Integrators' lessons learned from PSA-TEC 2011

May 20, 2011

Kermit the Frog famously said: "It's not that easy being green." Here's the lesson from the PSA-TEC event that was held this week in Colorado: "It's not that easy being an integrator."

PSA-TEC, held by the PSA Security Network (a purchasing cooperative), is one of those events that cuts through the hype in our industry and allows integrators to talk to each other about their businesses, about their pain points and about what works for them. As an observer and participant of PSA-TEC this week I want to run through some of the lessons I heard here at the show and to share them to you to make your life easier.

Point #1: "You need to know your consultants. You need to have a close relationship – not just that you receive the consultant's specs for the project and that is the extent of the relationship."

That was the message of Ray Coulombe, a consultant and operator of Ray was hosting a panel on the topic of getting integrators and consultants to work together well. One of the themes we heard was that security consultants don't know the technology and often spec bad projects because they are basing their knowledge off of manufacturer data sheets and not real world knowledge of the product. Panelists told of nightmare stories where they were contracted to install jobs where a consultant had picked products (based on manufacturer spin) that were brand new, untested and which proved to be laden with bugs. The lesson was that if you as the integrator have a close relationship with the consultant, you can help the specifier avoid creating these problems -- before they affect you and the end-user.

Point #2: The biggest challenge facing the integrator today isn't technology; it's money.

That was the message of PSA's Bill Bozeman, and it was echoed by others, including Jeff Kessler of Imperial Capital. The point here is that you know the technology, or at the very least you can get up to speed on a new technology without much trouble (you're smart; technology is easy to you). But money, now that's another issue. There are two things in play here. First, banks have not been as friendly to small businesses lately, although some believe that is changing. So you might be undercapitalized to grow your business to grab some projects you might want. Secondly, margins are sliding. IT VARs might be happy with small project margins, but that hasn't been the case in the security industry, where margins for integrators are often in the 20 and 30 percent range on great projects. Margins are going to continue to slide, and the recommendation from many systems integration business experts like Bozeman is that security integrators need to delve into RMR and continued service models -- and away from purely being installation companies.

Point #3: Getting a GSA schedule isn't the god-send you think it might be.

Jim Henry, CEO of Henry Brothers Electronics, shared this tip to us in a session. He pointed out that one of the dangers with GSA schedules is that it allows buyers to buy products in one batch and integration services in another buy. The challenge comes from the fact that you won't be able to test and burn-in the equipment at your own facility. The other problem is that manufacturers may set unrealistic end-user expectations for their products that you only learn about when you pick up the product from the government agency at their loading dock. Finally, there is a lot of managerial cost involved to being on the GSA schedule, and the panel's general consensus was that if you're not doing seven figures or better of GSA schedule business, it probably isn't worth your time. And even if you do, you better have a very diligent point person to run this aspect of your business. Sounds great, doesn't it?

Point #4: To protect your business, you need your terms and conditions into the contracts, but when dealing with commercial and government clients it's not that easy.

I enjoyed a presentation from Dennis Stern at the conference. He's with the law firm Mitchell Silberberg & Knupp LLP, and his point was that once you are into a bid situation, it's not so easy to insert your terms. Honestly, most of the attendees at PSA-TEC 2011 weren't from big behemoth residential alarm companies who have no problem getting homeowners to quickly sign a contract without reading it. Rather, your contracts for government and commercial projects are read by your end-users' lawyers. You often have to sign bid contracts where you can't negotiate much about liability issues of the security installation. Nonetheless, Dennis said that you can't just ignore those issues just to get the job r it will come back to bite you. Be clear and concise about your liability protection, and know when to walk away from a project if you can't get your protection. Otherwise, that $150,000 job might cost your company $2 million in a settlement if something ever goes wrong.

Ok, those are four of the best points. I'll share some more with you next week. There was so much good stuff here. If you haven't attended, do so next year. This is one of the best channel-focused events I've ever seen in our industry.