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Systems Integrators: The General Contractors of the Technology World

June 19, 2017

You have decided to build your next home on a beautiful spot up in the mountains. It’s really a great location – there’s a lake nearby, a general store six miles away, and a generous view of the sunset to the west.

You and your spouse are pretty handy, and both of you have experience as project managers. You use houses all the time and know how every system in your home works. Your budget has been constrained recently by a slowing economy and the decision to add the screened-in porch. But you’ve already chosen to splurge on that bear-claw ceramic tub you saw at the recent design trade show, and you’ve really wanted to add that third car garage, so you got the architect to alter the plans to include it. You even know which vanity mirror you want in the first floor bathroom.

So in order to save on costs, you’ve decided to forego using a general contractor and manage the build yourselves.

Day one of the build seems to be going great! All of the materials for your home have shown up and the excavators are ready to dig out the foundation. The cement mixers are ordered and standing by down the highway.

But there’s one small problem. The materials for the house were delivered while you weren’t around, and they are sitting on the land that’s to be dug out for the foundation. The excavator waits impatiently while you slowly try to drag crates and boxes 100 feet away. The cement contractor calls and says the cement is now ruined and they have to abandon the project. Your excavator eventually gives up and leaves an hour before dusk.

Throughout the build, several small logistic problems arise. The electrician flakes out and never shows up, which slows down the drywall contractor, which forces you to reschedule the paint team, which disrupts the cabinet installers, which impacts the granite installer. You didn’t realize it until it was too late, but the tile work in the bathrooms was so shoddy that some tiles have cracked and others are actually falling off the wall. And the replacement electrician was a disaster – much of the wiring had to be ripped out and replaced by a third electrician because they ran the wiring in front of the studs instead of through them.

The cost of these mistakes is greater than the cost of hiring a general contractor, who would have ensured this would have never happened.

This example is indicative of what can happen when an end user of technology foregoes the use of a systems integrator and procures the key components themselves.

Are systems integrators really necessary?

We live in an era of budget constraints and technology spending fatigue. General Managers and government program officers are increasingly under pressure to cut costs and save money where they can. Lately two trends have emerged that are somewhat disturbing and could lead to a significantly higher total cost of ownership for the end user.

Buying the parts and handing them to an integrator. First, some end users are specifying and procuring key components for systems themselves and handing them to a systems integrator. They do this to avoid the 5% markup that a systems integrator would put on this equipment to support the overhead associated with the purchase.

This is dangerous for a couple of reasons. The customer may not order the right component, or order the wrong options such as interface connectors, software versions, and other specifications. Also, they may not be getting the best price from the component supplier. The integrator may have a 10% discount as a channel partner, negating the 5% markup for overhead costs.

Additionally, while many key components are commodities, the customer may not be savvy enough or know relevant information about a particular supplier that would – over time – cost them more in repairs and updates than they would initially save in procurement cost.

Opting to do the systems integration themselves

This trend is far more concerning than the first one. In this scenario, the program officer or unit commander decides that his or her operators and maintainers are qualified to procure and integrate the components themselves. By saving the markup costs from a systems integrator and paying for the parts only, they can show a reduction in cost by up to 35% on average, and sometimes upwards of 100%.

But here’s the thing. By not using a systems integrator, these very capable technicians and operators run the risk of making an engineering calculation mistake. They also typically do not provide the necessary documentation for future generations of users. Also in many cases the quality of integration – namely the cabling, interconnectivity, and user interface – is lackluster and could be challenging for next generation users to use and maintain.

There are good and bad systems integrators out there.

Just like the housing market, there are all sorts of systems integrators. There are large SI companies that are great a highly complex integration projects that have a lot of regulatory hurdles to traverse. There are small integrators that can support relatively small integration projects but may not be suited to scale up to supporting billion-dollar projects.

And, yes, unfortunately, there are some systems integrators out there that are just plain bad. They either do shoddy work, provide poor program management and customer communication, or charge astronomical prices for their work.

Some systems integrators will bid a contract low and make far more profit on contract adjustments that may or may not really be necessary, whereas appropriately-priced integrators will do far more to protect the total value of the customer.

It also seems to me that many systems integrators that used to do high quality work at a fair price have grown too large to support smaller projects. With a dramatic decline in high-volume projects, these companies have been scrambling to find smaller projects to keep the pipeline filled. But they are charging far too much for the value they provide, and are not putting the level of quality into these projects that a smaller integrator would.

Choosing a systems integrator is much like choosing the general contractor for your new home. Sure you can get a track-home builder like Ryland Homes to build your house. But they will be expensive because they are building a custom home which is outside of their operationally-efficient process of building thousands of similar houses simultaneously. So choosing a systems integrator that is geared around building thousands of systems to integrate a small project will lead to a poor implementation and an overly-expensive program.

But choosing a smaller integrator is equally challenging. Some integrators are keen to provide high quality, reasonably-priced systems integration services. But systems integrators vary in quality and pricing and may not be suited for your program. Just like choosing a general contractor – you want to make sure you’re hiring a GC that has a reputation for building quality homes at a fair price.

Look for value, honesty, and experience.

The best systems integrators out there have either been there all along – maintaining their core business model for decades, or have been formed by teams that have spun out of larger integrators. There are highly-experienced systems integration companies that have only started up in the past 5 years throughout the country – usually clustered around cities that have legacy integration companies. Such as Long Island NY, Melbourne FL, Atlanta GA, and Dallas TX. Most of these companies were formed and are run by systems integration experts that want to get back to a business model centered around customer focus and quality work.

Before choosing to forego using a systems integrator for an implementation project, consider researching some of the next generation systems integration companies that are getting back to the basics of systems integration, or reaching out to those shops who have always consistently done great work at a fair price, but didn’t get caught up in the massive procurement cycle of the past decade. Working with these companies will save your program office far more money than trying to build it yourself.

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