Four integrators sat down with SIW during the Cloud Security Summit in Austin to talk about the breakneck pace of technology innovation and how they’re balancing growth with profitability.
Integrators today are facing many pressures on their business, from evolving technology to supply chain uncertainties to labor shortages.
At the Cloud Security Summit hosted by Eagle Eye Networks and Brivo, four integrators sat down with SecurityInfoWatch.com to talk about the future of the industry, the emergence of AI, how they’re trying to scale up their business without hurting the bottom line and more.
Participating were Lon Bazelais, president and co-founder of Grid Squared Systems; Chris Gilbert, President and Founder, Security Pros; Lucas Ingala, founder of Watchmen Security; Justin Stearns, Vice President and Partner of Chimera Integrations.
SIW: What's the biggest challenge facing your business and are you trying to tackle it?
Gilbert: For us it’s scaling up with the people that we currently have and being more intentional about how we go to market within our verticals. We teach a risk-assessment program to allow the advisory team to go out and meet with the customer, spend time with them, learn their business deeper on the front side, and start to plug in all the feature sets of the program. Locking the door is one thing, but there are 20 other things more important that allow us to get deeper into the building. Then we end up with a lot more technology and recurring services. The more recurring services we can drive, the stronger we've become.
Bazelais: We've got a good solid RMR base because I've been selling Brivo, Eagle Eye Networks and other RMR services for a long time. I'm trying to scale up with not scaling up people. We must get people to service more clients, but getting these people to mesh, and communicating the company’s goals to them is more challenging than I anticipated. You've got to grow as a person so you can grow the company and then you've got to grow with other people. And when you start the company, you're just hungry and aggressive and you're like, "Yeah, I could do this better than this guy." And before you know it, you're almost 20 years in and you're like, "How do I level up?” And then I must get everyone else to level up. So, we're getting there.
Stearns: I don't want more customers. I'll make more money with fewer customers and employees. Those two numbers seem synonymous. If I have more customers, I need more employees. I figure if I have fewer customers we do more for them. So, we're expanding our services. We just bought a cybersecurity company that's focused on reselling through integrators. There's a gap in building security because there's no synergy between physical and cyber. Both of those doors are open, and both are compromised. So how do you do more with less?
Ingala: You’ve got to commit first and figure it out later. I think that's how we all started our businesses. When they say you need to work on not being the smartest person in the room, I have no trouble with that.
One thing that I've done well is just getting the right people around me to help fill in the gaps. I know I'm good at just a couple of good things. We take that model at our senior leadership team level and have our leaders and organizations start building their teams, filling in the cracks around them as leaders. Everything rises and falls on leadership. And if we don't have the right people in the right seats doing the right things, then it can get messy fast.
Gilbert: We've had technicians come to us after getting beat down by the satellite industry and they were great. I hired four of them. I doubled their income in the first year and they were blown away. They'd worked Saturdays for 11 years straight. I'm like, "We don’t do Saturdays" and now we're trying to not do Fridays. And they’re like, "What?"
Bazelais: It's the same thing with the people we're selling to. You have to know who you're selling to. It's selling to millennials and they're used to paying for things on a subscription. We've got to know the people we’re hiring and what they like. Of course, they want money. But they want to feel part of something bigger.
Ingala: We haven't lost a technician in two years, right? Techs are an extension of who we are and the customer is buying that. I believe we have the best technicians in the country. These guys are phenomenal at what they do. They do better job than anyone in the office could ever do. When they go out and they interact with the customer, they’re like, "Wow, this is amazing." And we get that feedback from our customers and that's an extension of who we are.
SIW: How is your journey to increasing RMR going? What challenges are you having tried to increase it?
Bazelais: There's nothing that we put out there as far as proposals or estimates or pricing to a client that does not have an RMR component.
Gilbert: I'll give you the one trick. The trick to growing it is how do I charge for more days of storage or higher resolution in the cloud? Selling is not hard; it's getting the customer to see value in some of the feature sets of the APIs and the integrations. We go through these organizations, and we get champions within the organization that says, "Hey, we're going to do this. We're moving the whole thing to the cloud. We’ve got 15,000 cameras. Let's do that."
Then he hits a brick wall because leadership might say, "Well, you’ve put in cameras that last for 15 years. I'm not doing that." At bigger organizations, a lot of those leaders don't like change. Well, it is today because it's changed in the last 20 years. And so that's a challenge to grow an RMR within an existing organization too.
Justin Stearns: What I like about Eagle Eye is you get that soft opening for change. Using CMVR with on-prem storage with one frame per second, seven days of cloud storage just inherently with it. That's exceptional value for a few bucks a month, right? I hardly sell a bridge anymore.
There's been a couple of instances and I swapped it down and put CMVR in anyway. Some people ask, "How do you get customers to buy in the cloud?" First, I never talk about the word cloud -- ever. It's not in my vernacular. That's not the solution. That's just a feature. I don't buy a truck because of the type of stainless-steel washers it has. It doesn't matter.
Ingala: To increase RMR you must be thorough in the sales process and make sure you're identifying all the pain points that the customer has. How are they running their company? How are they parking cars? How are they managing employees? How do they make decisions? When you start slowing down and peeling the onion back, you'll find out there are a lot of different layers integrators can solve on a lot of various levels.
SIW: How well are you doing selling hardware as a service?
Stearns: It's a huge deal. There's a new IoT company that is pre-market right now, but it's asset tracking and there's no cost for implementation. They can do a 400,000-square-foot hospital with no wires and no money down. That's amazing. The ROI is right in front of you and will make you money instantly without having to invest anything. That's a tough hurdle for us. Yes, there's an ROI here, but I'm going to need you to give me $300,000 for the system first and then you're still going to pay me $20,000 a year.
But HAAS is a game changer for everybody. When you're doing the initial project, the problem is nobody has any capital at all. Our receivables are climbing right now because it's going downstream. I'm feeling the financial struggles that the country's having right now watching my receivables just go up and up and it's like, "I'm not a bank." So now we offer financing on every job and I'm trying to figure out hardware-as-a-service in a way that's palatable for us.
Gilbert: In our markets, they don’t because their business model doesn't allow us to do it. They would rather pay us cash and be done with it. They want to pay us cash too. "Here's the stuff. We want to buy this and we'll pay the monthly fees. We don't want to do the hardware thing. We don't want that big monthly coming out. We want the cash flow to stay with us. Let's go." Or I'm doing municipalities that don't care.
Lon: I get both. Office suites are happy to pay for the installation. It's not a big deal. But if we have a big building project they're not wanting to spend CapEx money and want to put it on the operating side.
Ingala: Hardware as a service works. We had a couple of projects where we did that, and it was profitable. It just takes a long time to get your money back and you must have a lot of money to make it happen. For a company our size right now, it doesn't make sense to go through that much stress and be overleveraged that much.
SIW: What are your biggest questions or concerns about artificial intelligence (AI) as it pertains to your business? What opportunities do you see utilizing it?
Ingala: AI is a big buzzword right now. I'm like an old farmer. I just try to keep it basic and simple. But it’s just like anything else we're selling. If we can make something better with AI there's an opportunity to serve the customer better, but you can go down the rabbit hole where it's too complex.
Gilbert: We don't have a complex system. We're going into a business and must dive really, deep to figure out what's going. I'll use logistics as an example. I need the truck numbers. I need to know when this pallet got on that trailer and that trailer leaves the lot, then comes back to the lot. At the new place, where's the truck in transit in between? Is my guy wearing his helmet? Does he have his safety vest on?
That's where AI starts to be exciting. But it's a complex sale. You've got to have the right people, the right culture and the right expectations to shift and change. And to challenge a customer -- sit across the table from them and say, "Hey listen, you can do this. But if you're going to do it with us, we're doing it this way because this is what benefits you. And if you don't want to pay this price, we can't do this work for you. I'm not just taking pictures for you."
Stearns: I'm not going to put an NVR on a shelf and walk away. It's just not how we do it. There's going to be a UPS on it with battery backup. AI is the same thing as the cloud. It's just a word feature. You must have the solution and present that.
Bazelais: I think that's where it could help us, once we get our heads wrapped around it. Because everybody has the same problem, we have right now with finding workers. Somehow the world just disappeared. So, I can augment your staff with AI being managed. How can we grow without growing? How can we use it to better serve our clients?
SIW: Do you get questions from employees about AI? Are they worried they’re going to lose their job?
Stearns: That's just a myth globally too. And I mean, you look at automation and jobs that are lost, their automation. AI was so big, for every job that's lost in automation four more are created in technology on the software manufacturing or developing and engineering side. Why does everybody need to work so much anyway? Why can't we all be a little bit happier globally? Because AI can help us be more efficient as human beings. I work to live. I don't live to work.
Gilbert: I think we're educating the market as integrators, right? How can we use AI on top of these systems that we're offering to make their business better? And they're not going to know that. It’s no different than saying, "Hey, we've got a parking solution for you." We call it a discovery meeting. If we don't do this right, we won't discover all your issues and be that filter for you. I filter this industry for that customer, and the only way I know I do that is by understanding what products need to go in here to solve X issue. That's what we get paid to do.
Stearns: It's truly proactive. At a liquor distribution warehouse, we worked with, they were losing top-shelf liquor out the door from theft. Tons of money. We trained a camera that if a human approaches the door with a backpack or a box, lock the door and notify a supervisor. On the waste management side, you're talking about personal protective equipment. If they don't have a yellow vest on, a prerecorded message comes from the speaker, "You're not wearing the proper safety equipment. Get away from the heavy machinery." We're saving lives with surveillance now. Not just finding out how they died.
We had a Department of Defense manufacturer that needed a glass brake system. It was $7,500 for the small office area to get the glass break sensors up and $25 a month for monitoring.
We went with a surveillance with a talk-down speaker on the outside of the building with line-crossing analytics. If somebody even comes near the building, a white and red strobe starts going off, a message that the police are on the way, and he can still notify the police if he wants to with monitoring for video. That's amazing. I will never sell another glass break sensor, ever.
John Dobberstein is managing editor of SecurityInfoWatch.com and oversees all content creation for the website. Dobberstein continues a 34-year decorated journalism career that has included stops at a variety of newspapers and B2B magazines.
