value with the customer, but there is still a lot of work involved in the installation, setup, ongoing maintenance and other items that the manufacturers do not really want to touch, and this gives the integrator room to add value.

I think this trend is also driven by customer demand as much as manufacturer desperation. Customers want to know that the company behind the products they are purchasing has some heft and presence. They also want reassurance that the system is going to work as advertised, so that manufacturer involvement is comforting to them.

Some of the customer-driven side of this may be due to the earlier days of IP, where integrations were more fragile and products overall less robust than current generation products. Finger-pointing between the multiple manufacturers involved, and the integrator, about who should own the solution was not uncommon.

Overall, I think customers want that involvement from the manufacturer, and are suspicious of integrators that try too hard to act as a "firewall" in that relationship.

I completely agree. I will also add that in my experience manufacturers want to work with integrators that they can trust to complete the deal and get the job done right. Some of the stories I have heard were an integrator completely screws up a "done deal" blows my mind.

Yes, as loyalty wanes and integrators are trying to support multiple manufacturer's lines so they can respond to more opportunities, the manufacturers are realizing that they need to do a lot more footwork to either get their product specified (AXIS and Avigilon come to mind) so that it doesn't matter who the eventual integrator is, or the manufacturers are finally taking the bull by the horns and spearheading the time and effort required for providing what the end user wants (from an integrated solutions standpoint), which pulls their own producst in along for the ride.

Long sentence, I know .. lol , but essentially I am agreeing with John.

The days of integrators getting really good at one main product line (Whether access ir video) and selling the heck out of it are starting to become a thing of the past. While this big cloud of dust is being stirred up (With the integrators responding to the pressure to become more things to more people), the manufacturers in some cases are seeing this as an opportunity to slide into the role that John describes and be front and center with the large end users.

By this time, the integrator (who often knows more about the various parts and pieces that make up the overall solution) are burdened with making a non-optimal solution work in order to stay in the race for the end user's business as well as sometimes settle for the installation and start-up labor.

From what I am seeing, the video side is still much more susceptible to the manufacturer threat than the access control side. Access control still has more unique nuances and risk components and there are often multiple approaches to a solution (from a locking hardware and system architecture standpoint).

It's been rearing its ugly head for years. You would have to be blind to not see it.

With security becoming more and more of a commodity, I would not want to be an integrator today. Let's not forget, 60 years ago, you needed to call a professional installer to get a new telephone. Over the years, phones became commodities. Sure, you still have a need for installers and technicians on very large phone systems, but the vast majority are exceedingly simple. Behold the future of security.

With security becoming more and more of a commodity, I would not want to be an integrator today.

Are things really better off as a manufacturer? ;)

Of course, some manufacturers have it good, some integrators have it good, but my gut feel is that life is better right now for the average integrator than manufacturer, agree/disagree?

John, this article speaks directly to the "basis of design" for the training information I sent you. Selling "widgets" or even a well designed solution is commodity based if not done with a comprehensive risk mitigation strategy in mind. Very few people in our industry understand the concept of Critical Incident Response and the associated liability for not having a clearly designed plan. The plan must include the use of electronic countermeasures and an understanding of things like Incident Command, Resource Typing and associated regulations and legal terms like the General Duty Clause and the Reasonable Man Test. With Active Shooter/Killer incidents on the rise mitigating liability risk is essential to create safer work spaces.

...want to be a manufacturer/integrator/distributor today....

Pick the right one for you.

I pick ...want to be a customer today....

:)

...manufacturer/integrator/distributor...

I pick ...want to be a customer today....

Sure, but the pay is lousy and you never get a day off :)

With all due respect, I think you've got it wrong. From my perspective what is happening is the maturity and redefinition of the integrator. True, there has been a lot of commoditization (sp?) over the years, especially in video surveillance. And that trend has pushed out a lot of folks, or at least threatened them financially. But it has also opened opportunities for an integrator with skills in networking, true software integration, etc.

We have seen ourselves priced out of the smaller projects, no doubt. But we have more and more business with clients who demand higher-end solutions and services that only a few can offer. And, those are larger projects. For us, that's been our sweet spot and we are growing.

I think it's a great, even exciting time to be in this business.

My .02; your mileage may vary.

Greg

This is interesting discussion on a couple different fronts but after all is said and done, integrators can't survive without reliable manufacturers and manufacturers can't survive without reliable integrators (at least mid-market to enterprise).

Consider the typical project cycle of prospecting, selling, designing, purchasing, installing, commissioning and servicing. Then look at weaknesses in the chain from a manufacturers standpoint and from an integrators standpoint.

From the time I entered the security industry in 1986 to roughly early 2000s, different manufacturers made different pieces of the puzzle. With modest exception, one made lenses, one made cameras, one made media converters (of various flavors) one made multiplexers or matrixes , one made recorders (and onto DVRs in early 2000's). In general, manufacturers sold pieces of the puzzle to integrators. Integrators had to make sure the puzzle was put together properly to implement the final solution. A manufacturer could "sell" the value of a lens, a camera, a multiplexer to an integrator. They would be pretty hard pressed to convince a security director that an aspherical lens at f0.8 was better than a plastic lens at f1.6.

Enter 2000's and the DVR. All of a sudden there was a quantum leap in performance of arguably the hardest thing to do in video; find out what happened in the past when I wasn't looking. As a representative of a DVR manufacturer in 2000's, I told integrator sales to get meetings in front of the end user. They won't believe how cool this thing is. It worked. We sold truck loads of DVRs because of the compelling value of an emerging technology. I can now do in six minutes what used to take me six hours. From an integrators standpoint, most of the sales team did not have either the knowledge or the hardware to conduct this presentation. They needed manufacturer support and everyone succeeded. It was partnering.

Enter 2007 (or so) and beyond. The shift to IP video in its midst. Decreasing need for putting the right lens on the right camera. Decreasing need to select the right media converter. Decreasing need to configure a matrix. However, there was/is an enormously increasing need to learn a technology very few in the security industry knew or would be able to know fast enough: networking. The heated trials of whether the manufacturer or the integrator holds full responsibility for a system design provides for some troublesome transitional times and ONVIF is not all it's cranked up to be.

From there, the manufacturer realizes it needs to get closer to the project earlier in the process in an attempt to preclude these headaches. Then they realize touching the end user, the design and the solution with the integrator works really well and is increasing sales and decreasing headaches for everyone involved. Marry this to the simultaneous evolution of manufacturers solely providing more and more pieces of the puzzle and you have 2016 and beyond. With an integrator sales force that is largely deficient in presenting value and differentiation for any manufacturer, it seems consistent that manufacturers will continue to extend their reach to end users to support their integrators with their solution that works and makes both profitable.

A lot of times, this isn't the manufacturers who jump in, but the distributors instead. Especially for inexperienced "integrators".

You can buy a new car from a dealership or you can buy a used one.

As a small integrator, I rarely even see mfg reps at my clients sites. We do have one larger client that does get visits, but the reps seem to respect our relationship and haven't offered to sell direct. I think they figure if they can close us as an integrator, they could potentially sell to more than one client at a time. It certainly could work in this particular case. But, if the rep didn't trust/like us, I could see him jumping over us and trying to sell direct.

Its all part of the "race of the bottom". Integrators that operate in a lowest-bidder market must understand that their business is under constant threat by competition willing to do the same work for less money.

It should never be a surprise to find new challengers. Expect them; especially from those that understand the vulnerabilities and have the leverage to exploit them. Manufactures and distributors with deep pockets will always be both partner and contender.

The answer to constant competition is to remove yourself from it. Differentiate by such a huge factor that it would take the competition a decade to catch up.

Differentiate by such a huge factor that it would take the competition a decade to catch up.

Yes, a decade or more of differentiation is hard to beat.

Pro tip: Don't think you are safe if you are "light years ahead of the competition".

This is erroneous, as a light year is a measure of distance not time ;)

The constant is light, not time, per Albert Einstein. And the movie Interstellar. Right?

The constant is the speed of light, the UOM is one of distance. A light year is ~6 trillion miles.

Interstellar...

Haven't seen it yet, but not all stellar movies can be trusted on matters of astronomical time and space though; when Han claims the Falcon can do the "Kessler run in 12 parsecs" he implies parsecs are a measure of time, when they actually refer to distance as well.

In my opinion, if you call your self a systems integrator and then need help figuring out how to put a system together - choosing products and communicating value to your customer - so you then call in a distributor or manufacturer to help - then you should go find something else to do for business.

Likewise, if you are a distributor or manufacturer and you come to see me and tell me how you have all these great people - engineers and designers that can help me choose products and configure systems/design systems etc., please don't. All you are doing is showing me that you have structured your business to help my competitors that don't know what they are doing.

I understand what you are saying, but I think your examples are a bit extreme.

At some basic level, those using the term "integrator" should certainly know how to design and install systems that cover basic things. Items like being able to choose appropriate cameras for standard scenes, compute storage calcs, select appropriate VMS licenses and server specs for typical applications, etc.

But what about the cases where a customer says the cameras at 5 remote sites are going to share a backbone that is also carrying VoIP traffic and credit card processing data, and they want assurance that the cameras at that site can be appropriately viewed/managed at the central SOC. Or when they want integration with their POS system and also a legacy access control system? Is there no benefit or value in having the manufacturer's engineers provide input there?

Do you think your customers would not be impressed by having employees from the manufacturer participate with you on presentations for larger systems?

My examples were extreme, I was trying to make a point. Bringing in a manufacturer on manufacture specific issue post sales is of course not at issue, bringing in a manufacturer on a manufacturer specific feature such as their POS integration pre-sales is not in question. But likewise bringing in a distributor to meet with an end user to discuss bandwidth and storage, a distributor should not be supporting this kind of endeavor. A distributor should not be assisting in troubleshooting a system, this crosses a line in my opinion... My real point is the comic nature of a distributor coming in and telling me about all his resources, that he has available to design, program sometimes and troubleshoot systems - basically performing our function (but no risk).

I agree with you in regards to distributors, I would not put distributor and manufacturer pre-sales help in the same category.

In my 25 years of experience as a sales professional working for a manufacturer, I have done everything from design to the end until the integrator does the installation.  We have eliminated the integrator in the process now, as sometimes the integrator loses site of what the end-user really wants and can make things more complicated.  We now have a network of highly trained integrators that do our installations for us and we have added an installation department to our staff as well.

We changed to this model over a year ago now and it has been very positive for the end-user, integrators and for us as the manufacturer.   Now we are working with directly with the end-user we have a better understanding what they really want and what they really need.  What we have found is even with the right solution it doesn't always solve the internal theft problems.  We now have Loss Prevention Serves. Loss Prevention auditing services  provide a turn-key Loss Prevention solution.  Our professionals function as the in-house Loss Prevention department for businesses that have the same Loss Prevention issues of larger retailers, but do not have the dedicated staff to manage the problem.  The LP services is a monthly subscription per location.  We have reoccurring revenue every month on services and software subscriptions and warranties.  So far this new model is very profitable and all parties involved are happy.

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