Integrators are engineering many parts of the system, but new convergence parameters are helping them achieve total solutions in a bit easier fashion. It's a tough game of how to deliver what the customer wants and still make money. How do integrators track profitability? We went to two systems integrators to find out.
Q. How do you margin in the revenue of the services you offer and what specific types of services or resources do you offer an end-user on a bid project to achieve RMR?
John Strauss, security and life safety sales director, Sound Inc., Naperville, Ill.: "On jobs where the specifications require, or a customer prefers to pay in advance, we include the annual service fees in the price of the proposal. We calculate the initial cost by analyzing client's requirements; quantity and type of equipment; cost of equipment; history with similar equipment; estimated labor hours/visits to site based on prior history with various systems and equipment; manufacturer's warranties; and the number of visits and labor hours required for preventative maintenance. These numbers are calculated using proprietary formulas and the resulting amount is included into the job sale price. For clients who desire a separate annual maintenance contract with monthly, quarterly or annual billing, the same numbers are calculated and applied to our formulas. Maintenance costs are tracked for each client via our service dispatch, job costing system. At contract renewal, the costs are reviewed and compared to the existing contract. Where acceptable profit and overhead margins are not met, the maintenance contract is reviewed to determine if the contract was undervalued or if the overrun was an exception.After the review, a determination is made whether the contract needs to be adjusted and the renewal contract is presented to the client."
Mike Kobelin, vice president of Sales & Marketing, Aronson Security Group, Seattle: "ASG focuses on the ROI and value of our proposed services that involve a recurring monthly fee. If we cannot return a 10/1 value for the services we offer, we have to question the viability of the offering. The key term in this question is 'bid.' Ironically, the very nature of supplying security solutions seems to be viewed by the common 'reseller' and his 'buyer' as a commodity. At ASG we feel creating a 'bid' from a spec document is probably going to result in an un-informed and undervalued solution especially if it infers a long term, month-over-month service. ASG provides assessment services that target key aspects of the security program within our clients that facilitate value exchanges between people, their roles and the core processes that deliver value to the security of the business. This discovery process inevitably uncovers areas the client is unable to resource or maintain. We customize a program to help bridge the gap. For example, ASG can supply month over month project management, design and maintenance services as well as monthly advisory and performance management/maintenance services."
'SNEAK PEEK' AT U.S. INTEGRATION STATS
According to IMS Research, Wellingborough, United Kingdom, integrated systems will account for over 70 percent of the total security systems installation and maintenance market in Europe by 2013. Now, the market research firm turns to the U.S., with a similar report. Here's the scoop:
"The report on the market for security systems integration breaks down the market in three major ways. The first looks at the different costs within a project, comparing the revenues from equipment sales with installation cost and service and maintenance contracts. Second, the Americas market is segmented by geography, splitting out the U.S. and Canada in North America and also Argentina, Brazil and Mexico in South America. Third, U.S., Canada and Latin America are split by 12 vertical markets with forecasts from 2010 to 2014 for each."-Ewan Lamont, market analyst, Video Surveillance & VCA, IMS Research
