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Business Intelligence for Custom Integrators

Tuesday Morning Coffee

Tuesday Morning Coffee

Part 2 The Evolution of Custom

Posted on April 6, 2015 at 4:00 PM Comments comments (25)

The Evolution of Custom – 30 Years Later, Still No Scale

by Steve Firszt, VITAL Mgmt

Part II - What Needs to Happen Next

In Part I, we concluded…

Absent a change to a more scalable CI model and the emergence of branded national distribution, most customers will have no known options beyond the low-cost and/or DIY offerings of non-CI companies such as Apple, ADT, Xfinity, and Sonos (to name just a few).

Industry Standards Needed

Standards go far beyond how an installation is performed, or a control system programmed. In fact, it is our view that one of the most significant missing standards is how CI companies are organized.

What does a Project Manager do, exactly? Ask this question of 10 CI’s and you’ll get 10 different answers. Even bigger questions are, What’s it take to become a PM?, and; What is the next level of advancement beyond Project Manager?

The challenge of finding and developing good people has been sited frequently of late, as the Smart Home market enters what looks to be a boom era over the next-5-6 years. But until our industry begins to define the roles in its organizations, it will continue to be difficult to attract and develop employees. Likewise, there are no financial standards.

Company-to-company differences in revenue recognition, inventory accounting, labor productivity measures, and customer deposit accounting (to name a few) stand as huge barriers to a consistent view of financial health among CI’s. Even the widely-accepted standard of $200,000 annual revenue-per-employee is subject to differences in how revenue is recognized, and how a company calculates the corresponding employee count. If the numerator and denominator aren’t defined, the dividend is meaningless!

The Missing Brand

The closest thing to a national brand for the delivery of CI products and services is… Geek Squad. Until there is an alternative, they will remain the best known option for most consumers. Does this speak well for the growth of true CI services?

Of course, no single independently-owned CI could possibly establish a national reputation. That’s going to require a network of CI companies across the US, working together to market themselves under a single brand umbrella. To-date, none of the multiple attempts to achieve this have succeeded. But that doesn’t mean it can’t be done, or won’t be done. (VIA and VITAL are two current efforts, though they differ markedly in their approach.)

Our view is that all the above must happen for CI companies to carve out a significant share of what could be a truly prosperous time for our industry. The brand must be there, with an objective of “consistent customer-facing behavior” among all its dealers. Success will also require financial standards throughout the network, and a sustaining and scalable organizational architecture that is practiced by all.

It is our belief that the CI industry can and will evolve from its “two guys and some wire” roots. Great opportunities await the companies willing to adapt to a new business dynamic, one that leverages the strengths of many into a cohesive organization scalable to $100M, $500M, even $1B or more in annual sales.

Will your company evolve as a participant, or will it continue as its own unique organism?

To learn how your company might evolve as a particpant, click here