Top 5 Integrator Concerns

Author: Brian Rhodes, Published on May 21, 2012

What concerns keep integrators awake at night? During our recent visit to PSA-TEC, we informally surveyed integrator attendees and asked them 'What are your biggest business concerns?" In this note, we compile that feedback into major themes and share below.

Overview

While this survey was very informal, common answers emerged from integrator responders across size, location, and years in operation. We engaged these PSA-TEC attendees during session breaks, hosted dinners, and after hours. The answers they gave can be categorized into the following groups:

  • Narrow Margins
  • Complexity
  • Unclear Value of Integrators
  • Elusive Young Talent
  • Competition is Everywhere

Narrow Margins

The strongest concern integrators expressed were that profits are quite simply not what they used to be. As noted in our recent integrator survey, markups of less than 25% are common. With lower profits, the total volume of 'won' jobs must grow to cover overhead costs. In turn, increased competition for these valuable opportunities drives margins down.

Interestingly, the pinch of small profits was an topic addressed in conference breakout sessions. As a rebutting strategy, PSA hosted several meetings themed to "Grow RMR" opportunities in the integration business. Undoubtedly, multiple factors of competitive pricing pressure, commoditization of hardware, and a tough economic environment have contributed to this concern.

Complexity

Many integrators also noted difficulty in keeping pace with product improvements. This is more than an 'IP vs. Analog' debate, as several experienced IP integrators suggested that they spend significant capital training technicians and salesmen on the features and function of a product, only to have later updates undermine their efforts.

Not only is system specification and selling complex, the time required to train new talent takes longer compared to years past. As a result, one integrator noted that his technician staff have become much more segmented in their skill sets. He explained that technicians doing 'access control' have difficulty quickly switching install skills for 'video' work in the field. This integrator explained this fragmentation is much deeper now that in years past, and it is a difficult situation to plan work around.

The complexity objection is a slippery slope for manufacturers to walk, as seen with recent examples of 'DIY' product offerings. When these easy-to-install and configure products enter the market, integrators condemn these moves as aiming to 'cut out the integrators' entirely. While the dynamic technology environment has accelerated compared to decades past, the pace of development will always require integrators to adapt.

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Unclear Value of Integrators

Several attendees mentioned difficulty establishing the value of security integrators in end-user minds. They suggested this experience may be a side effect of the 'convergence' effort that places a premium on the 'technology generalist' skill sets of a security integrator. However, this positioning is confusing to end users who see no special advantages in hiring a security integrator rather than handing over physical security design and installation tasks to IT subcontractors or physical plant maintenance workers.

Elusive Young Talent

Several well-established and mature integration firms expressed difficulty in finding and keeping young talent for technician positions. Aside from the salty comments regarding the lax work ethic of the younger generation compared to their predecessors, it is a clear pain point that capable entry level workers find integration work too dirty or too boring to stick with. Two integrators mentioned to me that despite tough economic conditions, they have had unfilled technician positions open for several years.

One integrator criticized vocational trade schools as unfairly portraying security integration as too limited for 'serious' IT workers to enter. He explains that many of his young staff are surprised to learn the opposite is true, and that those who enter the security integration business are often required to apply a much broader set of skills than those employed in tightly defined traditional IT support roles.

Competition is Everywhere

While the source of this threat is still undefined, integrators see evidence that other businesses and markets are encroaching into the security space. One integrator mentioned that the local Telcos are actively selling/bidding against him in his home market. Another shared that general IT service companies have aggressively moved to take his customers. Many integrators registered audible disgust at Pelco's parent Schneider Electric downplaying the impact of directly competing with independent integrators. While no consensus exists where the biggest source of this threat is originating, many integrators agree that the 'security space' is no longer off-limits for outside competition.

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