Niscayah announces restructuring plan
ATLANTA--In a public statement last week, global systems integrator Niscayah announced plans for a restructuring program that would commence immediately and focus on increasing service sales. As part of the plan, the company laid off roughly 600 employees, most of them involved with installation work.
Martin Guay, president of Niscayah's North American operations, which are based here, said "a few" of those layoffs were U.S. employees, but emphasized that Niscayah is still investing in its operations here, citing the October purchase of National Guardian's national monitoring accounts (those accounts not purchased by Stanley in September) and increased focus on the company's Massachusetts-based central station.
All of this, he said, is part of Niscayah's plan to emphasize service revenue over installation, or "implementation," revenue. He said the company categorizes its business in three areas. Implementation, which includes designing a system, understanding a customer's risk, project management, and the actually contracting work, is just one of those. The other two, systems management, "which was traditionally called service," and systems operation, "what's called central station monitoring in the intrusion world," are the other two.
He said the second two are where Niscayah will put its focus going forward. "What we need to do is stay close to the customer," Guay said, "because they need someone with them for the next five to 10 years to get leverage out of the system, not only to take care of it, through proactive and reactive service strategies, but they need somebody to help them understand the whole flow of the system."
"This is where the integrator market hasn't done as good of a job," he continued. "They've just been focused on new things, instead of living with the customer. The manufacturers are really driving a lot of that. They need to sell product. They're creating end user demand. We as an industry need to rationalize the existing legacy system and help end users get more out of that."
He said Niscayah would take new installations as they come, and would still be active in that market, but would also look to create relationships with customers who already have working systems but need a security company to help them maximize those systems' benefits. Along the way, it will help Niscayah discover new revenue streams, he said: "When you're in the implementation business, you're going after capital expenditures. When you're going through systems operations and services, you're going after operating dollars. When you have people focused on projects, they don't see those operating dollars being spent and they'll go somewhere else."
Currently, Niscayah's North American operations do about 25 percent of its revenues in service. Guay would like that to be closer to 40 percent. "We've changed the way people are compensated," he noted, to emphasize service sales, and the company pays close attention to metrics like attachment rate: How many customers have a service plan?
Niscayah's acquisition plan for 2009 will emphasize these service contracts, Guay said. "We want to put our investments into the core strategy, the systems management and systems operation," he said. "Implementation comes and goes. If you focus on that, you'll just be selling boxes, and that's not the right attitude."