Mike Abernathy Covers Changes Ahead for Systems Integrators

We sat down with Mike Abernathy, the Director of Business Resources for the National Systems Contractors Association (NSCA) to find out the biggest trends facing the systems integration industry and how integrators can expand into new growth segments. Back from celebrating NSCA’s 25th anniversary, Mike shared his views on how technology shifts are creating new growth opportunities for integrators.

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Q: How did you get into the system integrator space and what have been the biggest industry changes you have seen?

Mike Abernathy: I have been in the space now for over 20 years and, like many in our space, it was by accident. My degree in college was not in this space and I wasn’t a technical person. However, I spent around ten years in commercial audio manufacturing and ended up leading led international sales. I learned so much in those ten years with boots on the ground working on the business side. Then I had an opportunity to come back to NSCA. The goal for our 800 systems integrator members is to help them run their business and pivot in the face of new trends to continue growth.

When I started, the industry was very segmented. There was the audio segment, covering everything from church sounds systems to school PA systems. Then there were the video professionals who focused on projectors, for example. Today, systems integrators will work with multiple systems simultaneously and also work much more closely with IT departments. When you look at the professionals in our space now, about 80 percent do AV and close to 70 percent do security and surveillance work. We may still be specialized, but we are really in the IT industry now. Learning that IT side of business has been a big change for the systems integrator space. For example, learning networks and programming and being able to share with our customers how specific technology will affect their networks, among other important things.

Our industry is also continuing its move away from project-based systems. You used to sell a system for $100K and then go away and come back five years later hoping to sell another. Today we are seeing monthly payment models come from integrators alongside the hardware solutions and installation. Canopy is an example of a remote monitoring and management software system that can help with that transition.

Q: At NSCA’s recent Business & Leadership Conference, what were the big take aways?

Mike Abernathy: This year, about 300 integrators set aside two and half days to join the conference. One of our primary focus topics was on financial leadership. One aspect of that is what I like to call selling what’s between your ears. We now, as systems integrators, offer so much added value to customers. So many of us have given that away in the past. Now, when a company has an integrator come in, we are leading the integration of multiple technologies, working with IT departments, and changing the approach.

For master systems integrators, you are looking beyond traditional systems like nurse call systems, AV and security. They are starting to look into adjacent technologies, too, including HVAC, building automations and technologies established during the COVID-19 pandemic. Systems integrators can go into a business and really be that one handshake. They can help as a consultant to identify the best technology solutions for a customer that drives impact and outcomes.

Changing the approach to financial leadership means monetizing support. This includes things like engineering and design time, customer calls post install, project management time and better job costing. Often, we are also subcontractors to a general contractor, and you have to factor in those margins. It used to be 70 percent was bid work and now that is flipped where 70 percent of member’s business is design build and helping clients understand all the tech they need. A lot of my role here today at NSCA is to help members understand where they stand. We provide members with benchmarks and metrics and to help them leverage resources to grow and scale their business.

Further reading: Why System Integrators Are Pivoting to Services and More Recurring Revenue

Q: What is your advice for system integrators who want to increase the amount of services work they do?

Mike Abernathy: When you look at services and are thinking about a recurring revenue model, you have to consider how to generate revenue on a contracted, recurring basis. That has been challenging for integrators. The IT industry has moved that way, and we have learned as an association how to guide members. It’s a different pricing model that involves a host of factors, including making sure that your sales team has the right compensation package. Having the right tech framework is also key, along with having a great finance partner and accounting team. NSCA can help with this transition in a variety of ways.

Further reading: System Integrators’ Best Practices for Pricing Work

Q: If you were starting a system integrator business now, what type of work would you focus on?

Mike Abernathy: I would focus on the services side. Thinking beyond our traditional tech and thinking of being that master systems integrator, that one handshake for clients. I would also look at having key partners in the space, or hiring internally and having those Microsoft and Cisco skillsets on your team in order to provide advances in technology. It’s also important now to look at your business model and the projects you are taking on. Not all projects are good projects. Some can actually hurt profitability. Decide which projects are good for business and, again, I would be looking at having a recurring revenue model. Also look at new technology like AI and consider how things like ChatGPT and augmented reality might change things for the customer and be ready to guide them.

Further reading: Best Practices for Building Systems Integrator Teams

Q: Looking into the future, what do you think the system integrator industry will look like five years from now?

Mike Abernathy: I think the industry will be even more focused on collaboration and workflow and more involved in the health care space and safety technology, especially school safety. I do see our industry as being software focused and I see integrators starting to hire full stack developers. Back to that master system integrator idea – we will be bringing everything together.