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PSA-TEC nearly doubles in size

PSA-TEC nearly doubles in size

ST. CHARLES, Ill.--Here at the Pheasant Run Resort in the Chicago suburbs, PSA Security Network's annual conference and training event, PSA-TEC, has attracted some 800 registrants, nearly twice as many as 2006, representing among them approximately 100 systems integrators from the United States, Canada, Mexico and Puerto Rico. "It's the most of everything we've ever had," said PSA president Bill Bozeman, "from vendors to attendees to training sessions." PSA Security is a sub-chapter T cooperative representing more than 200 integrators, who do a collective $1.4 billion in annual revenues. It is the largest such cooperative in the world. Events here started Monday with a number of certification classes for companies like CoVi, AMAG and Zenitel, and skill sets like CompTIA Network+. Tuesday saw a day-long presentation from the IP User Group, along with classes from Bosch, Pelco and Intelli-M, among others designed by PSA Security. Keynote speaker John Mack capped Tuesday with a strident message for security systems integrators about developing a recurring revenue model for their businesses. The chief executive officer and co-founder of investment bank USBX and former head man at Protection One, Mack said that large companies are looking to buy independent integrators, but only if they conform to metrics that signify a healthy business. One metric of paramount importance outlines the percentage of revenues coming from monitoring and managed services. Since that revenue usually delivers a 50 to 70 percent gross margin, "that's where you want your revenue," said Mack. The trend toward more sophisticated security systems, and the requisite specialized labor that goes with them, will drive up margins on installation work, Mack said, but not high enough that integrators should look to live on new business alone. He said the most successful integrators also are showing significant revenues in upgrades, add-ons and warranty work, in addition to the monitoring and managed services. Securitas Systems, by way of example, does 45 percent of its revenue in service-related work, according to chief executive officer Juan Vallejo (search "Vallejo" at www.securitysystemsnews.com). Further, said Mack, large companies eyeing the integration market want expertise in specific verticals, especially those, like health care and banking, that are showing the most interest in sophisticated systems. "If you're strong in health care, your business is worth more," Mack said, "Full stop. No doubt about it." On average, what is an integration business worth? Mack said smaller companies should expect something between .5 and .8 of annual revenues, with a premium paid for vertical specialization. Also, he said, "It's a pretty big deal to get close to $10 million in revenues." Below that, not many large companies are interested unless an integrator is highly specialized. "If you're doing $4 million, and you've got a competitor doing $4 million across town," he advised, "it might be better to team up to become an $8 million dollar business with a plan to get to $10 million." Abuzz with valuation talk, integrators then filed out for dinner and cocktails before being entertained by the PSA All-Star band, which included a number of integration professionals acquitting themselves fairly well with a number of blues standards. PSA-TEC 2007 continues through Friday, concluding with a PSA Security stockholders meeting and vendor speed-dating, where integrators can be introduced to new vendors in very short intervals.

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