New Hybrid Channel Paradigm = “Disruption”?
Recently there has been some extensive speculation about the need for disruption/change in the “contract hardware distribution” channel. Examples given, include “pre-install of hardware before shipment to jobsites”, expected advances in modular construction, and an evolution of the general
contractor as a more hands on channel partner. All those examples are true and momentum continues to increase these conversations.
However, for me and American Direct, the real disruption underway in the channel comes first, from the manufacturers whose products we sell and second from competitors we never thought would be in our space. The battle rages around us, as to who owns the door, and if you’re looking at that fight the future of technology at all levels in the buildings must be top of mind.
Manufacturers want us to buy products they specify, but our clients, our customers, even our general contractors want to discuss how the building is going to perform with the specified products or why is there a scope gap related to technology performance. The clients want to discuss what the field conditions are for the access openings, where the video surveillance can be located, is there a specialized
credential that can provide data analytics for the building as it functions for safety and security. They also want to discuss how all of the technology can be incorporated at the door and what services we can provide.
In the old days, we didn’t provide technology, we provided mechanical doors, frames and hardware. In the old days, commercial systems integrators didn’t provide mechanical doors frames and hardware, they provided technology. Today the systems integration business and the contract hardware business are on a collision course, because to meet the evolution of the quickly emerging hybrid channel you have to be able to provide value design around technology no matter the specification. If you are preparing for the future hybrid channel, if you are looking at the trends at the edge of the door, then you are thinking about the role of technology.
Specifically, technology as it relates to the manufacturers of electrified locking hardware, electronic exit devices, wall readers and wireless or wired solutions. Theses manufacturers want us to provide products that they sell, no matter the expectation for field performance and we should be providing products that define value and technology application. Some of the manufacturers do not have the complete product line to meet the field performance expectation. There is clear evidence that technology defines value in the environment in which we live. Some use the term digital, not digital but total technology design and analytics.
An overwhelming technology channel consensus understands that recurring revenue is the best value is find stickiness and also loyalty to the serviced providers. Recently, a study found that 82% of Americans were Amazon Prime subscribers. An annual recurring payment amount that is staggering. Same perspective applies to safety and security products, licensing, support agreements, annual renewals all are recurring revenue. Whether the recurring revenue, is with access control software, credentials or surveillance this is where we are headed as a channel.
If the manufacturing community produces recurring revenue requirements for their products we need to be equipped as distributors that can provide that value so that we can participate in those same revenue streams.
Finally, the new reality in our business is not about bidding jobs to general contractors, of course we will continue to view the marketplace job by job, but today end users are making the tech decisions and our job is to approach end users with a value add technology design. A design that includes technology at the edge of the door – we at American Direct are the only company today in the space that can provide a turn-key technology solution, that includes access-control, systems integration and mechanical openings products anywhere in the United States. Our intention is to be the leader in this hybrid-channel and we want to own the door with Total Security solutions.
- Byron Whetstone, American Direct CEO/Chairman