Even Post-Recession, Integrators Will Face Rough Seas

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As the economy emerges from the recession, integrators and resellers should expect to face more demanding customers and tighter margins.

The consensus among integrators, consultants and vendors at this week's ISC West Conference and Exposition was that IP networking, increasing standardization and Internet sales will continue to exert pressure on pricing and margins. Integrators who expect to thrive post-recession will have to turn to solutions-oriented, value-added selling and expansion into managed services.

Thumbnail image for ISC_West_Logo copy.jpgThe recession, combined with the transition from analog, proprietary security systems to digital open platforms, has forced a permanent reorientation in the integrator channel, said panelists in yesterday's State of the Industry Panel that kicked off the show. Although the economy may return to 2006 levels, the 40 to 50 percent margins integrators once enjoyed on projects will not, said Bill Bozeman, president and CEO of PSA Security Network. Margins instead are more likely to be far closer to the IT channel average of 7.9 percent.
 
Meanwhile, customers will be more demanding than before, said Ed Bonifas, vice president of Alarm Detection Systems Inc. and president of the Central Station Alarm Association.

In general the panel agreed that to continue to thrive, integrators will have to move away from a project-to-project business model and nurture more long-term relationships with customers. Managed services and hosted, software-as-a-service (SaaS) solutions, which have appeared in access control and now, video monitoring, also hold promise for integrators. Although Bonifas believes the central station will continue to exist, it will have to adapt to the virtualization trend emerging as part of network-centric security architectures and concepts such as cloud computing.

On the show floor, industry executives' thoughts echoed with the panel consensus.

"Integrators have to stop thinking about the projects and start thinking about customers," said Jason Oakley, CEO of North American Video, which this week has been showcasing the Honeywell-based integrated digital security system it architected for MGM Mirage's new Las Vegas City Center and Aria resort and casino. Although NAV has done considerable work for MGM Mirage properties in the past, the City Center contract, marking the gaming company's  roll out with digital, took the work "to another level," Oakley said. Before awarding the bid to NAV, MGM Mirage put NAV through an evaluation process to satisfy itself the integrator had the necessary IT expertise. "It's not enough to have a relationship with the security guys," Oakley said.

'Who's the next Brivo?'


Managed services offer the promise of replacing the recurring revenues that were once a dependable part of burglar alarm monitoring, said Jay Hauhn, vice president, technology and industry relations for ADT Security Services. Companies like Brivo Systems, which offers a hosted access control system, offer a perfect new model that can be a "win-win" for customer and integrator. "Who's the next Brivo?" Hauhn asks rhetorically, and suggesting that it will come in hosted video.

Integrators will also be looking to new forms of training and certification. NAV regularly puts puts its installers through the Microsoft Certified Software Engineer (MCSE) and Cisco Certified Design Professional (CCDP) programs to add IT and IP networking expertise to their portfolios, Oakley said. Vendors also are also supporting their channel in way that stress the value proposition of networking.

"To an integrator, digital looks like a loss of revenue," said Dave Tynan, vice president, global sales and marketing for Avigilon, which this week introduced a certification program on the Avigilon Control Center value proposition, one of four modules that make up its new Avigilon University program. But at the same time, Tynan said, the job can be much less labor-intensive. "When there's less mystery and bafflement to an installation, it's less labor-intensive to install."

Tynan sees the security integration reaching a third stage. The first was simply assembling pieces and parts. The second assembled pieces into logical components that add some value. The third is where an integrator works in tighter partnership with both vendor and customer to provide larger business value. Tynan sees a role on the part of manufacturers, especially those like Avigilon, which are built around IP networking, open standards and cross-platform integration, as critical in educating the channel.

Similarly Firetide, which at the show introduced a point-to-point, 35 Mb/s wireless bridge for outdoor wireless cameras connections, also spoke to its role in vendor training in wireless mesh wireless. "It's a challenging proposition," said Ksenia Coffman, senior marketing manager at Firetide. "You have to know security; you have to know networking; and you have to know RF."

The benefit, however, means that integrators have a chance to become a trusted resource to the end-customer, she said, especially because so many wireless projects, Coffman estimates 75 percent, proceed in phases. "The best integrators know the more corners you cut early in the process the more problems you run into later," she said. "When you're certified it has to go right the first time." As the project builds out, integrators who have demonstrated both expertise and value stand to become "a trusted adviser" for the long term.


As the economy emerges from the recession, integrators and resellers should expect to face more demanding customers and tighter margins.

The consensus among integrators, consultants and vendors at this week's ISC West Conference and Exposition was that IP networking, increasing standardization and Internet sales will continue to exert pressure on pricing and margins. Integrators who expect to thrive post-recession will have to turn to solutions-oriented, value-added selling and expansion into managed services.

Thumbnail image for ISC_West_Logo copy.jpgThe recession, combined with the transition from analog, proprietary security systems to digital open platforms, has forced a permanent reorientation in the integrator channel, said panelists in yesterday's State of the Industry Panel that kicked off the show. Although the economy may return to 2006 levels, the 40 to 50 percent margins integrators once enjoyed on projects will not, said Bill Bozeman, president and CEO of PSA Security Network. Margins instead are more likely to be far closer to the IT channel average of 7.9 percent.
 
Meanwhile, customers will be more demanding than before, said Ed Bonifas, vice president of Alarm Detection Systems Inc. and president of the Central Station Alarm Association.

In general the panel agreed that to continue to thrive, integrators will have to move away from a project-to-project business model and nurture more long-term relationships with customers. Managed services and hosted, software-as-a-service (SaaS) solutions, which have appeared in access control and now, video monitoring, also hold promise for integrators. Although Bonifas believes the central station will continue to exist, it will have to adapt to the virtualization trend emerging as part of network-centric security architectures and concepts such as cloud computing.

On the show floor, industry executives' thoughts echoed with the panel consensus.

"Integrators have to stop thinking about the projects and start thinking about customers," said Jason Oakley, CEO of North American Video, which this week has been showcasing the Honeywell-based integrated digital security system it architected for MGM Mirage's new Las Vegas City Center and Aria resort and casino. Although NAV has done considerable work for MGM Mirage properties in the past, the City Center contract, marking the gaming company's  roll out with digital, took the work "to another level," Oakley said. Before awarding the bid to NAV, MGM Mirage put NAV through an evaluation process to satisfy itself the integrator had the necessary IT expertise. "It's not enough to have a relationship with the security guys," Oakley said.

'Who's the next Brivo?'


Managed services offer the promise of replacing the recurring revenues that were once a dependable part of burglar alarm monitoring, said Jay Hauhn, vice president, technology and industry relations for ADT Security Services. Companies like Brivo Systems, which offers a hosted access control system, offer a perfect new model that can be a "win-win" for customer and integrator. "Who's the next Brivo?" Hauhn asks rhetorically, and suggesting that it will come in hosted video.

Integrators will also be looking to new forms of training and certification. NAV regularly puts puts its installers through the Microsoft Certified Software Engineer (MCSE) and Cisco Certified Design Professional (CCDP) programs to add IT and IP networking expertise to their portfolios, Oakley said. Vendors also are also supporting their channel in way that stress the value proposition of networking.

"To an integrator, digital looks like a loss of revenue," said Dave Tynan, vice president, global sales and marketing for Avigilon, which this week introduced a certification program on the Avigilon Control Center value proposition, one of four modules that make up its new Avigilon University program. But at the same time, Tynan said, the job can be much less labor-intensive. "When there's less mystery and bafflement to an installation, it's less labor-intensive to install."

Tynan sees the security integration reaching a third stage. The first was simply assembling pieces and parts. The second assembled pieces into logical components that add some value. The third is where an integrator works in tighter partnership with both vendor and customer to provide larger business value. Tynan sees a role on the part of manufacturers, especially those like Avigilon, which are built around IP networking, open standards and cross-platform integration, as critical in educating the channel.

Similarly Firetide, which at the show introduced a point-to-point, 35 Mb/s wireless bridge for outdoor wireless cameras connections, also spoke to its role in vendor training in wireless mesh wireless. "It's a challenging proposition," said Ksenia Coffman, senior marketing manager at Firetide. "You have to know security; you have to know networking; and you have to know RF."

The benefit, however, means that integrators have a chance to become a trusted resource to the end-customer, she said, especially because so many wireless projects, Coffman estimates 75 percent, proceed in phases. "The best integrators know the more corners you cut early in the process the more problems you run into later," she said. "When you're certified it has to go right the first time." As the project builds out, integrators who have demonstrated both expertise and value stand to become "a trusted adviser" for the long term.


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