What’s it REALLY like “at work” every day? We asked Dennis Hickman of the SOHO Shop, David Raines of Osbee and Rick Scott of System Integrators to give it to us straight about what they face each day, what categories are hot, and how they strategize to grow the bottom line. How does it compare to your daily grind?
Technology Integrator: Tell us about your integration firm. Where are you located, how long have you been in business, and how big of an operation do you run?
Hickman: The SOHO Shop has been in business since 2007. We currently have two Midwest offices, and we are looking to add a third in the South. We are located in St. Louis and Des Moines, Iowa. Right now we have approximately 20 employees between the two offices, but we are always searching for qualified install technicians, programmers and sales staff.
Raines: Osbee is located in Harrison, N.Y., a suburb in Westchester north of New York City. Osbee began as a residential IT/LAN installation company and evolved about 12 years ago into a full-service whole-house automation and A/V company. The company currently has 18 employees.
Scott: Systems Integrators is a small integration firm based near Middlebury, Vt. Our primary service encompasses the state of Vermont, Western New Hampshire and Northern New York. We have been operating since 2003, typically with a staff of six to eight.
TI: What is the primary source of your business, i.e., new construction, retrofit, commercial …?
Hickman: We are about 60 percent retrofit residential and 40 percent new construction right now. This changes a bit depending on how the market is going, as you would expect. We get a lot of our customer referrals from the sub-contractor partnerships that we have as well as from architects and general contractors.
On the commercial side, we do a few projects a month. We are looking to grow that aspect of the business, as there are a lot of opportunities coming up in our market.
Raines: Most clients are residential. Our work is split about 50/50 between new construction and retrofits. We do some commercial projects for data-heavy businesses, such as financial services firms.
Scott: We are predominantly residential integrators. We enjoy long-term relationships with a number of high-end residential construction companies and architects. We also receive referrals and upgrade business from existing clients.
TI: What products and services are most people looking for now? Energy management, security, A/V control?
Hickman: Right now, lighting control, motorized shading and HVAC control are really hot with our clients. We are getting a lot of requests just to add a few controllable dimmers into a home and a thermostat.
We are Control4 and Lutron dealers, so we have a lot of flexibility on our product offerings and how we can integrate everything together. Shading is a great product to offer, as everyone has at least one room in their home where a motorized shade of some type would be useful. Shading is always in the budget for a new home or remodel as well, even when automation control and technology budgets may be short or forgotten about.
Raines: Our clients are very affluent and are mainly looking for solutions tailored to their lifestyle. Our job is to listen to their needs and desires—to design a system and choose the products and technologies that meet those needs and desires in the best way possible. In this context, our clients are mainly looking for convenience, comfort and security, not necessarily any one product or service. Within those parameters—and the budget—we may include touch screens; integrated HVAC, lighting and shade control; whole-house audio and video distribution; state-of-the-art media rooms and/or home theaters, possibly with custom lifts or cabinet to hide the screens when not in use; and house-and-pool/patio intercom and CCTV monitoring for security and convenient communication with the family, no matter where they are in the house.
Scott: A/V, automation and control still lead our product mix, followed by lighting control. Enterprise-level networking and high-performance CCTV camera systems are the fastest growth categories for us.
TI: What are the biggest problems you see in our industry going forward?
Hickman: There are a few that I see right now. Margins are dwindling on a lot of our offerings. Everyone knows that there is nothing left in televisions, and there is a bit of this in the automation components. A lot of this is a result of Best Buy, Amazon and Walmart beating each other up for sales, and we get caught in the middle. We do bid everything as a package and we do not offer itemized quotes, which helps.
We are becoming more of a labor supplier than an all-inclusive provider of parts and labor. We have clients who supply some of their own equipment, and we just install and program. In time, this really could be how our business is industry-wide.
We will be more like electricians and plumbers at that point. The scenario is, the customer buys a lighting system from Home Depot or Staples (Lutron Caseta Wireless) and we do the setup and programming. This already happens when you get the call about hanging a flat panel the customer just bought from Costco.
It makes you look at your labor rates and what you are charging and really reaffirm to your customers on how valuable your time is to the client.
Raines: In the high-end market, the playground is more competitive. In years past, the biggest hurdle was educating architects, contractors and clients about what we do, and why it was important to include in their projects.
Now, what we do is standard for our client base, so it’s not so much about selling WHAT we do, but HOW WELL we do it. So staying ahead of the technology—and offering creative and innovative custom solutions no other integrators offer—is more important than ever.
Scott: I think the commoditization of automation and control is a new challenge, not necessarily a problem.
Hobby-level automation has always existed, but with the proliferation of apps and the entry of big name players like ADT, Comcast, etc., they set an expectation that automation and control is cheap and easy now, which, beyond very basic applications, it isn’t.
TI: Any problems specific to your part of the country?
Hickman: The Midwest is slow to adopt technology and is pretty conservative. The new homebuilders are a bit behind the curve on what technology offers they include with their homes in comparison to other parts of the country.
We are trying to change this way of thinking where we can and it has caught on with some builders. This is a pretty small percentage, though.
Raines: No. (Also, we work all over the country and around the world.)
Scott: As a predominantly rural state, serving clients with estates “off the beaten path,” high-quality broadband is a constant issue. We usually have access to an entry-level performance DSL or satellite and that’s it. This limits our ability to remotely monitor and manage systems well. Of course, as streaming media services become the primary source for audio and video, that suffers.
TI: How are you addressing those problems?
Hickman: Education. We try to educate anyone who will listen to us about the need of adding technology to any project and how it will impact that project. We are trying to use “green living” as a bit of a jump-off for this conversation. The second conversation starter is security.
Almost all of our customers are concerned about security and look at adding even a basic security system. In fact, a lot are doing surveillance cameras.
Scott: Thorough explanations of the state of the industry, what the specific challenges are, and what the future holds.
TI: What trends do you see going forward in terms of what consumers or commercial contacts will want for their specific jobs?
Hickman: As I mentioned before, the requests for lighting control and HVAC control are big. Most consumers want to have some kind of app control as well. We try to promote bringing everything under a single app for control (Control4, Lutron). One app that operates everything, even without your interaction, is best.
On the commercial side, big video displays have been requested a lot. Be it for a retail environment or a conference room, we are doing a lot of 100-inch-plus displays.
We still do a fair amount of projection in conference rooms as they are cost-effective and deploy fairly easily. If the business is looking for a statement piece, video walls or large multi-touch screen panels have been popular. I have gotten a lot of requests from IT departments for systems to be designed with those features.
Raines: Mobile smartphone and tablet monitoring and control are now mandatory. We work toward GUI design that’s even easier to use, more intuitive and fully custom-programmed for each client.
We are always looking for products that make audio and video easier to install, and/or more invisible or integrated into the environment—such as “invisible” speaker brackets—or make more of a statement, such as bigger, flexible displays and video walls.
Scott: Remote access and control is in demand, in addition to streaming media services, cloud-based media, and the organization of all that content.
TI: How important are trade organizations such as CEDIA? And how best do you use CEDIA when it comes to growing your business?
Hickman: CEDIA is great for the once-a-year meet-and-greet. We do take advantage of this time to get exposure to new projects and to negotiate with our vendors to get better deals and terms.
I have been going for a long time myself so I do not catch as many of the classes as I used to, as they don’t seem to change as fast as I would like.
For my techs, the classes are great for refreshers. We do not utilize our membership as much as we should during the year. We are trying to get better about that.
Raines: We are only as good as our ability to stay ahead of the technological innovations that apply to our industry. CEDIA helps us stay abreast of that changing technology and network with people who share our vision for what’s possible.
Scott: We’ve been a CEDIA member since our inception. The EXPO is very important to us, for both the exposure to what’s new and for the training offered.
We have utilized CEDIA regional training and certification courses as well. CEDIA is the only comprehensive trade organization that spans all our disciplines. •